Slide 1: Q4/17 Results Presentation
Mariana Gheorghe Chief Executive Officer and President of the Executive Board Stefan Waldner Chief Financial Officer The spoken word applies. Check against delivery. 1
Slide 2: Intro
Mariana Gheorghe - OMV Petrom - CEO Slide 1 – Intro Good afternoon, ladies and gentlemen, and a warm welcome from my side. As this is my last quarterly results presentation before handing over to Christina Verchere as the new CEO, I am particularly proud to be able to present to you an excellent set
Slide 3: Legal Disclaimer
Slide 2 – Legal Disclaimer Before we start the actual presentation, please let me draw your attention to our Legal Disclaimer, which you can read in detail on slide 2. 3
Slide 4: Key messages Q4/17
Key messages Q4/17 Free cash flow of RON 664 mn Upstream: production 165 kboe/d, -3% yoy; OPEX USD 12.4/boe, +7% yoy Clean CCS Operating Result at RON 573 mn Downstream Oil: refining margins USD -1.0/bbl yoy; retail sales volumes +4% yoy Dividend proposal': RON 0.02/share, 33% higher yoy Downstream
Slide 5: Key messages Q4/17
Slide 3 – Key messages Q4/17 Let me start with some key highlights for Q4/17 at slide 3. In this quarter, we enjoyed increased demand for fuels and electricity, as well as higher commodity prices. Broader market conditions were somewhat mixed, with increased oil, gas and electricity prices, while re
Slide 6: Romanian environment
Romanian environment 2017 GDP growth’: 7% yoy; Q4/17 GDP growth: 7% yoy CPI annual inflation: 3.3% end- Dec; 12-month average: 1.3% Dem [| 2017 yoy | aaitz yoy Supplementary gas taxation® extended Tax on special constructions eliminated starting January 1, 2017 Engagement with stakeholders on Upstre
Slide 7: Romanian environment
Slide 4 – Romanian environment On slide 4, we provide some macroeconomic highlights for Romania. Romania had another quarter of solid economic performance, with impressive GDP growth, although its sustainability is questionable given the recent generous stimulating fiscal measures and the latent ups
Slide 8: Economic environment
Economic environment FX (RON/USD) 425 47 414 3.90 3.02 O46 Q1n7 Q217 Q3/17 47 Q4i16 Q1N7 Q2N7 Q3i7 Q4i7 —*— Avg RONIUSD —2— Avg Urals price in USDIbb|_ —®— Avg Brent price in USD/bbI Gas prices (EUR/MWh)' Power prices in Romania (EUR/MWh)' 192 19.5 67 158 16.2 ea Q4ié QtN7 27 3/17 47 4/16 QtN7 217 Q
Slide 9: Economic environment
Slide 5 – Economic environment On page 5, let me provide you with an overview of the pricing environment in our industry. The upper left chart shows the exchange rate development: in Q4/17 USD was weaker versus the RON by some 6% year-on-year. In the chart on the upper right, you can see the Urals p
Slide 10: Upstream KPIs: OPEX/boe impacted by one-offs
Upstream KPIs: OPEX/boe impacted by one-offs OPEX' Key drivers Q4/17 vs. Q4/16 (USD/boe) Higher OPEX, in USD/boe terms, +7%: > One-off personnel-related expense, USD 1.2/boe » Unfavorable FX development, USD 0.7/boe a6 Quay 27 Q317 aay » Abolition of tax on special constructions, Hydrocarbon product
Slide 11: Upstream KPIs: OPEX/boe impacted by one-offs
Slide 6 – Upstream KPIs: OPEX/boe impacted by one-offs And now, I would like to present to you some operational KPIs for each business segment. Let me start with Upstream on slide 6. In Q4/17, average unit production cost reflected a one-off personnel- related expense following the conclusion of the
Slide 12: Downstream Oil KPIs: decline of refining margins and strong retail sales
Downstream Oil KPIs: Q4/17 decline of refining margins and strong retail sales OMV Petrom Indicator refining margin (USD/bbl) Q416 Quiz Q217 Q3/17 47 Retail sales volumes (mn t) 06s 0.68 . 0.67 416 Qni7 a7 Qsii7 a4 Key drivers Q4/17 vs. Q4/16 | » Refining margin -14% yoy t > Refinery utilization rat
Slide 13: Downstream Oil KPIs: decline of refining margins and strong retail sales
Slide 7 – Downstream Oil KPIs: Q4/17 decline of refining margins and strong retail sales Continuing with Downstream Oil KPIs at slide 7, as a general observation we had lower refining margins, but higher retail sales. The OMV Petrom refining margin indicator decreased in Q4/17 by 14% year-on-year, t
Slide 14: Downstream Gas KPIs: significantly higher net electrical output
Downstream Gas KPIs: significantly higher net electrical output Gas sales volumes Key drivers Q4/17 vs. Q4/16 (TWh) oO 15.50 14.17 > Lower gas volumes to third parties in the context of decreased demand » Larger volumes off-taken by Brazi power plant aait6 Qii7 Q2n7 Q37 aay Net electrical output (TW
Slide 15: Downstream Gas KPIs: significantly higher net electrical output
Slide 8 - Downstream Gas KPIs: significantly higher net electrical output As to Downstream Gas on the next slide, our gas sales volumes in Q4/17 decreased by 5%, the higher offtake by the Brazi power plant and end- customers partly counterbalancing the lower sales volumes to wholesalers. The Brazi p
Slide 16: Cost efficiency and operational excellence
Cost efficiency and operational excellence Total operating cost! Key drivers 2017 vs. 2015 (RON mn) a » Upstream cost base reduced with 22% > Downstream Direct Cash Costs: reduced maintenance costs, energy efficiency improvements and 3" party contracts renegotiation, -11% >» Corporate Costs: cutback
Slide 17: Cost efficiency and operational excellence
Slide 9 - Cost efficiency and operational excellence As the CEO of the company, I am very encouraged by the strong execution of our efficiency plans outlined at slide 9. We had initiatives across all business segments: in Upstream we optimized material and energy costs, set up leaner operations and
Slide 18: Cash Flow highlights
OMV Petrom | Q4/17 Results ne P OMV Petrom Cash Flow highlights Operating Cash Flow (RON bn) >» 2017 OCF" up due to higher Operating Result > Q4/17 NWC2: cash outflow RON 117 mn > 2017 NWC2: cash outflow RON 199mn Q4/16 Q4ii7 2016 2017 2.45 Investing Cash Flow (net outflow, RON bn) » 2017 CAPEX high
Slide 19: Cash Flow highlights
Slide 11 – Cash Flow highlights Thank you, Mariana, and good afternoon to you all. On slide 11, I would like to start with highlights of our cash flow statement. In Q4/17, we achieved an operating cash flow of about RON 1.5 billion, mainly on the back of strong operating result. This, in turn, was s
Slide 20: Income Statement highlights
Income Statement highlights \Clean CCS Operating Result (RON bn) 0.45 0.57 Q4/16 Q4ii7 2016 Clean CCS Net Income* (RON bn) 2.49 0.26 0.43 as aaii7 2016 2017 Net Income’ (RON bn) 2.49 1.04 0.16 ui 416 Qani7 2016 2017 >» Clean CCS Operating Result reflects: » Market conditions (prices, demand) » Highe
Slide 21: Income Statement highlights
Slide 12 – Income Statement highlights On slide 12, I would like to discuss some highlights of the Income Statement, with a special focus on Q4/17 vs. Q4/16 developments. Sales increased by 10% year-on-year, supported by higher commodity prices and increased electricity sales volumes, which was part
Slide 22: Special items and CCS effect
Special items and CCS effect RON mn Q4/17 Q4/16 2017 2016 Clean CCS Operating Result 573 453 3,273 1,700 gains /{losses) holding 403 75. 102 -98 Special items 145-193 -105 -127 Thereof Upstream 102 -87 -13 -174 Downstream Oil 50-95 44 58 Downstream Gas 7 -8 -134 7 Operating Result 820 335 3,270 1,47
Slide 23: Special items and CCS effect
Slide 13 – Special items and CCS effect On the next page, we bridge the Clean CCS Operating Result to the Reported Operating Result. For Q4/17, we recorded inventory holding gains amounting to RON 103 mn due to increased crude prices over the quarter. Looking at special items, in Q4/17 we had a spec
Slide 24: Upstream Clean Operating Result supported by higher realized prices
Upstream Clean Operating Result supported by higher realized prices Upstream Clean Operating Result Key drivers Q4/17 vs. Q4/16 (RON mn) | t > Higher realized oil prices, +27% | | w0 gee 246 ” >» Higher exploration expenses >» Sales volumes -3% » Production costs impacted by one-off effects aans Rea
Slide 25: Upstream Clean Operating Result supported by higher realized prices
Slide 14 – Upstream Clean Operating Result supported by higher realized prices Let me move on to page 14, which shows the major building blocks for the development of the Upstream Clean Operating Result in Q4/17. With the realized oil price increasing by around 27% year-on-year to almost USD 53/bbl
Slide 26: Downstream Clean CCS Operating Result: improved performance in both segments
Downstream Clean CCS Operating Result: improved performance in both segments Downstream Clean CCS Operating Result (RON mn) 292 a, --- ate Hl Downstream Oil [ll Downstream Gas 360 aa Key drivers Q4/17 vs. Q4/16 » Higher sales revenues following increase in demand >» Improved non-oil business contrib
Slide 27: Downstream Clean CCS Operating Result: improved performance in both segments
Slide 15 – Downstream Clean CCS Operating Result: improved performance in both segments Moving to slide 15, the Q4/17 Clean CCS Operating Result of Downstream increased by 23%, reflecting the improved contribution of both segments. We had a higher year-on-year contribution of Downstream Oil, despite
Slide 28: CAPEX and E&A
CAPEX and E&A Group CAPExX incl. capitalized E&A (RON bn) 2016 2017 2018 I Upstream Downstream and Co&Other CAPEX incl. capitalized E&A » 2017 at RON 3.0 bn: > > 64 new development wells and sidetracks drilled >1,000 workovers performed >» 2018 at RON 3.7 bn: > > > > Drilling >100 development wells
Slide 29: CAPEX and E&A
Slide 16 – CAPEX and E&A Slide 16 provides an overview of CAPEX and E&A activities including an outlook for 2018. In 2017, our total CAPEX was around RON 3.0 billion. The majority was dedicated to Upstream. We ramped up drilling activities, resulting in 14 active drilling rigs by December 2017. At t
Slide 30: 2017 Dividend proposal
2017 Dividend proposal: EUR 248 mn > DPS" 2017: RON 0.02 > Dividend yield? 2017: 7% > EUR 1.1 bn returned to shareholders in the past five years + Executive Board's proposal subject to approvals of the Supervisory Board and Annual General Meeting of Shareholders on Aprit 26,2018; ? Calculated based
Slide 31: 2017 Dividend proposal
Slide 17 – 2017 Dividend proposal: EUR 248 mn On slide 17, let me highlight once more that we, as the Executive Board, are committed to delivering a competitive shareholder return by paying an attractive dividend. Based on the results and strong free cash flow achieved in 2017, the Executive Board p
Slide 32: Outlook 2018
Outlook 2018 Brent oil price Refining margin Production FCF after dividends "Not including pontolio optimization initiatives ® 18 omvretrom | 24/17 Results 32 Actual 2017 USD 54/bbl USD 7.75/bbI 168 kboe/d RON 3.0 bn RON 2.7 bn OMV Petrom @® OMV Petrom
Slide 33: Outlook 2018
Slide 18 – Outlook 2018 Let me finish my part of the presentation with the outlook for the full year 2018, on page 18. Here I would like to highlight our main market assumptions as well as the targets we have set for 2018 and how they compare to the actual 2017 figures. First of all, we expect an av
Slide 34: First progress towards achieving our 2021+ strategic objectives
Mariana CEO OMV Petrom First progress towards achieving our 2021+ strategic objectives Sustainable access to energy for everyday modern life Enhancing competitiveness Developing growth options Regional expansion « Drilling campaign ramped-up = Operational efficiency increased = Costs optimized = Por
Slide 35: First progress towards achieving our 2021+ strategic objectives
Slide 20 – First progress towards achieving our 2021+ strategic objectives Ladies and gentlemen, now I would like to take the opportunity to present to you the progress we made in executing our strategy 2021+. 2017 was an important year in OMV Petrom’s corporate development, as we have set clear and
Slide 36: Domino and Pelican South was selected, continuing now with the commercial viability assessment. On
Domino and Pelican South was selected, continuing now with the commercial viability assessment. On the assumption of continued fiscal stability, clarity of the legal and regulatory framework and favorable gas market developments, the current schedule would enable us to come to a potential Final Inve