Omv Petrom Sa · BVB:SNP
Omv Petrom Sa — Non-Deal Roadshow (February 2017)
62 slides from Omv Petrom Sa's roadshow presentation, February 2017
Slide 1: Capital Markets Story
Cover option 1: Insert a cover picture and align grouped text Capital Markets freely on Sustainable access to energy page, (28pt) Story for2013 Place, xx. Month everyday (16pt) modern life February 2017
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This page is left blank intentionally 2 | OMV Petrom │ Capital Markets Story │ February 2017
Slide 3: Legal Disclaimer
Legal Disclaimer This presentation does not, and is not intended to, constitute or form part of, This presentation may contain forward-looking statements. These statements and should not be construed as, constituting or forming part of, any actual reflect the Company’s current knowledge and its expe
Slide 4: Agenda
Agenda At a glance Strategy Update 2021+ Q4 and FY16 results review Outlook 2017 Appendix 4 | OMV Petrom │ Capital Markets Story │ February 2017
Slide 5: At a glance
Chapter divider slide: Design must be alike to chosen cover style At a glance (28pt) At a glance
Slide 6: We are the leading industrial company in Romania
We are the leading industrial company in Romania One of the largest private #1 energy supplier employers Accounts for ~40% of oil, gas and fuel supply, and can cover up to c.15,000 direct employees and 10% of power generation in more than 45,000 indirect jobs1 Romania Substantial investor Largest co
Slide 7: Operating in the integrated oil and gas sector
Operating in the integrated oil and gas sector Upstream Downstream Oil Petrobrazi refinery, 4.5 mn t/yr capacity Romania 783 filling stations, operated via 2 brands: 3.60 mn toe/yr crude oil and NGL Petrom (479, Romania, Moldova) and OMV (304, Romania, Bulgaria, Serbia) 5.25 bcm/yr gas 2.6 mn t reta
Slide 8: Focused on safeguarding our employees and the environment
Focused on safeguarding our employees and the environment Improved LTIR1 in 2016 vs. 2012 Significant reduction of GHG3 and Water Intensity Offshore operations: more than 2 years GHG and Water Intensity Indices reduced by without LTI2 ~6% in 20164 vs. 2015 Downstream Oil LTIR: 0.09 Downstream Oil ac
Slide 9: Proving resilience in a challenging market
Proving resilience in a challenging market Clean CCS EBIT 2014 - 2016 Oil and Gas Price evolution (2012 - 2016) 160 50 (RON mn) 40 -52% 120 5.202 30 80 654 20 40 10 0 0 -33% Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 2.522 Brent (USD/bbl) - left axis CEGH (EUR/MWh) - right
Slide 10: Turning efficiency savings into cash flow…
Turning efficiency savings into cash flow… Operating cash flow (RON bn) Lowered OPEX (USD/bbl) 17.3 8.0 7.2 6.8 15.4 15.5 5.3 4.5 13.2 11.8 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Operating cash flows / Capex (%) Gearing ratio (%) 173 7 152 5 146 136 3 1 109 2012 2013 2014 2015 2016 2012 2
Slide 11: …and cash flow into returns to shareholders
…and cash flow into returns to shareholders Dividend Policy Petrom is committed to deliver a competitive shareholder return through the business cycle, including paying an attractive dividend, subject always to maintaining a strong balance sheet that will enable the Company to finance its investment
Slide 12: Shareholder structure and capital market environment
Shareholder structure and capital market environment OMV Petrom S.A. shareholder structure1 (%) 12.57% OMV2: Austria’s leading integrated international oil and gas company Fondul Proprietatea: listed fund with ~73% of AUM invested3 in the energy sector Romanian State, no special rights attached 51.0
Slide 13: Strategy Update 2021+
Chapter divider slide: Design must be alike to chosen cover style At a glance (28pt) Strategy Update 2021+
Slide 14: Leading integrated regional player
Our vision Committed to enhance customer experience Leading integrated regional player Regional growth leveraging Romanian expertise Sustainable access to energy for everyday modern life 14 | OMV Petrom │ Capital Markets Story │ February 2017
Slide 15: Proven history of integration delivering value
Proven history of integration delivering value Changes in performance contribution reflect market dynamics Clean CCS EBIT evolution 2012-2014 Average 2015-2016 Average 6% Synergies and earnings resilience delivered in depressed oil price 40% environment 60% Downstream Oil clean CCS EBIT in 2016 up ~
Slide 16: Strong track record of capital management
Strong track record of capital management Performance 2012 - 2016 UPSTREAM DOWNSTREAM Improved operational OPEX reduced Refinery utilization rate increased from USD 15/boe to USD 12/boe from 73% to 89% efficiency Limited production decline to ~4.7%1 Indicative refinery margins improved FCF3 average
Slide 17: 2021+ Centered around three key pillars
2021+ Centered around three key pillars Enhancing Developing Regional competitiveness in growth options expansion the existing portfolio Commitment to deliver attractive shareholder returns 17 | OMV Petrom │ Capital Markets Story │ February 2017
Slide 18: Exploiting potential in existing upstream field portfolio
Exploiting potential in existing upstream field portfolio Maximize economic recovery Oil and Gas recovery rates Mature contingent resources through: 28% 55% infill drilling campaigns 50% 25% selected field redevelopment programs Adding ~150 mn boe1 reserves from existing fields Current 2016 Ultimate
Slide 19: Relentless pursuit of operating efficiencies
Relentless pursuit of operating efficiencies Focus on the most profitable barrels Commitment to operational excellence Upstream Further reduction of unit costs Modernization and simplification of installations and facilities Capturing of highest integrated operational value Maximization of availabil
Slide 20: Clear operational targets set
Clear operational targets set Increase MTBF1 (days) Refinery - maintain high utilization and reduce fuels & losses 750 Utilization Fuels & Losses 100% 9.4% 555 8.8% 90% 8.2% 80% 7.6% Downstream Upstream 70% 7.0% 2016 2017 2018 2019 2020 2021 2016 2021 Utilization Fuels & Losses Modernize facilities
Slide 21: Technology enabling efficiency progression
Technology enabling efficiency progression Digital Oil Field – well automation and online condition monitoring Upstream Drones used for aerial photogrammetry, imaging or videos Automated processes and optimized predictive maintenance Predictive Analytics – electronic coordination and management of t
Slide 22: Mature Neptun Deep opportunity
Mature Neptun Deep opportunity OMV Petrom (50%), ExxonMobil (50%, Operator) First exploration drilling campaign in 2011 – 2012 Domino-1 well gas discovery: a play opener Two seismic acquisition campaigns: 2009; 2012 – 2013 Second exploration drilling campaign 2014 - 2016 Seven wells drilled; most of
Slide 23: Rejuvenated exploration portfolio in Romania
Rejuvenated exploration portfolio in Romania Estimated production contribution1 Continue to unlock deep onshore opportunities in ~10 kboe/day existing licenses Participate in new licensing rounds 2021 Contribution to RRR2 target depending on timing and Existing commitments Targeted exploration optio
Slide 24: Strong near-field and exploration opportunities in existing portfolio
Strong near-field and exploration opportunities in existing portfolio onshore and shallow offshore Readiness to drill 2017 2018 2019 2021+ Legend1 Lead Prospect NFO Target depth <3000m Lead Prospect NFO Target depth >3000m Mamu N D Batran ToteaS 4200m 4800m E Videle Sierra Usurei 2200m 4400m 1600m 8
Slide 25: Capture downstream opportunities
Capture downstream opportunities Increase integrated value Conclude modernization of fuel Explore value-adding through refining and retail storage network opportunities for gas investments Finalise last depot modernization in Polyfuel project to upgrade production 2018 Explore technological mix (ope
Slide 26: Enhance offer and customer experience
Enhance offer and customer experience Increase throughput per filling station in Romania (mn l) >5 Downstream 4.6 Value for money High quality leader Oil 2016 2021 Innovation and partnerships to strengthen Petrom and OMV brand positioning Downstream Gas Develop partnerships Expanding domestic Produc
Slide 27: Regional expansion to complement portfolio
Regional expansion to complement portfolio Leverage our local know-how Upstream Downstream Gas Transport capacities planned existing Capture synergies with existing operations Diversify sales channels for current production (subject to interconnectors ~80 mn boe reserves targeted from near-term deve
Slide 28: Portfolio investments
Portfolio investments EUR ~5 bn cumulative Capex anticipated over 2017 - 2021 Cumulative Capex allocation Upstream portfolio 100% Maximize value of current mature field portfolio Secure improved recovery from contingent 80% resources Deliver further growth in Romania 60% Drive regional expansion 40%
Slide 29: Success built on three core strategic enablers
Success built on three core strategic enablers People and Organizational Culture We are the energy Sustainability Respect the future Technology and Innovation Innovate for the future 29 | OMV Petrom │ Capital Markets Story │ February 2017
Slide 30: Generate positive outcomes for shareholders
Generate positive outcomes for shareholders + + Enhanced Strong Attractive profitability balance sheet shareholder returns 30 | OMV Petrom │ Capital Markets Story │ February 2017
Slide 31: 2021 Clear, robust targets
2021 Clear, robust targets RRR1 Clean CCS ROACE3 100% by 2021 > 10% by 2021 CAPEX Gearing EUR ~1 bn p.a. Maintain a strong balance sheet FCF2 after dividends Dividend Positive for majority of period Attractive returns 1 Reserves Replacement Rate; 2 Free Cash Flow; 3 Clean Current Cost of Supply Retu
Slide 32: Dividend considerations
Dividend considerations Commitment to deliver a competitive shareholder return by paying an attractive dividend Considerations 2016 DPS2 proposal: RON 0.015 EUR mn 347 Earnings Stress tested forecasts under various pricing points and FX assumptions Oil & Gas prices 189 Upcoming CAPEX CAPEX FCF1 gene
Slide 33: Our path to long-term success
Our path to long-term success Deliver Defined Execution Solid Foundation Vision Clear Strategy Sustainable Value Plan Creation Sustainability of reserves base Integrated business Operational Provider of model delivers Enhance efficiency sustainable access value through the competitiveness of Value c
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Slide 35: Q4 & FY16 Results review
Chapter divider slide: Design must be alike to chosen cover style At a glance (28pt) Q4 & FY16 Results review
Slide 36: Key messages 2016
Key messages 2016 Free cash flow at RON 1.6 bn, due to investment prioritization and strict cost discipline Clean CCS EBIT at RON 1.7 bn; higher Downstream contribution OMV Petrom’s Free Float increased to 15.8%; GDRs traded on the London Stock Exchange since October 2016 Dividend proposal: RON 0.01
Slide 37: Romanian macroeconomic and fiscal environment
Business Diagram Slide Romanian macroeconomic and for PowerPoint fiscal environment Macroeconomic environment Fiscal framework 2016 GDP growth1: 4.8% yoy Supplementary taxation5 extended until end-2017 CPI annual inflation: -0.5% end- Dec;12-month average: -1.5% Tax on constructions eliminated start
Slide 38: Economic environment
Economic environment Oil price (USD/bbl) and FX (USD/RON) OMV Petrom Indicator refining margin (USD/bbl) 4.18 4.07 7.75 42 7.14 48 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Avg Urals price in USD/bbl (left scale) Avg RON/USD (right scale) Gas prices (EUR/MWh)1 Power prices in Roman
Slide 39: 2016 CAPEX and E&A in line with guidance
2016 CAPEX and E&A in line with guidance CAPEX cuts mainly driven by focus on the most profitable barrels CAPEX incl. capitalized E&A Group CAPEX incl. capitalized E&A (RON bn) 2016 down by RON 1.3 bn, -34% yoy 3.9 -34% 3.6 Upstream CAPEX down by RON 1.4 bn mainly on projects prioritization 2.6 3.5
Slide 40: Strong execution of efficiency plans
Strong execution of efficiency plans Upstream CAPEX Operating cost savings FCF1 OPEX in USD/boe RON bn RON mn RON bn +1.2 -10% -34% 13.16 3.9 -500 1.6 11.85 2.6 0.3 2015 2016 2015 2016 2015 2016 2015 2016 Corporate Downstream Oil Downstream Gas Upstream 1 FCF before repayment of loans and dividend p
Slide 41: 2016 Strong financial resilience
2016 Strong financial resilience + + Profitability impacted by Strengthened balance sheet Restoration of dividend ongoing market backdrop distributions RON 1.7 bn Clean CCS EBIT, Switched from RON 1.3 bn net 2016 proposed: RON 0.015/share1 -33% yoy debt at end 2015 to RON 0.2 bn Dividend yield2: 5.3
Slide 42: Cash flow development
Cash flow development Strong FCF generation 2016 vs. 2015 2016 operating cash flow resilience supported by: RON mn Q4/16 Q4/15 2016 2015 ► cost savings partly offsetting impact of Cash flow from operating activities (CFO) 1,070 1,104 4,454 5,283 declining prices and refining margins Thereof, Depreci
Slide 43: Income statement summary
Income statement summary RON mn Q4/16 Q4/15 2016 2015 Q4/16 vs. Q4/15 Sales 4,595 4,518 16,247 18,145 Clean CCS EBIT margin development driven by cost reductions, as yoy sales performance was relatively flat EBIT 335 (1,844) 1,469 (530) Special items include charges of RON (193) mn in Q4/16 Clean CC
Slide 44: Clean CCS EBIT overview
Clean CCS EBIT overview Q4/16 Clean CCS EBIT more than double yoy Q4/16 vs. Q4/15 Improved Clean CCS EBIT due to lower exploration expenses and depreciation RON mn Q4/16 Q4/15 2016 2015 Upstream result supported by higher oil prices (Urals up 13%) and gas sales volumes Clean CCS EBIT 454 211 1,694 2
Slide 45: Upstream Clean EBIT turnaround
Upstream Clean EBIT turnaround Improved results based on lower Exploration and Other expenses Key drivers Q4/16 vs. Q4/15 Clean EBIT (RON mn) 246 Realised oil price +15% Decreased production costs (-3%), royalties & depreciation 293 -223 Lower exploration expenses due to lower activity in Neptun 216
Slide 46: Upstream – Improved efficiency
Upstream – Improved efficiency Production decline below upper limit guidance Key drivers Q4/16 vs. Q4/15 Hydrocarbon production (kboe/d) Highlights -3% 176 175 177 174 170 OPEX, in USD/boe terms, -3%, as efficiency plans delivered lower services, personnel and 81 81 81 79 78 materials costs 96 94 96
Slide 47: Downstream results improved
Downstream results improved Both Downstream segments displayed improved contribution Key drivers Q4/16 vs. Q4/15 Clean CCS EBIT (RON mn) 292 269 13 11 Higher contribution from both refining (due to cost savings) and retail Good gas business performance 288 277 -8 5 Refining margins -8%, impacted by
Slide 48: Downstream – Mixed operational performance
Downstream – Mixed operational performance Refinery utilization rate (%) Refined product sales Extracting record performance levels off key assets volumes (mn t) Key drivers Q4/16 vs. Q4/15 +4 pp -5% 92% 94% 97% 96% 1.34 1.39 1.27 Growth in retail sales of +2%1 1.14 1.13 68% Highlights Higher gas sa
Slide 49: Stronger balance sheet
Stronger balance sheet Net debt/(cash) development (RON bn) Main developments Switched from RON 1.29 bn net debt position at end 2015 to RON 0.24 bn net cash at end 2016 1.29 1.37 1.26 0.12 Equity ratio2 -0.24 ► end-2015: 62% Dec 31, 2015 Mar 31, 2016 Jun 30, 2016 Sep 30, 2016 Dec 31,2016 ► end-2016
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Slide 51: Outlook
Chapter divider slide: Design must be alike to chosen cover style At a glance (28pt) Outlook 2017
Slide 52: Business Outlook 2017
Business Outlook 2017Diagram Slide for PowerPoint Assumptions Targets Brent at USD 55/bbl Production decline up to 3% yoy Refining margins to decline CAPEX budget increased to EUR 0.8 bn Fuel demand on an upward trend (~85% in Upstream) Gas demand broadly flat; high Positive FCF after dividends comp
Slide 53: Appendix
Chapter divider slide: Design must be alike to chosen cover style At a glance (28pt) Appendix
Slide 54: Romanian oil market overview Jan-Nov 2016
Romanian oil market overview Jan-Nov 2016 Supply IMPORTS: various 67% 33% PRODUCTION TRANSPORTATION: Conpet Refineries (combined nameplate capacity ~12 mn tpa) processed crude oil ~101 70% 30% mn tpa (of which ~6.8 mn t from import) Refineries Petroleum Products Imports Petrobrazi Rompetrol (Petromi
Slide 55: Downstream Oil market environment in 2016
Downstream Oil market environment in 2016 Our operating region1 Romania Declining refining margins throughout Increased oil product demand vs. 2015 2016 Strong market competition Higher oil product demand vs. 2015 Long on both diesel and gasoline Persistent overcapacity Higher crude oil imports Comp
Slide 56: OMV Petrom Group fuel retail sales in 2016
OMV Petrom Group fuel retail sales (mn l) in 2016 188 163 159 140 105 78 2012 13 14 15 2016 2,405 2,405 2,308 2,444 2,573 Republic of Romania Moldova Serbia 2012 13 14 15 2016 219 153 401 195 184 181 172 Bulgaria Black Sea 331 350 337 348 342 90 2012 13 14 15 2016 61 2012 13 14 15 2016 56 | OMV Petr
Slide 57: Romanian gas market overview in 2016
Romanian gas market overview in 2016 Regula- Regulatory Body tory Romanian Energy Regulatory Authority (ANRE) IMPORTS: various 13% 87% PRODUCTION: , Romgaz, … STORAGE: Supply TRANSPORTATION: Transgaz Romgaz, Depomures, Amgaz SUPPLY: , Romgaz, Engie Romania, E.ON Energie Romania, ... Distribu- tion D
Slide 58: Romanian gas market liberalization
Romanian gas market liberalization Gas prices in Romania (EUR/MWh1) Prices for non-households liberalized since January 40 2015 31 Price liberalization for households frozen until March 29 28 31, 2017; deadline envisaged for completion: June 27 27 27 26 26 2021 24 25 21 20 19 Gas producers and suppl
Slide 59: Romanian power market overview in 2016
Romanian power market overview in 2016 Regulatory Regulatory Body Romanian Energy Regulatory Authority (ANRE) Thermal Nuclear Hydro Renewables Supply Production Imports 39% 17% 30% 14% Transport & Distribution System Operator (TSO&DSO) Market(s) Mid/long term fwd market(s) Ancillary services & Balan
Slide 60: Romanian gas and power markets overview in 2016
Romanian gas and power markets overview in 2016 Gas demand1 (TWh) Power production and demand2 (TWh) 128 122 125 61 62 61 10 3 16 8 10 9 Renewables 22 22 21 Thermal 1 3 CCPP Brazi 118 119 109 3 Hydro 19 17 18 Import gas Nuclear Domestic gas 11 11 10 Power demand 2014 2015 2016 2014 2015 2016 Gas mar
Slide 61: Key financial indicators (consolidated)
Key financial indicators (consolidated) in RON mn 2008 2009 2010 2011 2012 2013 2014 2015 2016 Sales 20,127 16,090 18,616 22,614 26,258 24,185 21,541 18,145 16,247 EBIT 1,205 1,620 2,986 4,936 5,662 5,958 3,338 -530 1,469 1 EBITD 3,875 4,109 5,797 7,766 8,514 9,313 8,145 6,231 4,933 Net income (loss
Slide 62: Contact Investor Relations
Contact Investor Relations OMV Petrom Investor Relations Tel: +40 372 161 930 E-mail: investor.relations.petrom@petrom.com Homepage: www.omvpetrom.com 2017 Financial Calendar April 25: Annual General Meeting of Shareholders May 11: Q1 2017 results August 10: Q2 and HY 2017 results November 9: Q3 201