Galp Energia, Sgps S.a. Class B · EURONEXT:GALP
Galp Energia, Sgps S.a. Class B — Galp Energia — 9M 2006 Earnings Presentation
35 slides from Galp Energia, Sgps S.a. Class B's earnings presentation, Nov 30, 2006
Slide 1: 9M 2006 Results
9M 2006 Results Conference Call Presentation Lisbon, 30 November 2006
Slide 2: Disclaimer
Disclaimer Matters discussed in this presentation may constitute forward-looking statements. Forward- looking statements are statements other than in respect of historical facts. The words “believe,” “expect,” “anticipate,” “intends,” “estimate,” “will,” “may,” "continue," “should” and similar expre
Slide 3: Key Highlights
Key Highlights Stable R&M contribution despite decline in refining margins Adjusted net income strongly impacted by higher volumes of natural gas sold Sale of NG assets with a positive impact of 220 million Eur in net income 9M Net Income (Million Eur) 7% 723 675 15% 3Q 261 369 374 6M 326 134
Slide 4: Key Highlights
Key Highlights Adjusted net income reflects elimination of inventory holding effects and non recurrent items Inventory effect strongly impacted by major price variations 9M Net Income (Million Eur) 107 242 723 374 2006 Inventory Non 2006 Reported holding recurrent Adjusted effect items Nine mont
Slide 5: Market Overview
Market Overview
Slide 6: Market Overview
Market Overview Rotterdam Cracking vs Rotterdam (Hydro Average Brent price (Usd/bbl) + Aromatics)3 (Usd/bbl) 80 12 75 70 9 65 6 60 55 3 50 45 0 40 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 35 -3 30 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Rotterdam Cracking Rotterdam Hydro + Aromatics
Slide 7: Segment Overview
Segment Overview
Slide 8: Exploration & Production
Exploration & Production Total production increased by 26% Production started in two fields in Block 14: BBLT and TL Q3 average daily production almost doubled from Q2 Total production by field (thousand bbl) TL 26% 1,550 BBLT 104% 1,231 Kuito 800 392 Brent Price Q3 05 Q3 06 9M 05 9M 06 (Usd/b
Slide 9: Exploration & Production (cont.)
Exploration & Production (cont.) Stable EBITDA despite decrease in volumes sold Lower sales volume compensated by increase in realized sale price EBIT impacted by non cash costs of 20 million Eur Adjusted EBIT (Million Eur) -27% -12% 37 27 27 24 Q3 05 Q3 06 9M 05 9M 06 Nine months results 2006
Slide 10: Exploration & Production (cont.)
Exploration & Production (cont.) Angola Block 14: TL field officially started production Block 32/33: Currently in drilling/seismic phase Cabinda Centro: Talks in progress to lift Force Majeure Potiguar Basin (DW) # Blocks 5 Brazil Operator Petrobras Potiguar Basin (OS) Other partners Encana #
Slide 11: Refining & Marketing
Refining & Marketing Galp Energia refining margin has been above benchmark Higher refining margin due to location premium and optimized crude slate Galp Energia vs Benchmark refining margin (Usd/bbl) 12 9 6 3 0 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Benchmark Refining Margin Galp Refin
Slide 12: Refining & Marketing (cont.)
Refining & Marketing (cont.) Higher utilization rates allowed an increase in raw materials processed of 5% 40% increase in exports more than compensated decrease in Iberian market Gasoline and middle distillates production increased 5.4% to 7.1 M tonnes 9 months (Million tonnes) +5.2% +3.3% yo
Slide 13: Refining & Marketing (cont.)
Refining & Marketing (cont.) Adjusted EBIT increased by 3% despite decrease of 21% in refining margin Third quarter adjusted EBIT increased by 61% Strong inventory holding effect due to crude price movements EBIT (Million Eur) -32% 3Q 633 3% 6M 247 430 80 261 268 86 138 2005 2006 2005 2006 Rep
Slide 14: Gas & Power
Gas & Power Natural gas volumes sold increased by 15% Strong increase in natural gas sales driven by trading volumes Portuguese natural gas market grew 3% in the last nine months Natural gas sales (Million m3) Trading 15% 3,601 LDC’s 3,145 Industrial 37% Electrical 1,377 1,008 Q3 05 Q3 06 9M 0
Slide 15: Gas & Power (cont.)
Gas & Power (cont.) Reported EBIT impacted by natural gas assets sale Excluding unbundling impact, adjusted EBIT increased by 23% Strong Q3 2006 adjusted EBIT, an increase of 59% from Q3 2005 EBIT (Million Eur) 476 23% 3Q 348 6M 224 188 182 87 61 55 2005 2006 2005 2006 Reported Adjusted Nine m
Slide 16: Gas & Power (cont.)
Gas & Power (cont.) Update on Power projects Sines Cogen Expected to start operating in Q3 2008 Synergies on natural gas consumption as well as in our Sines refinery CCGT’s Interconnection permits awarded on 20 September Until mid 2007, technical documentation to be submitted to DGGE Wind Fa
Slide 17: Adjusted EBIT
Adjusted EBIT Third quarter operating result increased by 51% Strong performance of Gas & Power segment driven by NG volumes 9M results with strong growth despite decline in refining margins Adjusted EBIT by Segment (Million Eur) 12% G&P 520 R&M 464 E&P 51% 247 164 Q3 05 Q3 06 9M 05 9M 06 Nine
Slide 18: Financial Overview
Financial Overview
Slide 19: Strong Cash Flow Generation
Strong Cash Flow Generation Adjusted EBITDA vs Capex 9M (Million Eur) E&P R&M G&P Total Adjusted EBITDA 47 419 256 742 Capex 62 58 81 201 EBITDA – Capex (15) 361 175 541 Note: Segmental figures don’t add up to total adjusted EBITDA due to Corporate & Others Nine months results 2006 19
Slide 20: Balanced Capital Structure
Balanced Capital Structure Net Debt (million Eur) 222 105 9521 871 985 1,021 Net Debt June 2005 Unbundling Extraordinary Cash Net Debt Sep 2006 dividend dividend generated by 2006 operations D/E 39% 51% Gearing 28% 34% 1 Includes the payment of natural gas assets (€526.3 million) and net debt transf
Slide 21: Consolidated Key Figures
Consolidated Key Figures Third Quarter Nine Months 2005 2006 % Ch. 2005 2006 % Ch. 2,925 3,263 11.5% Sales 7,941 9,393 18.3% 223 329 47.6% EBITDA 655 742 13.3% 164 247 50.5% EBIT 464 520 12.0% 134 207 54.0% Net Income 326 374 14.6% 0.16 0.25 54.0% Adjusted EPS (Eur/share) 0.39 0.45 14.6% 0.31 0.45 4
Slide 22: Unbundling Transaction
Unbundling Transaction
Slide 23: Unbundling of Natural Gas assets
Unbundling of Natural Gas assets NG Supply Sold to REN Provisional price of € 844 million Sourcing High pressure network: €738 million assuming €318 million of net debt Transport ex. Storage: €76.4 million Portugal LNG terminal: €30.0 million Transport - Portugal Storage and LNG terminal w
Slide 24: Settlement of Final Price
Settlement of Final Price Experts Selection Galp Energia is entitled to choose one international bank REN chooses the second expert A third expert is chosen by the first two experts Final Price Step 3 Step 1 Final Price is Valuation Step 2 that is 20% the average valuation of different the two
Slide 25: Strategy Update
Strategy Update
Slide 26: Strategy Update
Strategy Update Exploration & Production Develop our current portfolio Leverage on relationships with ENI, Petrobras and Sonangol Refining & Marketing Conversion unit to improve overall refining capacity Decision expected before year end on technical solution Continue improving retail marg
Slide 27: Q&A
Q&A
Slide 28: Backup Information
Backup Information
Slide 29: Consolidated Income Statement
Consolidated Income Statement Third Quarter Nine Months 2005 2006 % Ch. Million Euros 2005 2006 % Ch. 2,925 3,263 11.5% Sales and services rendered 7,941 9,393 18.3% (2,546) (3,032) 19.1% Operating expenses (6,922) (8,540) 23.4% 12 287 n.m. Other operating revenues (expenses) 16 288 n.m. 391 518 32.
Slide 30: Operating result reconciliation
Operating result reconciliation Third Quarter Nine Months 2005 2006 % Ch. Million Euros 2005 2006 % Ch. 27 24 (11.5%) Exploration & Production 37 27 (26.8%) 247 80 (67.8%) Refining & Marketing 633 430 (32.2%) 61 348 n.m. Gas & Power 188 476 152.4% (3) (7) (104.4%) Others (15) (5) 70.3% 332 444 33.9%
Slide 31: Exploration & Production
Exploration & Production Third Quarter Nine Months 2005 2006 % Ch. Million Euros 2005 2006 % Ch. 35 53 52.5% Sales and services rendered 65 75 15.0% 27 24 (11.5%) Operating result 37 27 (26.8%) - - - Non recurrent items - - - 27 24 (11.5%) Adjusted operating result 37 27 (26.8%) 61.6 69.6 12.9% Aver
Slide 32: Refining & Marketing
Refining & Marketing Third Quarter Nine Months 2005 2006 % Ch. Million Euros 2005 2006 % Ch. 2,635 2,882 9.4% Sales and services rendered 7,135 8,323 16.6% 247 80 (67.8%) Operating result 633 430 (32.2%) (162) 79 n.m. Inventory effect (371) (130) (65.0%) 1 (21) n.m. Non recurrent items (2) (31) n.m.
Slide 33: Gas & Power
Gas & Power Third Quarter Nine Months 2005 2006 % Ch. Million Euros 2005 2006 % Ch. 256 380 48.5% Sales and services rendered 770 1,039 35.0% 61 348 n.m. Operating result 188 476 n.m. (7) (6) (8.2%) Inventory effect (7) 3 n.m. - (255) n.m. Non recurrent items - (255) n.m. 55 87 58.7% Adjusted operat
Slide 34: Natural Gas Regulatory Framework
Natural Gas Regulatory Framework Power Last Resort Sourcing Companies Spare Distribution Supplier Contracts (current Quantities Business (LRS) contracts) 2.2 2.2 5.7 1.3 0.7* NG Volumes bcm bcm bcm bcm bcm DL 140/2006 Maintain actual Contracts with Regulated Not Regulated Regulated + sourc
Slide 35: 9M 2006 Results
9M 2006 Results Investor Relations Tel: +351 21 724 08 66 Fax: +351 21 003 09 11 E-mail: investor.relations@galpenergia.com Website: www.galpenergia.com