Galp Energia, Sgps S.a. Class B · EURONEXT:GALP
Galp Energia, Sgps S.a. Class B — Galp Energia — FY2006 Earnings Presentation
27 slides from Galp Energia, Sgps S.a. Class B's earnings presentation, Mar 8, 2007
Slide 1: Full Year 2006 Results
Full Year 2006 Results Lisbon, 8 March 2007
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: Adjusted EPS increased by 10%
Adjusted EPS increased by 10% Reported Adjusted 2005 2006 % Ch. € Million 2005 2006 % Ch. 11,137 12,210 9.6% Sales 11,134 12,107 8.7% 1,192 1,241 4.1% EBITDA 877 958 9.3% 863 949 10.0% EBIT 580 667 15.0% 51 41 (21%) Income from Associates 51 41 (21%) 701 755 7.7% Net Income 425 468 10.1% 0.84 0.91 7
Slide 4: Net income positively impacted by sale of NG assets
Net income positively impacted by sale of NG assets Inventory effect with a reduced contribution due to the decrease, since August, of crude and product prices Non recurrent items strongly impacted 2006 net income due to the €220 M of the NG assets sale effect 2006 Net Income (€ M) NG assets s
Slide 5: Adjusted EBITDA increased by 9% despite poorer market conditions
Adjusted EBITDA increased by 9% despite poorer market conditions Crude production increase confirming ramp up phase of Block 14 in Angola Resilient contribution of R&M despite lower refining margins in 2006 G&P performance driven by higher volumes and margins on trading activities 2006 Adjuste
Slide 6: Market Overview
Market Overview
Slide 7: Less favourable market environment in 2006
Less favourable market environment in 2006 Rotterdam Cracking and Rotterdam Brent price (Usd/bbl) (Hydro + Aromatics)3 (Usd/bbl) 75 12 70 10 65 8 60 6 55 4 50 2 45 0 40 -2 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Rotterdam Cracki
Slide 8: Business Overview
Business Overview
Slide 9: E&P production in a ramp up phase
E&P production in a ramp up phase Production increase supported by BBLT and TL contribution Equity production of 11.6 kbbl/d in Q4 2006 Total Equity Production by Field (million bbl) 71% 2.6 TL BBLT 1.6 Kuito 1.1 0.3 Q4 05 Q4 06 2005 2006 WP* Kbbl/d 4.4 14.6 5.0 9.5 *Working Production correspon
Slide 10: E&P results reflect rising production
E&P results reflect rising production Increase in realized sale price due to higher Brent price and higher contribution from lighter crude from BBLT and TL Unit production costs down by 27% due to the beginning of production in BBLT field Adjusted EBIT (€ M) 148% 45 18 18 (19) Q4 05 Q4 06 2005 2
Slide 11: Block 14 crude reserves evolving positively
Block 14 crude reserves evolving positively Working million bbl Net Entitlement1 % Ch. Reserves June 30, Dec 31, Dec 31, Block 142 2006 2006 2006 Reference crude price 62.5 Usd/bbl 65 Usd/bbl 4% - Proved (P1) 35.6 35.7 0% 46.5 Proved + Probable (P2) 41.4 50.4 22% 80.7 Source: Gaffney, Cline & Associ
Slide 12: Galp Energia refining margin consistently above benchmark
Galp Energia refining margin consistently above benchmark Spread over benchmark of 2.2 Usd/bbl in 2006 and 2.5 Usd/bbl in Q4 Premium over benchmark due to logistic advantage and crude slate in discount to Brent Galp Energia vs Benchmark Refining Margin (Usd/bbl) 12 10 8 7.2 6 5.4 4 2 0 -2 Jan-05
Slide 13: Higher levels of exports compensated decrease in Portuguese market
Higher levels of exports compensated decrease in Portuguese market Sales to Galp Energia clients represent 61% of total volumes processed Middle distillates and gasoline represent 44% and 25% respectively of total production Million tons 2005 2006 % Ch. Crude oil and other refinery inputs 14.3 1
Slide 14: Resilient R&M EBIT generation
Resilient R&M EBIT generation Reported EBIT down by 39% on lower inventory effect of €303 M YoY Adjusted EBIT up by 6% despite lower refining margin of 26% YoY Lower refining margins were compensated by better trading and marketing margins EBIT (€ M) -39% 602 6% Q4 368 9M 358 338 78 89 -31 -62
Slide 15: Strong increase in NG volumes regardless unfavourable Q4
Strong increase in NG volumes regardless unfavourable Q4 Portuguese market, excluding power generation, increased by 5% even with warm weather in Q4 Higher trading activity more than compensated power generation NG consumption due to strong rainfall in Portugal Natural gas sales (M m3) 9% Tradin
Slide 16: NG sales boosted adjusted EBIT by 18%
NG sales boosted adjusted EBIT by 18% Reported EBIT strongly affected by the sale of NG assets to REN Adjusted EBIT driven by high volumes growth and better trading margins Stable Q4 adjusted EBIT despite higher opex of €15 M with the effect of Unbundling EBIT (€ M) 547 71 18% Q4 9M 244 266 22
Slide 17: Financial Overview
Financial Overview
Slide 18: Strong cash flow generation
Strong cash flow generation Adjusted EBITDA vs Capex 2006 (€ M) E&P R&M G&P Total Adjusted EBITDA 79 560 320 958 Capex 106 131 112 349 Adjusted (27) 429 209 609 EBITDA – Capex Adjusted (42) 410 195 561 EBITDA – Capex (2005) Note: Segmental figures don’t add up to total adjusted EBITDA due to Corpora
Slide 19: Capital structure in place to finance future growth
Capital structure in place to finance future growth Net debt has reduced by €305 M since 2005 Balance Sheet (€ M) Non 5,776 5,039 current assets Current 2,198 assets 2,430 excluding 2,368 2,115 cash 1,192 Equity 887 Net Debt 3,346 2,386 2,671 Non interests 2,037 liabilities 2005 2006 D/E 50% 44% G
Slide 20: Strategy Update
Strategy Update
Slide 21: E&P portfolio enriched by exploration success
E&P portfolio enriched by exploration success BM-S-11 Tupi discovery 6 Km Hydrocarbons in place: 1.7 to 10 billion boe Appraisal is expected in 2007 (Tupi Sul well) Iracema Opening of a new hydrocarbon play Exploration Program 3D seismic survey already completed Tupi Iracema well progr
Slide 22: +3.5 Usd/bbl incremental refining margin
+3.5 Usd/bbl incremental refining margin Iberian Diesel Gap (M tons) Major refineries investments 2005 0.5 2011 Conversion Project -0.7 -2 -8.5 Investment of €998 M -9 -11 -11.7 Replace fuel production by diesel -16 -18 Increase heavy crude + processing + Conversion projects in Iberia Includ
Slide 23: Renegotiations will focus on value preservation
Renegotiations will focus on value preservation RAB methodology (remuneration rate to be known in Q2) Regulation Spare quantities have to be auctioned Profits of such auctions to be shared with the market on a 50%/50% basis Unbundling of LDC’s concession contracts* Legislation RAB to be ad
Slide 24: Outlook
Outlook
Slide 25: Short Term Outlook
Short Term Outlook Expected working production share of 16 Kbbl/d from Block 14 in Angola in 2007 Sustained investment in exploration activity throughout 2007 Turnaround of Oporto Refinery in Q3 2007 with an estimated capex of €40 M Current refining margins above last year levels due to stro
Slide 26: Galp Energia positioned for growth
Galp Energia positioned for growth E&P and G&P confirming growth prospects Galp Energia Capital structure in Resilient EBITDA positioned for growth place to finance from R&M future growth Strong return on capital employed of 17% Full Year 2006 Results 26
Slide 27: Full Year 2006 Results
Full Year 2006 Results Investor Relations Tiago Villas-Boas Tel: +351 21 724 08 66 Fax: +351 21 003 09 11 E-mail: investor.relations@galpenergia.com Website: www.galpenergia.com