Repsol Sa · BME:REP
Repsol Sa — Repsol YPF — FY2003 Earnings Presentation
53 slides from Repsol Sa's earnings presentation, Feb 24, 2004
Slide 1: 2003 Results
2003 RESULTS February, 24th 2004 0
Slide 2: Disclaimer
Disclaimer Safe harbor statement under the Private Securities Litigation Reform Act of 1995: This document contains statement s that Rep sol YPF believes con stitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statement
Slide 3: 2003 Highlights
2003 HIGHLIGHTS Alfonso Alfonso Cortina Cortina Chairman Chairman && CEO CEO 2
Slide 4: General Environment
General Environment 1.2 4.0 1.13 Peso/$ Exchange Rate $/€ Exchange Rate 3.51 3.12 1.0 2.90 0.94 3.0 2.85 0.8 2.0 2002 1Q 2Q 3Q 4Q 2003 4Q 2002 1Q 2Q 3Q 4Q 2003 03 03 03 03 02 03 03 03 03 US dollar weakness and strengthens of peso Brent Dated Brent Dated ($/bbl) 26.50 (€/bbl) 25.02 28.83 25.52 2002 2
Slide 5: Value Creation
Value Creation Net IIncome Net ncome Million Euro 2,000 +3.5% 1,000 1,952 2,020 0 2002 2003 Million Dollar 2,400 8% + 23. 1,200 2,283 1,843 0 2002 2003 Hitos Año 2003 4
Slide 6: Delivering our 2003 commitments
Delivering our 2003 commitments 9Production growth at double digit in 4th quarter 9Improvement in Refining and Marketing 9Volume growth in petrochemical and natural gas 9Capital discipline 2003 highlights 5
Slide 7: Full Year Results
Full Year Results • Net income above 2 billion euros • Net cash flow of €4,477 million euro • 13.2% production growth year on year • Net debt reduced by 2,425 million euro 2003 highlights 6
Slide 8: Strategy
REPSOL YPF REPSOL YPF STRATEGY
Slide 9: Operating Excellence: Cost Savings
Operating Excellence Cost Cost Savings Savings (2001-2003) (2001-2003) M€ M€ (Costs /Year) 118 670 552 2001 - 2002 2003 2001 - 2003 Strategy 8
Slide 10: Operating Excellence: Lifting Costs
Operating Excellence Lifting Lifting Costs Costs (( US$/boe US$/boe)) US$/boe) 3.0 - 33 .0% 1.5 2.57 1.72 1.48 0.0 2001 2002 2003 Strategy 9
Slide 11: Operating Excellence: Refining Capacity Utilization
Operating Excellence Group Group Refining Refining Capacity Capacity Utilization Utilization (%) (%) 90% 87% 86% 85% 80% 2002 1Q 03 2Q 03 3Q 03 4Q 03 2003 Strategy 10
Slide 12: Financial Strength
Financial Strength Million euro Net debt/Capitalization 18,000 42.9% 40 Net Debt ratio 11,000 Dec 2003 16,555 29.2% 30 21.9% 21.9% 7,472 5,047 4,000 20 DEC 01 DEC 02 DEC 03 Net Debt Net debt ratio Strategy 11
Slide 13: Financial Strength improvements
Financial Strength improvements (BASIS POINTS ) Spreads Spreads According According to to Ratings Ratings 300 150 0 Jan 2003 March 2003 June 2003 Sept 2003 Jan 2004 CDS REPSOL A INDEX BBB INDEX Source: iboxx Strategy 12
Slide 14: Profitable Growth in Production
Profitable Growth in Production Hydrocarbon Hydrocarbon Production Production (KBOE/D) 1,200 +13.2% 1,133 600 1,000 0 2002 2003 Strategy 13
Slide 15: Profitable Growth in Production
Profitable Growth in Production (KBOE/D) 1,200 % +18 .9 COMMITMENTS FOR 2003 Production Production growth growth 1,139 600 GROWTH GROWTH AT AT DOUBLE DOUBLE DIGIT DIGIT IN THE H QUARTER 2003 THE 4TTH TH 2003 958 Trinidad Option TOP AVERAGE PR ODU CTION 60,000 3rd. Train NGL OCP Libya Bolivia 0 Boe/d
Slide 16: Profitable Growth in Reserves
Profitable Growth in Reserves Net Net Proven Proven Reserves Reserves Mboe 6,000 +3.3% 3,000 5,261 5,433 0 2002 2003 Strategy 15
Slide 17: Profitable Growth in Oil Products Sales
Profitable Growth in Oil Products Sales Repsol Repsol YPF YPF Kt 60,000 +7.0% • 3% Argentina 30,000 50,091 53,577 • 4% Spain • 27% Rest of the World 0 2002 2003 Strategy 16
Slide 18: Profitable Growth in Chemicals
Profitable Growth in Chemicals Total Total Sales Sales Kt 4,000 +13.6% 2,000 4,007 3,526 0 2002 2003 Strategy 17
Slide 19: Deconcentration in Production
Deconcentration in Production Oil Oil & & Gas Gas Production Production 2002 2002 2003 2003 28% 33% 72% 67% Argentina ROW Strategy 18
Slide 20: Deconcentration Through New Projects
Deconcentration Through New Projects Saudi Saudi Arabia Arabia Persian Gulf Qatar U.A.E. Block C OMAN Saudi Arabia Strategy 19
Slide 21: Deconcentration Through New Projects
Deconcentration Through New Projects Burgos Burgos Basin Basin TORREON TORREON MONTERREY MONTERREY GUADALAJARA Manzanillo D.F. CD. PEMEX CACTUS Y NVO. PEMEX Reynosa Monterrey Block Strategy 20
Slide 22: Deconcentration Through New Projects
Deconcentration Through New Projects Lázaro Lázaro Cárdenas Cárdenas 4-10 bcm/y Regas Terminal HERMOSILLO Start-up: 2008 CHIHUAHUA Existing and Potential Dem and TORREON TORREON in the Area (bcm a) MONT MONT ERREY ERREY Ciudad CD. MAMA DERDERO O G UADALAJARA 2003 14.4 Man zanillo D.F. CD. PE Ciudad
Slide 23: Value Creation: ROACE 2003
Value Creation ROACE ROACE 2003 2003 18.6% 10.4% Not adjusted Adjusted(1) Calculations under current Spanish GAAP (1) Adjusted: Pre-all goodwill (in NOPAT and Capital Employed) and excluding non-recurrent items. Strategy 22
Slide 24: Results
RESULTS Luis Luis Mañas Mañas CFO CFO 23
Slide 25: Full Year Results
Full Year Results Net IIncome Net ncome Adj. Adj. Net IIncome Net ncome Million Euro 2,000 +3.5% 2,800 +18.0 % 1,000 1,952 2,020 1,400 2,676 2,269 0 0 2002 2003 2002 2003 Million Dollar 2,400 3,000 % + 23. 8% 41.2 + 1,200 1,500 3,024 2,283 1,843 2,142 0 0 2002 2003 2002 2003 Results 24
Slide 26: Comparison Year on Year
Comparison Year on Year Adj. Adj. by by cons cons. . cons. Adj. Adj. by by Adj. Adj. by by REP REPORTED ORTED + criteria criteria + €/$ €/$ + Tax Rate Tax Rate Gas GasNatural Natural Exchange Exchange Rate Rate Operating Income 16.2% 31.4% 57.3% 57.3% Net Income 3.5% 3.5% 23.9% 50.7% Adj. Net income
Slide 27: Operating Income Bridge
Full Year Results Million euro Operating Operating Income Income 6,000 405 681 546 376 1,090 3,000 448 3,860 3,323 0 Dec. 02 Consolidation Oil gas Pr ices Down. Margins Volume $ / euro others Dec. 03 Results 26
Slide 28: Exploration & Production
Exploration & Production O perating IIncome Operating ncome 2,800 .8 % + 31 1,400 2,352 1,785 0 2002 2003 2,800 .7 % +57 1,400 2,658 1,685 0 2002 2003 Exploration & Production 27
Slide 29: Realization Price: Liquids
Realization Price Liquids Liquids (US$/ (US$/bbl bbl)) (US$/bbl) 30 % +2 3.2 15 25.5 20.7 0 2002 2003 Exploration & Production 28
Slide 30: Realization Price: Natural Gas
Realization Price Natural Natural Gas Gas (US$/kscf (US$/kscf)) (US$/kscf) 1.2 .4 % + 35 0.6 1.07 0.79 0.0 2002 2003 Exploration & Production 29
Slide 31: Realization Price: Natural Gas in Argentina
Realization Price Natural Natural Gas Gas in in Argentina Argentina (US$/mscf (US$/mscf)) (US$/mscf) 1.6 0.8 1.46 0.85 0.69 0.0 2001 2002 2003 Exploration & Production 30
Slide 32: Hydrocarbon Production
Hydrocarbon Production Reported Reported (KBOE/D) 1,200 1,133 + 13.2% 1,000 % • 13.2% total production growth +29.3 600 • 6.9% excluding acquisitions +1.7% 0 2002 2003 Liquids Gas Exploration & Production 31
Slide 33: Reserves at December 31st
Reserves at December 31st Proven Proven Reserves Reserves 482 (MBOE) 226 5,433 5 ,2 6 1 (1 2 3 ) (4 1 3 ) 3 ,2 4 2 3 ,5 5 1 2 ,0 1 9 1 ,8 8 2 Liquids Gas 22 00 002 2 I n c o r p o r aR t i oe nv Rs iesv iio s icn A suei s i t i o n s / D i v e s P oqn t mrroeodnd ut scut ico tn 22 00 00 33 A d d i t
Slide 34: Reserve Replacement
Reserve Replacement Million Million boe boe 1,640 43% 1 1,149 Production Reserve s Addition 2001-2003 2001-2003 Exploration & Production 33
Slide 35: Efficient and Low Cost Operator
Efficient and Low Cost Operator Lifting Lifting Cost Cost (US$/boe) (US$/boe) - 33 .0% Unit Unit Costs Costs E&P E&P (US$/boe) (US$/boe) 11.3 2.57 7.4 1.48 1.72 5.9 5.3 2.7 2001 2002 2003 3.7 1.3 2.0 0.8 Finding costs F&D costs Reserve replacement costs Industry range: 2000-2002 average Repsol YPF:
Slide 36: Refining & Marketing
Refining & Marketing O perating IIncome Operating ncome 1,200 0 . 0% +4 600 1,196 854 0 2002 2003 Million Euro Refining & Marketing 35
Slide 37: Refining Margins
Refining Margins ($/bbl) ($/bbl) 4 % .8 05 +1 2 3.19 1.55 0 2002 2003 Refining & Marketing 36
Slide 38: Sales to Own Network
Sales to Own Network SPAIN SPAIN ARGENTINA ARGENTINA Light Light products products sales sales Refined Refined products products sales sales 16,006 16,550 +3.4% 12,397 +3.0% 12,765 2002 2003 2002 2003 Thousand Tons Refining & Marketing 37
Slide 39: Chemicals
Chemicals O perating IIncome Operating ncome 160 9. 8% +5 80 155 97 0 2002 2003 Million Euro Chem icals 38
Slide 40: Growth in Petrochemical Sales
Growth in Petrochemical Sales Total Total Urea Urea and and Methanol Methanol % 4,000 +1 3.6 800 . 0% 6 +5 2,000 3,526 4,007 400 783 502 0 0 2002 2003 2002 2003 Kt Chem icals 39
Slide 41: Gas & Power
Gas & Power Operating Operating Income Income 700 373Consolidation effects 350 - 18.5% 260 212 0 2002 2003 Million Euro Gas & Pow er 40
Slide 42: Financial Evolution
REPSOL as YPF REPSOL YPF FINANCIAL EVOLUTION
Slide 43: Net Debt Variation of 2003
Net Debt Variation of 2003 Million Euro 8,000 4,477 572 667 4,000 7,472 3,642 1,275 5,047 220 0 Dec.02 Dec.03 Net Cash Flow €/$ Exch.Rate Divest. (*) Invest. (*) Dividends Others (*) Excluding financial investments or divestments that don’t affect net debt. Finan cial Evolution 42
Slide 44: Financial Ratios
Financial Ratios 31 Dec 31 Dec 2002 2003 NET DEBT 7,472 5,047 BOOK CAPITALIZATION 25,546 23,072 NET DEBT / BOOK CAPITALIZATION (%) 29.2 21.9 OPERATING CASH-FLOW 5,382 (*) 6,156 (*) NET DEBT / OPERATING CASH-FLOW (X) (**) 1.39 0.82 NET CASH-FLOW 4,227 (*) 4,477 (*) NET CASH-FLOW / NET DEBT (%) (**) 5
Slide 45: Financial Expense
Financial Expense Average Average Net Net Debt Debt Financial Financial Result Result 12,000 -4 800 -3 0. 3.5 3% % 6,000 11,901 400 672 7,107 447 0 0 2002 2003 2002 2003 Net Interest Expenses Million Euro Finan cial Evolution 44
Slide 46: Investments
Investments 3,8 3,8 B illion euros Billion euros 4,000 3,837 2,000 2,673 E&P R&M G&P 0 Chemicals 2002 2003 Finan cial Evolution 45
Slide 47: Final Remarks
FINAL REMARKS Alfonso Alfonso Cortina Cortina Chairman Chairman && CEO CEO 46
Slide 48: 2003 Final Remarks
2003 9Exercised important growth options 9Cash flow generation on target 9Substantial increase in dividend 9Financial flexibility recovered Final Rem arks 47
Slide 49: 2004: Exploration & Production
2004, Setting the basis for the continued growth Exploration Exploration & & Production Production ¾ Start operations in two new areas: 1. Saudi Arabia 2. Gulf of Mexico ¾ Increasing of activities in Lybia, with the exploration of two new concessions won in 2003 ¾ Completion of the gas developments
Slide 50: 2004: LNG
2004, Setting the basis for the continued growth LNG LNG Further investment in LNG business 1. Construction of the 4th Train in Trinidad & Tobago 2. Delivery of 2 new LNG tankers 3. LNG operations in Puerto Rico and new opportunities in the Atlantic Basin 4. Developments of integrated projects in No
Slide 51: 2004: Downstream
2004, Setting the basis for the continued growth Downstream Downstream ¾ Improvements in conversion capacity 1. Puertollano mild hydrocracker 2. Vacuum and Visbreaking units in Peru ¾ Organic growth from non oil sales and loyalty programs ¾ Volume growth in petrochemicals Final Rem arks 50
Slide 52: Returning Cash to Shareholders
Returning Cash to Shareholders Cents of € 40 % +29.0 20 20 31 20 0 2002 Interim Final Final Rem arks 51
Slide 53: 2003 Results
2003 RESULTS February, 24th 2004 52