Galp Energia, Sgps S.a. Class B · EURONEXT:GALP
Galp Energia, Sgps S.a. Class B — Galp Energia — Investor Day (March 2014)
98 slides from Galp Energia, Sgps S.a. Class B's investor day presentation, Mar 4, 2014
Slide 1: Strategy overview
Strategy overview Manuel Ferreira De Oliveira Chief Executive Officer 1 Capital Markets Day – 4th March 2014
Slide 2: An integrated energy player focused on exploration and production
An integrated energy player focused on exploration and production Focus on execution of high value upstream projects Accelerate projects’ time to production to maximise value creation Increase cash flow through improved efficiency of downstream and gas activities Maintain strong capital structure th
Slide 3: Increased free float to enhance share liquidity
Increased free float to enhance share liquidity Galp Energia shareholding structure Free float evolution 7% 62% 16.34% 8% 7.00% 8% 13% 38% 25% 38.34% 38.32% Free float Free float Eni and CGD Free float Eni Eni Parpública Potential (YE 2012) sale (YE 2013) shares exchangeable exchangeable Free float
Slide 4: Paving the way to accelerated growth
Paving the way to accelerated growth Executing growth strategy focused on value Translating growth into value Pursuing sustainability Foreseeing Galp Energia future 4 Capital Markets Day – 4th March 2014
Slide 5: 2013: Breaking ground to E&P long-term value creation
2013: Breaking ground to E&P long-term value creation Development de-risk Successful appraisal Exploration delivery Start-up of Lula NE FPSO Iara successful appraisal Target of 300 mboe for 2013 production campaign achieved Lula project infrastructure Bracuhy well results reinforced Four
Slide 6: 2013: Major downstream and gas and corporate achievements
2013: Major downstream and gas and corporate achievements Downstream and gas Corporate Refining system LNG trading Sustainability Access to funding Impressive ramp-up of Record year for LNG Improved risk Successful debt issuance upgrade project trading volumes management policy in the capita
Slide 7: Paving the way to accelerated growth
Paving the way to accelerated growth Executing growth strategy focused on value Translating growth into value Pursuing sustainability Foreseeing Galp Energia future 7 Capital Markets Day – 4th March 2014
Slide 8: Promising outlook on key drivers but challenging for refining
Promising outlook on key drivers but challenging for refining Global oil demand (mbpd) European refining sector (mbpd) 15 100 10 85 5 2013 2015E 2020E 2025E 2013 2015E 2020E 2025E Refining capacity Crude runs LNG demand (bcm/yr) Iberian demand mton bcm 400 80 50 200 40 25 0 0 0 Americas Euroasia Asi
Slide 9: Focused on E&P project execution, whilst optimising downstream and gas activities
Focused on E&P project execution, whilst optimising downstream and gas activities Upstream business Downstream and gas businesses Focus on Accelerate time to Improve R&M Sustain LNG trading developing production of high integration in the long-term relevant projects value projects on time and on bud
Slide 10: Exploration & Production
Paving the way to accelerated growth Executing growth strategy focused on value Exploration & Production Translating growth into value Pursuing sustainability Foreseeing Galp Energia future 10 Capital Markets Day – 4th March 2014
Slide 11: Galp Energia holds a set of world-class projects…
Galp Energia holds a set of world-class projects… Lula/Iracema Iara Carcará Júpiter Rovuma Unparalleled Giant reservoir Carbonate reservoir Giant reservoir of GIIP over 85 tcf, development going under with excellent oil, gas and ranking Rovuma project currently appraisal phase porosity and condensat
Slide 12: … with a large resource base in place
… with a large resource base in place 2P + 2C evolution1 (mboe) 3P + 3C evolution1 (mboe) 253 4,630 331 1 136 2,432 4,044 2,223 73 (1) 2012 Brazil Angola Mozambique 2013 2012 Brazil Angola Mozambique 2013 1Working interest resources and net entitlement reserves 12 Capital Markets Day – 4th March 201
Slide 13: Working towards material and sustainable production growth
Working towards material and sustainable production growth Portfolio potential output1 (kboepd) 600 + + Explore 400 Unlock additional development projects Develop Risk 200 pre-sanctioned projects Execute sanctioned projects 0 2013 2016E 2019E 2022E 2025E + Sanctioned Pre-sanctioned Unrisked addition
Slide 14: Project execution on time and on budget is crucial
Project execution on time and on budget is crucial Infrastructure net installed capacity (kboepd) 375 Operating Operating/Sanctioned Sanctioned Lula/Iracema – 10x FPSO 300 Pre-sanctioned Block 14 – 2x CPT 225 Pre-sanctioned 150 Iara – 2x FPSO Carcará – 1x FPSO 75 Júpiter – 1x FPSO Block
Slide 15: Tier 1 development projects with an estimated production CAGR of c.40%
Tier 1 development projects with an estimated production CAGR1 of c.40% Net installed capacity vs WI production (kboepd) 375 Net installed capacity Operating 300 Total projects Sanctioned Pre-sanctioned Production CAGR 2013-20: ≈ 40% 225 WI production Operating + Sanctioned Operating + Sanctioned
Slide 16: Main levers for successful project execution as a non-operator
Main levers for successful project execution as a non-operator Valuable Active consortia Competitive Risk partnerships influence procurement strategy management Strong expertise and In-house know-how and Critical equipment Supplier monitoring know-how technical expertise already contracted
Slide 17: Protect value and extract more upside on current project pipeline
Protect value and extract more upside on current project pipeline Execute projects on time and on budget Focus on execution of Lula/Iracema development project Intensive appraisal activities to: Accelerate time to production of resources Deliver identified opportunities namely in Brazil, in Sa
Slide 18: Exploration strategy limited by tactical decision
Exploration strategy limited by tactical decision Exploration strategy Tactical decision implemented Exploration target: 100-200 mboe/yr Maintain exploration target, yet subject to Company priorities Focus on current regional hubs (Brazil, Reduced drilling activity until FCF Mozambique, Ango
Slide 19: Downstream and gas
Paving the way to accelerated growth Executing growth strategy focused on value Downstream and gas Translating growth into value Pursuing sustainability Foreseeing Galp Energia future 19 Capital Markets Day – 4th March 2014
Slide 20: Room to improve competitiveness of R&M business
Room to improve competitiveness of R&M business Mid-cycle refining Ebitda1 ($/bbl) R&M integration (mton) 1st Quartile Area for Area for improvement improvement Galp Energia 23% 2nd Quartile Operators ≈ 13 mton 3rd Quartile 65% Direct clients 4th Quartile 2013 2013 Refining throughput Iberian market
Slide 21: Enhance integration between R&M activities to increase returns
Enhance integration between R&M activities to increase returns Issues to be addressed Decisions being executed Integration of Adapt refining Increase weight of refining and activity to market CIF volumes marketing activities Focus on energy Reduce costs and Refining operations efficiency capital emp
Slide 22: Iberian demand and flexible supply contracts support LNG trading activity
Iberian demand and flexible supply contracts support LNG trading activity 2013 supply sources Progress of NG & LNG sales (bcm) 4.6 Spot Contracted 4.4 4.4 23% pipeline 4.0 4.1 31% 3.0 Total: 2.2 7.1 bcm 0.7 0.5 Contracted LNG 0.3 46% Contracted supply up to 2020-26 2009 2010 2011 2012 2013 Sonatrach
Slide 23: Sustain LNG supply & trading activity in the long-term
Sustain LNG supply & trading activity in the long-term Key success factors Strategic decisions Stable demand Maintain a stable Iberian outlet Flexible and competitive supply Further diversify supply options Tight LNG market Leverage trading opportunities Strong trading capabilities M
Slide 24: Galp Energia: 2014 goals
Galp Energia: 2014 goals Upstream Downstream and gas Ramp up Lula NE and deploy FPSO #31 Increase refining energy efficiency DoC for Iara field by year-end Leverage Iberian demand recovery Perform key appraisal activities in Study new supply options to diversify Júpiter and Carcará LNG p
Slide 25: Translating growth into value
Paving the way to accelerated growth Executing growth strategy focused on value Translating growth into value Pursuing sustainability Foreseeing Galp Energia future 25 Capital Markets Day – 4th March 2014
Slide 26: Value delivery: Doubling capital employed, whilst tripling ROACE
Value delivery: Doubling capital employed, whilst tripling ROACE Capital employed ROACE > 15% ROACE ≈ 5% Upstream Upstream Downstream and gas Downstream and gas 2013 2020+E Brent $109/bbl $90/bbl 26 Capital Markets Day – 4th March 2014 Note: Includes sanctioned and pre-sanctioned project development
Slide 27: Pursuing sustainability
Paving the way to accelerated growth Executing growth strategy focused on value Translating growth into value Pursuing sustainability Foreseeing Galp Energia future 27 Capital Markets Day – 4th March 2014
Slide 28: Implementing best safety policies in the industry with a zero accident goal
Implementing best safety policies in the industry with a zero accident goal Health and safety Safety performance1 Losses of containment2 Creating a safe work environment Trained workforce Environment Managing environmental impacts 1,2 1,3 Member of Dow Jones 1,0 1,0 2.24 2.06 1.80 1.18 Susta
Slide 29: Our people are a key strategic asset to our success
Our people are a key strategic asset to our success E&P team increased Supporting project Emphasise our values c.40% yoy execution and culture International recruitment In-house and external Growth company present in process to support growth training programmes world-class projects Attract Develop
Slide 30: Research & Technology rooted in our culture
Research & Technology rooted in our culture Partnership established with Reinforcement of R&T activities to Heriot-Watt University, a world- create further value class reference opportunities 30 Capital Markets Day – 4th March 2014
Slide 31: Foreseeing Galp Energia future
Paving the way to accelerated growth Executing growth strategy focused on value Translating growth into value Pursuing sustainability Foreseeing Galp Energia future 31 Capital Markets Day – 4th March 2014
Slide 32: Galp Energia group: Steps being taken
Galp Energia group: Steps being taken Redesign corporate centre Adapt to on-going Company transformation, increasing flexibility and accountability Organisational structure simplification Company reorganisation to align legal and business structures and to promote business growth Active portfo
Slide 33: Galp Energia strategy focused on value, not scale
Galp Energia strategy focused on value, not scale Until 2020 Post 2020 Execute projects on time and on budget Exploration activities to unlock between 100 – 200 mboe/yr Accelerate time to production of Sustain material production level resources Improve efficiency of downstream and Selec
Slide 34: Key upstream projects
Key upstream projects Stephen Whyte Executive Director – E&P 34 Capital Markets Day – 4th March 2014
Slide 35: Focus on execution of high value upstream projects on time and on budget
Focus on execution of high value upstream projects on time and on budget 14 new FPSO and LNG project to be deployed until 2020 De-risk low-risk resources and accelerate time to production Unlock several development upside opportunities Further exploration activities to add resources 35 Capital Marke
Slide 36: A large resource base in place
A large resource base in place Lula/Iracema project being carried out according to plan Appraisal and development de-risking activities Maturing exploration portfolio Concluding remarks 36 Capital Markets Day – 4th March 2014
Slide 37: A large resource base in place
A large resource base in place 2P + 2C evolution1 (mboe) 3P + 3C evolution1 (mboe) 253 4,630 331 1 136 2,432 4,044 2,223 73 (1) 2012 Brazil Angola Mozambique 2013 2012 Brazil Angola Mozambique 2013 1Working interest resources and net entitlement reserves 37 Capital Markets Day – 4th March 2014 All f
Slide 38: Focus on Lula/Iracema, additional pre-salt Santos basin, and Mozambique
Focus on Lula/Iracema, additional pre-salt Santos basin, and Mozambique 2P + 2C project split1 (mboe) 3P + 3C project split1 (mboe) 4,630 2,432 Lula/Iracema Additional Mozambique Angola Total Lula/Iracema Additional Mozambique Angola Total Brazil Brazil 1Working interest resources and net entitlemen
Slide 39: Lula/Iracema project being carried out according to plan
A large resource base in place Lula/Iracema project being carried out according to plan Appraisal and development de-risking activities Maturing exploration portfolio Concluding remarks 39 Capital Markets Day – 4th March 2014
Slide 40: Lula/Iracema: Execution according to plan
Lula/Iracema: Execution according to plan 2010 2013 2014 2015-2017 ▪ Development plan submitted ▪ Start of production of FPSO ▪ FPSO #2 ramp-up and to ▪ Seven additional FPSO to for Lula/Iracema field #2 in June, with one producer reach full capacity in 4Q start producing well at 30 kbopd ▪ Start of
Slide 41: FPSO C. Paraty (#2) expected to reach full capacity in 18 months
FPSO C. Paraty (#2) expected to reach full capacity in 18 months Lula NE milestones Schedule Status Lula NE production ramp-up Delivery of FPSO Cidade Paraty May-13 100% Start of production Jun-13 Connection of injector well Aug-13 Connection of producer well1 4Q13 (Jan-14) Connection to gas export
Slide 42: FPSO execution on track to ensure development as planned
FPSO execution on track to ensure development as planned Chartered FPSO1 Replicant FPSO1 Installation of topsides underway in Brazil Hulls being built in Rio Grande do Sul shipyard whilst Being converted Being converted in part of P-67 hull has been transferred to China to in China Chengxi shipyard,
Slide 43: Critical equipment contracted at competitive price
Critical equipment contracted at competitive price Key equipment FPSO Drilling rigs Umbilicals Production lines Christmas trees Drilling rigs Risers Umbilicals Subsea architecture Manifolds Flowlines Pipes Risers PLSV Logistics support FPSO Christmas trees Manifolds BSR 43 Capi
Slide 44: Natural gas export and injection wells available for gas evacuation
Natural gas export and injection wells available for gas evacuation Gas export routes Gas/WAG injection wells Pipeline Lula-Mexilhão operating Injection wells key to increase and Cabiúnas on track to first gas flexibility to manage oil by 2015 production 44 Capital Markets Day – 4th March 2014
Slide 45: Improving production ramp-up sequence to target of 12 months
Improving production ramp-up sequence to target of 12 months Subsea architecture ▪ Drilling campaign executed prior to FPSO deployment ▪ FPSO #3 with seven wells already drilled and two being drilled ▪ Optimisation of risers and other subsea equipment selection (manifolds) and installation process ▪
Slide 46: Further development optimisation to decrease capex going forward
Further development optimisation to decrease capex going forward Average drilling and completion1 (# days) ▪ Continued reduction of drilling and completion duration ▪ Increase average quality of drilling 239 rigs going forward 170 121 125 ▪ Optimise materials qualification for forthcoming activities
Slide 47: WAG being tested in Lula-1 area with potential to increase recovery factor
WAG being tested in Lula-1 area with potential to increase recovery factor Lula-1: well locations ▪ Proved effectiveness of WAG CO2 injectors mechanism in Lula-1 project ▪ Tracers injected were identified in producing wells ▪ WAG impact to be fully evaluated after a significant track record of stabi
Slide 48: Optimising Lula/Iracema development project
Optimising Lula/Iracema development project Horizontal wells Subsea separation Breakthrough operation achieved on Process being studied to be developed complex reservoir conditions in ultradeep waters Potential to increase oil recoverability Potential to improve process efficiency and produc
Slide 49: Appraisal and development de-risking activities
A large resource base in place Lula/Iracema project being carried out according to plan Appraisal and development de-risking activities Maturing exploration portfolio Concluding remarks 49 Capital Markets Day – 4th March 2014
Slide 50: Iara: Intensive appraisal campaign reduced development uncertainty
Iara: Intensive appraisal campaign reduced development uncertainty Iara: structural map ▪ Heterogeneous reservoir with separate structures with different porosity and permeability levels ▪ Iara West 2 DST revealed excellent productivity on West area of the reservoir ▪ First horizontal well successfu
Slide 51: Iara: Two FPSO contracted with potential for further units
Iara: Two FPSO contracted with potential for further units Iara High Angle: multi-stage fracturing ▪ EWT scheduled to start by 2Q14 in order to issue DoC by YE with first oil expected by 2017 ▪ Iara Entorno (ToR), unitisable area with BM-S-11, has already one FPSO contracted to start production by 2
Slide 52: BM-S-8: High quality reservoir identified in Carcará
BM-S-8: High quality reservoir identified in Carcará BM-S-8 ▪ 2012 Carcará discovery encountered excellent pre-salt reservoir in high pressure ▪ One of the best rock quality identified in the pre-salt Santos basin ▪ Contracting upgraded equipment to handle with high pressure reservoir conditions ▪ O
Slide 53: Carcará: Appraisal campaign with potential to de-risk further FPSO deployment
Carcará: Appraisal campaign with potential to de-risk further FPSO deployment BM-S-8: geological cross-section ▪ MPD drilling equipment contracted to guarantee faster and safer drilling and contracting upgraded X-tree to perform EWT ▪ Drilling of Carcará appraisal well expected by 4Q14 followed by a
Slide 54: BM-S-24: Bracuhy discovery further supports Júpiter development
BM-S-24: Bracuhy discovery further supports Júpiter development BM-S-24: Hydrocarbon volumes ▪ Bracuhy well confirmed the continuity of the Júpiter reservoir and a thicker oil rim ▪ Volumes to be developed reinforced Gas in both Júpiter and Bracuhy areas Gas Condensates Condensates ▪ Reservoir compo
Slide 55: BM-S-24: Oil and condensates development concept reinforced after Bracuhy
BM-S-24: Oil and condensates development concept reinforced after Bracuhy BM-S-24 ▪ Appraisal programme being fast- tracked with two DST and two appraisal wells to be drilled in 2014 ▪ Development of oil as the base case with ongoing studies to develop condensates and reinjection of gas with CO2 ▪ O
Slide 56: Mozambique: World-class natural gas province established
Mozambique: World-class natural gas province established Mozambique: LNG possible routes ▪ Perfectly located to arbitrage on LNG market dynamics ▪ Mamba/Coral structure appraisal campaign successfully concluded with over 80 tcf GIIP identified ▪ Sufficient gas for multiple commercialisation options,
Slide 57: Moz Area 4: Continued successful exploration and appraisal
Moz Area 4: Continued successful exploration and appraisal Area 4 ▪ Agulha well identified c.7 tcf GIIP, increasing the volumes exclusively located in Area 4 ▪ One appraisal and one exploration well to be drilled by 2014, with potential for an additional well ▪ Key to assess the potential of the new
Slide 58: Moz Area 4: Initial development phase of 10-15 mtpa being defined
Moz Area 4: Initial development phase of 10-15 mtpa being defined Development concepts ▪ Onshore LNG project to be executed in coordination with Area 1 Incluir ▪ Optimise common facilities and esquema offshore infrastructure também.. ▪ FLNG being matured, mitigating risk of onshore infrastructure ▪
Slide 59: Angola: Mature fields being complemented by new developments
Angola: Mature fields being complemented by new developments Block 14 Block 14k Block 32 Current producing fields had Lianzi area to start production FID Kaombo area imminent already reached peak by 2015 production Malange and Lucapa expected Development project consists Two FPSO, each w
Slide 60: Maturing exploration portfolio
A large resource base in place Lula/Iracema project being carried out according to plan Appraisal and development de-risking activities Maturing exploration portfolio Concluding remarks 60 Capital Markets Day – 4th March 2014
Slide 61: 2013 campaign delivered over 300 mboe through Agulha, Bracuhy and Pitú wells
2013 campaign delivered over 300 mboe through Agulha, Bracuhy and Pitú wells CMD 2013: Exploration target ▪ Commercial success rate of 38% ▪ 2013 finding cost of c.$1.1/boe ▪ Four new plays identified: • First oil and gas accumulations discovered in Pitú well • Drilling campaign proved oil potential
Slide 62: Potiguar: Pitú is a play opener in Brazilian equatorial margin
Potiguar: Pitú is a play opener in Brazilian equatorial margin Potiguar basin ▪ Pitú discovered an oil accumulation in a structural setting (Cretaceous Upper Aptian clastics) and a gas accumulation in lower Aptian interval ▪ DST currently being performed to evaluate oil accumulation ▪ Several follow
Slide 63: Namibia: Wingat well proved oil potential in Walvis basin
Namibia: Wingat well proved oil potential in Walvis basin PEL 23: Walvis basin ▪ Indication of oil in Aptian Kudu shale could open up a new oil play ▪ Turbiditic cretaceous sands of excellent quality found in Murombe well ▪ Prospects identified and matured in the North of the PEL 23 area ▪ Several e
Slide 64: Seven to nine exploration and appraisal wells expected to be drilled in 2014
Seven to nine exploration and appraisal wells expected to be drilled in 2014 2014 drilling campaign Morocco Trident 2Q14 Angola Mozambique Brazil Agulha 2 1Q14 Cominhos-2 2Q14 Querimbas East 2Q14 Júpiter SW 3Q14 Cominhos-3 3Q14 Querimbas Central 3Q14 Carcará (extension) 4Q14 (pending on results) (pe
Slide 65: Morocco: Concluding jack-up rig contract to drill first exploration well by 2Q14
Morocco: Concluding jack-up rig contract to drill first exploration well by 2Q14 Tarfaya Offshore area in Morocco ▪ Different Jurassic carbonate prospects identified, with the primary prospect located in the middle Jurassic, targeting light oil ▪ Seismic inversion results imply good porosity levels
Slide 66: Concluding remarks
A large resource base in place Lula/Iracema project being carried out according to plan Appraisal and development de-risking activities Maturing exploration portfolio Concluding remarks 66 Capital Markets Day – 4th March 2014
Slide 67: Committed to deliver
Committed to deliver Lula/Iracema development on track for sustainable production growth Appraisal and pre-development activities in Iara, Júpiter and Carcará expected to deliver further upside Working on key milestones for FID of Mozambique LNG project Exploration and appraisal drilling act
Slide 68: Appendix
Appendix 68 Capital Markets Day – 4th March 2014
Slide 69: Underexplored areas in the E&P portfolio still to be evaluated
Underexplored areas in the E&P portfolio still to be evaluated Portugal Pernambuco basin (Brazil) ▪ Seven offshore blocks in Alentejo and ▪ Frontier area with multiple objectives Peniche basins and one project onshore identified to be matured ▪ 3D seismic campaign concluded offshore ▪ Second phase o
Slide 70: Galp Energia reserves and resources portfolio
Galp Energia reserves and resources portfolio Reserves and resources (mboe)1 Reserves 2012 2013 % Chg. 1P 154 178 15% 2P 640 579 (10%) 3P 783 707 (10%) Contingent resources 2012 2013 % Chg. 1C 206 319 55% 2C 1,583 1,853 17% 3C 3,262 3,923 20% Exploration resources 2012 2013 % Chg. Unrisked 3,203 2,4
Slide 71: Exploration and appraisal drilling schedule in 2014
Exploration and appraisal drilling schedule in 2014 Galp Energia 2014 drilling schedule Spud Duration Area Target Interest E/A date (# days) Brazil1 BM-S-8 Carcará (extension) 14% A 4Q14 120 BM-S-24 Júpiter SW 20% A 3Q14 120 BM-S-24 Bracuhy NE 20% A 4Q14 120 Morocco Tarfaya Trident 50% E 2Q14 90 Moz
Slide 72: Financial outlook
Financial outlook Filipe Silva Chief Financial Officer 72 Capital Markets Day – 4th March 2014
Slide 73: Committed to good execution
Committed to good execution Allocation of capital to high return projects Production growth from existing projects to drive cash generation Financial discipline to maintain strong financial position Committed to creating superior shareholder value 73 Capital Markets Day – 4th March 2014
Slide 74: Allocating capital to high return projects
Allocating capital to high return projects Focused on generating cash flow Committed to a robust financial position Concluding remarks 74 Capital Markets Day – 4th March 2014
Slide 75: Capex priorities reflect Group strategy
Capex priorities reflect Group strategy Average annual capex Intensive development activities in 2014-18 period €1.5 bn - €1.7 bn €1.4 bn - €1.6 bn Upstream accounts for up to 90% of Further LNG estimated 2014-18 capex Optimisation Iara development and limited Júpiter Carcará recourse financing
Slide 76: Allocating capital to top quality projects
Allocating capital to top quality projects 2014-18 upstream capex breakdown 2014-18 upstream capex profile Exploration and appraisal Other developments Total capex Lula/Iracema field Other development projects Area 4 (Mozambique) Lula/Iracema project Other pre-salt 2013 2014E 2018E projects Around 8
Slide 77: Focused on generating cash flow
Allocating capital to high return projects Focused on generating cash flow Committed to a robust financial position Concluding remarks 77 Capital Markets Day – 4th March 2014
Slide 78: Upstream Ebitda driven by capacity build-up in Brazil
Upstream Ebitda driven by capacity build-up in Brazil Upstream Ebitda vs Galp Energia capacity in Brazil Ebitda growth in line with Ebitda €m kboepd commissioning of each upcoming 3,500 400 FPSO 3,000 350 2,500 300 Brazil FPSO delivery schedule with 250 2,000 higher visibility 200 1,500 150 1,00
Slide 79: Competitive portfolio
Competitive portfolio Opex1 ($/boe) DD&A1 ($/boe) 14 23 8 - 10 13 - 15 2013 2018E 2013 2018E Scale of projects High quality assets supports competitiveness reduce capex requirements 1Based on net entitlement production. Excludes royalties, overheads and SPT 79 Capital Markets Day – 4th March 2014
Slide 80: Solid downstream and gas contribution
Solid downstream and gas contribution R&M Ebitda (€m) G&P Ebitda R&M Ebitda 1 LNG supply and trading supporting Ebitda of 800 €150 - €200 m/yr 400 NG infrastructure with stable earnings of c.€150 m/yr, plus €50 m from stakes in 0 Associates 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E Power act
Slide 81: Reiterating guidance: Ebitda CAGR 2013-18 of over 25%
Reiterating guidance: Ebitda CAGR 2013-18 of over 25% Group Ebitda (€m) Upstream Ebitda (€m) CAGR > 25% 396 2013 2014E 2015E 2016E 2017E 2018E Growth picks up from next year 1,141 Downstream and gas Ebitda (€m) 727 2013 2018E 2014 Ebitda estimated at €1.1 bn - €1.3 bn 2013 2014E 2015E 2016E 2017E 20
Slide 82: Positive free cash flow during 2017, growing rapidly thereafter
Positive free cash flow during 2017, growing rapidly thereafter Cash flow profile 2 2013 2018E 2020E 1 Ebitda - Capex Cash flow Inflection point expected in 2015 when Lula/Iracema capex peaks 1Post interest, taxes and dividends 82 Capital Markets Day – 4th March 2014 2Illustrative and not exhaustive
Slide 83: Committed to a robust financial position
Allocating capital to high return projects Focused on generating cash flow Committed to a robust financial position Concluding remarks 83 Capital Markets Day – 4th March 2014
Slide 84: 2013 in review
2013 in review 2013 commitment Status Sustain strong liquidity position €3.6 bn liquidity1 Access to broader funding options Inaugural bond issue provides benchmark for cost of debt Monetise non-core assets as required Sale of 5% stake in CLH Maturities more in line with cash flow Average li
Slide 85: Access to diversified sources of funding
Access to diversified sources of funding Galp Energia debt breakdown1 Proceeds from $4.8 bn capital increase in Brazil lent back to Sinopec at Libor + €1.5 bn 1.5% and are gradually being €3.7 bn reimbursed EMTN Bonds (p.p.) €0.9 bn Multilaterals €1.3 bn Bank loans Gross debt Cash and cash Loan to S
Slide 86: Aligning reimbursements with cash flow profile
Aligning reimbursements with cash flow profile Galp Energia reimbursement profile (€m) 1,250 1,000 750 500 250 0 2014 2015 2016 2017 2018 2019 2020+ 86 Capital Markets Day – 4th March 2014
Slide 87: Concluding remarks
Allocating capital to high return projects Focused on generating cash flow Committed to a robust financial position Concluding remarks 87 Capital Markets Day – 4th March 2014
Slide 88: Committed to creating sector-leading shareholder value
Committed to creating sector-leading shareholder value Disciplined allocation of capital focused on premium projects Production from existing projects in Brazil to drive free cash flow generation Committed to maintaining a robust financial position, with net debt to Ebitda reaching c.2x in 201
Slide 89: Appendix
Appendix 89 Capital Markets Day – 4th March 2014
Slide 90: 2014 key targets and assumptions
2014 key targets and assumptions Key operational and financial targets 2013 2014E WI production (kboepd) 25 28 - 30 Refining utilisation rate1 (%) 73 70 - 75 Oil sales to direct clients (mton) 9.9 + 1% to 2% yoy NG/LNG sales (bcm) 7.1 5-7 Ebitda (€ bn) 1.1 1.1 - 1.3 Capex (€ bn) 0.9 1.3 - 1.5 Key as
Slide 91: 2014-2018 business plan assumptions and sensitivities
2014-2018 business plan assumptions and sensitivities Mid-cycle assumptions and Ebitda sensitivities 2013 2018E Average 2014-2018 Brent price ($/bbl) 109 90 94 Refining margin benchmark1 ($/bbl) 1.2 3.2 2.9 EUR:USD 1.33 1.30 1.30 Approximate impact Approximate annual medium- Change in 2014E long ter
Slide 92: Key indicators on Galp Energia debt
Key indicators on Galp Energia debt YE2012 YE2013 Gross debt €3.6 bn €3.7 bn Cash and cash equivalents €1.9 bn €1.5 bn Net debt €1.7 bn €2.2 bn Net debt considering loan to Sinopec €0.8 bn €1.3 bn Net debt to Ebitda ratio1 0.7x 1.1x Available credit lines €1.4 bn €1.2 bn Average life of debt 2.6 yr
Slide 93: Closing remarks
Closing remarks Manuel Ferreira De Oliveira Chief Executive Officer 93 Capital Markets Day – 4th March 2014
Slide 94: Galp Energia: 2014 goals
Galp Energia: 2014 goals Upstream Downstream and gas Ramp up Lula NE and deploy FPSO #31 Increase refining energy efficiency DoC for Iara field by year-end Leverage Iberian demand recovery Perform key appraisal activities in Study new supply options to diversify Júpiter and Carcará LNG p
Slide 95: Value delivery: Doubling capital employed, whilst tripling ROACE
Value delivery: Doubling capital employed, whilst tripling ROACE Capital employed ROACE > 15% ROACE ≈ 5% Upstream Upstream Downstream and gas Downstream and gas 2013 2020+E Brent $109/bbl $90/bbl 95 Capital Markets Day – 4th March 2014 Note: Includes sanctioned and pre-sanctioned project development
Slide 96: Galp Energia strategy focused on value, not scale
Galp Energia strategy focused on value, not scale Until 2020 Post 2020 Execute projects on time and on budget Exploration activities to unlock between 100 – 200 mboe/yr Accelerate time to production of Sustain material production level resources Improve efficiency of downstream and Selec
Slide 97: Acronyms
Acronyms # Number EBITDA Earnings before interest, taxes, depreciation and amortization NE North East % Percentage EIA Energy Information Administration NG Natural gas 3C Contingent Resources EOR Enhanced oil recovery NLNG Nigeria Liquefied Natural Gas 3D Three dimensional seismic EUR (or €) Euro NW
Slide 98: Disclaimer
Disclaimer RCA figures except otherwise noted. By attending or reading this presentation, you acknowledge and agree to be bound by the following limitations and restrictions. This presentation has been prepared by GALP Energia, SGPS, S.A. (“GALP Energia” or the “Company”) and may be amended and supp