Gazprom Neft · RUS:SIBN
Gazprom Neft — Q3 2011 Earnings Presentation
28 slides from Gazprom Neft's earnings presentation, Nov 8, 2011
Slide 1: US GAAP Financial and Operating Results for Third Quarter 2011
US GAAP Financial and Operating Results for Third Quarter 2011 8 November 2011
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Gazprom Neft and its consolidated subsidiaries. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements
Slide 3: Agenda
Agenda Alexey Yankevich Highlights, Macro Acting CFO Environment Vadim Yakovlev Upstream Deputy Chairman of the Management Board, First Deputy CEO Vladimir Konstantinov Downstream Head of Economics and Investment Department Refining and Marketing Division Strategy Yuri Kalner Head of Strateg
Slide 4: Overview
Overview Highlights Macro Environment Upstream Downstream Financials Q&A Appendix 44
Slide 5: Strong financial performance while advancing on 2020 strategic goals
Strong financial performance while advancing on 2020 strategic goals Financial performance in 9M 2011: • Revenue: US$ 32,908 mln (+38.8% Y-o-Y) • EBITDA: US$ 7,704 mln (+49.7% Y-o-Y) • Adjusted net Income*: US$ 4,393 mln (+91.0% Y-o-Y) Continued operational progress : • 7.1% Y-o-Y production inc
Slide 6: Macro Environment
Macro Environment Stabilizing prices, slight ruble depreciation 66
Slide 7: Mixed macro drivers: stabilizing prices and ruble depreciation
Mixed macro drivers: stabilizing prices and ruble depreciation Brent, $/bbl Average exchange rate Inflation (PPI), % Brent, $/bbl Average exchange rate Stabilized global crude and product prices Ruble appreciation against US$ Y-o-Y Ruble depreciation against US$ Q3/Q2 77
Slide 8: Upstream
Upstream New projects on track, as resource base extension and efficient development of legacy fields continue 88
Slide 9: Sixth straight quarter of production growth
Sixth straight quarter of production growth Group hydrocarbon production +6% +1% Total Group hydrocarbon production increased 0.7% Crude oil production by equity affiliates increased Q-o-Q and 6.0% Y-o-Y (toe) 1.9% Q-o-Q and remained stable Y-o-Y, driven by increased development activity in 3Q 2
Slide 10: Operating efficiency backed by industry-leading growth
Operating efficiency backed by industry-leading growth % change in opex/boe 9M Y-o-Y % change in capex/boe 9M11 Y-o-Y - Gas project -Priobsky Power Gas Plant Opex/boe: moderate growth Capex/boe: decreased Energy efficiency Reducing drilling time Installing energy efficient equipment Optimizi
Slide 11: Strategic acquisitions in new production area
Strategic acquisitions in new production area Бугуруслан Bashkir 9M2011 Results and 2012 Plans Republic Бузулук Tsarichanskoye Creation of new production cluster in Volga-Urals field region Orenburg processing Orenburg Kapitonovskoye Adds 185 million metric tons (1.35 billion field facility barr
Slide 12: New projects driving domestic growth: 9M 2011 results and outlook
New projects driving domestic growth: 9M 2011 results and outlook 9 M11 Key Events 2011-12 Major Goals 9 M11 Key Events 2011-12 Major Goals • Reactivated & studied 4 wells • Began FEED for test • Prepared for test Complete asset production Complete production acquisition in development plan • De
Slide 13: International projects are on schedule
International projects are on schedule Key events: 2011-2012 Plans: Badrah Completed de-mining Seismic interpretation results due Nov 2011 Completed 3D seismic Planning to drill Nov 2011 Completed construction of cluster sites and site roads Construct crude collector and processing facil
Slide 14: Downstream
Downstream Fuel quality upgrades and increases in premium sales add value to industry-leading portfolio 14 14
Slide 15: Refinery modernization raises fuel quality, drives continued premium sales growth
Refinery modernization raises fuel quality, drives continued premium sales growth 3Q11 Key Events: 2011 Major Goals: Refining Begin construction of isomerization units at Moscow while completing unit Refining volumes up 9% 3Q at Yaroslavl to improve gasoline quality 2011/3Q 2010 Upgrade and co
Slide 16: Higher-value product yield amid increased refining throughputs
Higher-value product yield amid increased refining throughputs Gazprom Neft refining throughput Gazprom Neft gasoline and diesel yields (MMTonnes) (MMTonnes) Gasoline Diesel NIS Yaroslavl Moscow Omsk Refinery throughputs up due to increased demand Class 2 gasoline production suspended Moscow r
Slide 17: Capitalizing on higher netbacks by channeling crude to domestic refining
Capitalizing on higher netbacks by channeling crude to domestic refining Gazprom Neft Crude mix Gazprom Neft average netbacks $/bbl (MMTonnes) Crude to CIS & Russia Crude Export Refining Refining netbacks remain strong Volumes of crude oil exports and sales on international markets declined 19.0
Slide 18: High-growth premium channels continue strong performance
High-growth premium channels continue strong performance Y-o-Y 3Q premium* Market share** Geographical expansion: 21 sales increase filling stations in Krasnodar region. Average daily sales per retail site in Russia grew by 35% Y-o-Y Retail (9M11 vs. 9M10) Expanded G-Family lubricants internat
Slide 19: Yaroslavl Refinery modernization continues with launch of Isomalk isomerization unit
Yaroslavl Refinery modernization continues with launch of Isomalk isomerization unit October 2011 startup of Isomalk isomerization unit (design capacity 650,000 tpa) Isomalk produces high-octane component of commercial gasoline and will boost high octane gasoline output Isomalk is another step i
Slide 20: Financials
Financials Strong results on higher volumes and prices 20 20
Slide 21: Financials continue to see strong growth despite quarterly price decline
Financials continue to see strong growth despite quarterly price decline Increased sales volume offset by lower crude and petroleum prices resulted in 0.8% revenue increase Revenues Q-o-Q US$ mln Average Urals price decreased 2.0% Q-o-Q and increased 47.5% Y-o-Y Improved sales mix drove 11.3%
Slide 22: Forward rate volatility can cause significant paper losses
Forward rate volatility can cause significant paper losses that will reverse closer to the contract expiration date Profit & Loss FX loss reconciliation, US$ mln Adj. Net Income reconciliation, US$ mln Ruble Bond effect = US$157 mln Hedge accounting Net Income reconciliation, US$ mln Current hedge p
Slide 23: EBITDA reconciliation
EBITDA reconciliation Management effectiveness = 798 Changes in Net Price = 1 890 23 23
Slide 24: Operating cash flow boosted due to net income growth
Operating cash flow boosted due to net income growth Cash flow reconciliation US$ mln 24 24
Slide 25: Rebranding and improvement program continues to drive capex
Rebranding and improvement program continues to drive capex Capex (US$ mln) Capital expenditures up Q-o-Q 24.4% due to: 24.4% 9.1% 1 111 58.6% increase in refining capex due to 21 ongoing modernization program 1 018 Significant 183.6% increase in M&D 27 111.1% 190 90 893 capex due to integrati
Slide 26: Record Net Debt/EBITDA ratio as a result of commitment to capital discipline
Record Net Debt/EBITDA ratio as a result of commitment to capital discipline and debt optimization Debt ratios and maturity mix Debt by currency Net debt/EBITDA 0.6 vs. target < 1.5 Increased US$ 600 mln Club Term Loan Share of short term debt decreased from 67% Facility to US$ 870 mln in 9M20
Slide 27: Questions & Answers
0 cazpnom NE F T Questions & Answers
Slide 28: Units
Units bbl barrel boe barrel of oil equivalent tonne metric ton toe tonnes of oil equivalent MMTonnes million tonnes MMbbl million barrels MMboe million barrels of oil equivalent Mmtoe million tonnes of oil equivalent bcm billion cubic metres mcm thousand cubic metres MMm3 million cubic metres bcf bi