Omv Petrom Sa · BVB:SNP
Omv Petrom Sa — Non-Deal Roadshow (February 2018)
70 slides from Omv Petrom Sa's roadshow presentation, Feb 21, 2018
Slide 1: Capital Markets Story
Cover option 1: Insert a cover picture and align grouped text Capital Markets freely on page, (28pt) Story Place, xx. Month 2013 (16pt) Sustainable access to energy for everyday modern life
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This page is left blank intentionally 2 | OMV Petrom │ Capital Markets Story │ February 21, 2018
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: Contents
Contents Investment proposition Strategy 2021+ Q4 and FY17 results review Outlook 2018 Appendix All figures throughout this presentation refer to OMV Petrom Group (herein after also referred to as “the Group”), unless otherwise stated. The financials represent OMV Petrom Group’s consolidated results
Slide 5: Investment proposition
Chapter divider slide: Design must be alike to chosen cover style (28pt) Investment proposition
Slide 6: OMV Petrom's Investment Proposition
OMV Petrom’s Investment Proposition Integrated oil and gas company Earnings resilience and High safety standards capital stewardship Cost efficiency and Strong cash conversion and operational excellence attractive shareholder return 6 | OMV Petrom │ Capital Markets Story │ February 21, 2018
Slide 7: Operating in the integrated oil and gas sector
Operating in the integrated oil and gas sector Upstream Downstream Petrobrazi refinery, 4.5 mn t/yr capacity Romania 786 filling stations, operated via 2 brands: Petrom and OMV Production: 1P reserves: 5.1 mn t total refined product sales (thereof 2.7 mn t retail sales) 59 mn boe 542 mn boe Brazi ga
Slide 8: Focused on safeguarding our employees and the environment
Focused on safeguarding our employees and the environment Improved LTIR1 in 2017 vs. 2012 Significant reduction of GHG3 and Water Intensity Upstream achieved the greatest GHG reduction: -41% in 20174 vs. 2012 2017 LTIR well below international Water intensity reduced by ~38% vs. 2012 benchmarks (IOG
Slide 9: Proven history of integration delivering value
Proven history of integration delivering value Synergies and earnings resilience delivered in depressed oil price environment Clean CCS Operating Result RON bn 112 109 99 Upstream 2015-2017: lower personnel, material 5.9 6.0 and services costs 5.2 52 54 44 3.3 2.5 1.7 Downstream result2 2.7 54% time
Slide 10: Cost efficiency and operational excellence
Cost efficiency and operational excellence Total operating cost1 Key drivers 2017 vs. 2015 (RON mn) -500 -500 -380 -380 Upstream cost base reduced with 22% Downstream Direct Cash Costs: reduced maintenance costs, energy efficiency improvements and 3rd party contracts renegotiation, -11% Corporate Co
Slide 11: Turning efficiency savings into cash flow…
Turning efficiency savings into cash flow… Clean CCS Operating Result margin1 (%) Clean CCS ROACE (%) 25 24 19 22 18 17 14 14 10 10 6 5 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 Cash flow (RON bn) Net cash and Debt (RON bn) -0.1 0.7 -0.2 -0.5 1.2 2.0 7.2 8.0 6.8 4.0 5.3 4.5 6.0 1.4
Slide 12: …and cash flow into returns to shareholders
…and cash flow into returns to shareholders Dividend Policy OMV 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 invest
Slide 13: Shareholder structure and capital market environment
Shareholder structure and capital market environment OMV Petrom S.A. shareholder structure1 (%) 10% OMV2: Austria’s leading integrated international oil and gas company Fondul Proprietatea3: listed fund with ~68% of AUM invested4 in the energy sector 21% Romanian State, no special rights attached 51
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This page is left blank intentionally 14 | OMV Petrom │ Capital Markets Story │ February 21, 2018
Slide 15: Strategy 2021+
Chapter divider slide: Design must be alike to chosen cover style (28pt) Strategy 2021+
Slide 16: OMV Petrom's strategic directions 2021+
OMV Petrom’s strategic directions 2021+ Attractive shareholder return Enhancing competitiveness Highest integration value Operational excellence Improved recovery Streamlined producing portfolio Sustainable Developing growth options access to 100% Reserves Replacement Rate energy Exploration portfol
Slide 17: First progress towards achieving strategic objectives
First progress towards achieving strategic objectives 2017 highlights Drilling campaign ramped-up Operational efficiency increased Enhancing competitiveness Costs optimized Portfolio streamlining initiated Strong performance and attractive return Development concept selected 9.8% Clean CCS ROACE for
Slide 18: Upstream: maximize economic recovery to realize the potential of our current assets
Upstream: maximize economic recovery to realize the potential of our current assets Highlights 2017 No. of drilled wells Drilling activities ramped-up, 14 drilling rigs being active +178% in December 2017 >100 Over 1,000 workover jobs performed in 2017 69 Field Development Totea Deep and FRD1 Lebada
Slide 19: Upstream: streamline producing asset portfolio to focus on most profitable barrels
Upstream: streamline producing asset portfolio to focus on most profitable barrels Footprint development Highlights 2017 (no. of fields) 5 commercial fields relinquished -35% Mazarine transaction finalized, 19 marginal fields 232 208 divested 150 New round of divestment initiated 2016 2017 2021 Unit
Slide 20: Upstream: continued operational excellence
Upstream: continued operational excellence Increased MTBF1 Modernized facilities Automated wells3 (days) (no. of modernized facilities2) (no. of automated wells) 4,950 5,200 750 4,800 626 640 4,300 555 360 400 340 300 2016 2017 2018 2021 2016 2017 2018 2021 2016 2017 2018 2021 Going forward Maintain
Slide 21: Downstream Oil: high level of performance
Downstream Oil: high level of performance Refining Going forward Continue to: Fuel storage network Utilization rate (%) Focus on operational excellence 2005 100 Improve refinery operations to international benchmarks 90 Maintain cost discipline 80 Perform the planned turnaround in 2018, scope dimens
Slide 22: Downstream Gas: consolidate leading position in Romanian gas market
Downstream Gas: consolidate leading position in Romanian gas market Stable gas sales (TWh) Capture the highest integrated Optimize business portfolio. gas and power value Focus on core activities 50 51 50 50 150 new end customers added to Dorobantu Wind park divested the portfolio with 1.6 TWh gas a
Slide 23: Upstream: Neptun Deep opportunity, the most important growth option
Upstream: Neptun Deep opportunity, the most important growth option 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 201
Slide 24: Downstream Oil: growth and technological opportunities in refining
Downstream Oil: growth and technological opportunities in refining Polyfuel project Increase output of high-demand and high-value products Total investment estimated at approx. EUR 60 mn Construction started in 2017 Fully operational in 2019 Explore technological opportunities capitalizing on skills
Slide 25: Downstream Oil: enhance offer and customer experience in retail
Downstream Oil: enhance offer and customer experience in retail Secure strong positioning on the retail market by clearly differentiating two brands Increase throughput per filling Value for money station in Romania (mn l) High quality leader 4.9 5.0 >5 4.6 Diversification of the services offered We
Slide 26: 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’ development) ~80 mn boe reserves targeted from
Slide 27: 2021 Clear targets sustained by high investments
2021 Clear targets sustained by high investments CAPEX (EUR bn) FCF after dividends Clean CCS ROACE1, % (EUR mn) EUR ~5 bn cumulative 1.0 400 Positive for the majority of the period > 10% 2016 2017 2018 2021 2016 2017 2021 Strong net cash position supporting Neptun Deep and regional expansion invest
Slide 28: 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 28 | OMV Petrom │ Capital Markets Story │ February 21, 2018
Slide 29: People and Organizational Culture at the core of our strategy
People and Organizational Culture at the core of our strategy We are the energy – for a better life! We place people at the core of our business. We create a workplace that is fulfilling, diverse and learning orientated. We engage talented teams to drive safe and efficient business performance. Peop
Slide 30: Long-term sustainability of our business and value for the stakeholders
Long-term sustainability of our business and value for the stakeholders Environment & Eco-Efficiency: Manage carbon emissions sustainably ~6% reduction of GHG intensity vs. 2016 4% reduction of flaring and venting vs. 2016; Zero routine flaring and venting by 2030 “Zero harm-no losses” HSSE culture
Slide 31: Technology and Innovation for a sustainable future and valuable customer experience
Technology and Innovation for a sustainable future and valuable customer experience Digital Oil Field - well automation and online condition monitoring COMPETITIVENESS Standardized NarrowBand-Internet of Things (NB-IoT) - connectivity for the Upstream wells located in isolated areas Production autom
Slide 32: 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
Slide 33: Q4/17 Results review
Chapter divider slide: Design must be alike to chosen cover style (28pt) Q4/17 Results review
Slide 34: 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 Clean CCS EPS up 65% yoy margins USD -1.0/bbl yoy; retail sales volumes +4% yoy Dividend proposal1: RON 0.02/share, 3
Slide 35: Romanian environment
Romanian environment Macroeconomic environment Fiscal framework 2017 GDP growth1: 7% yoy; Supplementary gas taxation5 extended Q4/17 GDP growth: 7% yoy Tax on special constructions CPI annual inflation: 3.3% end- eliminated starting January 1, Dec; 12-month average: 1.3% 2017 Demand: Engagement with
Slide 36: Economic environment
Economic environment FX (RON/USD) Oil price (USD/bbl) 4.25 61 4.17 4.14 61 54 52 49 50 52 51 3.92 48 3.90 48 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Avg RON/USD Avg Urals price in USD/bbl Avg Brent price in USD/bbl Gas prices (EUR/MWh)1 Power prices in Romania (EUR/MWh)1 19.5 67
Slide 37: Cash Flow highlights
Cash Flow highlights Operating Cash Flow 2017 OCF1 up due to higher Operating Result +34% (RON bn) 5.95 Q4/17 NWC2: cash outflow RON 117 mn +41% 4.45 1.07 1.51 2017 NWC2: cash outflow RON 199 mn Q4/16 Q4/17 2016 2017 Investing Cash Flow (net outflow, RON bn) -16% -16% 2017 CAPEX higher 15% yoy 2.90
Slide 38: Income Statement highlights
Income Statement highlights Clean CCS Operating Result Clean CCS Operating Result reflects: (RON bn) +92% +92% ► Market conditions (prices, demand) 3.27 +26% ► Higher exploration expenses 1.70 0.45 0.57 ► Insurance revenues related to power segment Q4/16 Q4/17 2016 2017 Clean CCS Net Income1 Clean C
Slide 39: Special items and CCS effect
Special items and CCS effect Q4/17 Reversal of work litigation provision RON mn Q4/17 Q4/16 2017 2016 Gain from forward contracts for electricity Clean CCS Operating Result 573 453 3,273 1,700 Reversal of restructuring provision CCS effects: Inventory holding 103 75 102 -98 gains / (losses) Impairme
Slide 40: Upstream KPIs: OPEX/boe impacted by one-offs
Upstream KPIs: OPEX/boe impacted by one-offs OPEX1 Key drivers Q4/17 vs. Q4/16 (USD/boe) +7% +7% 12.4 Higher OPEX, in USD/boe terms, +7%: 11.6 10.5 10.4 10.2 One-off personnel-related expense, USD 1.2/boe Unfavorable FX development, USD 0.7/boe Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Abolition of tax on speci
Slide 41: 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) Higher realized oil prices, +27% -98 317 -121 340 -4 Higher exploration expenses 246 Sales volumes -3% Production costs impacted by one-off effects Q4/16 Realizati
Slide 42: Downstream Oil KPIs: Q4/17 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 Key drivers Q4/17 vs. Q4/16 (USD/bbl) 8.51 8.75 Refining margin -14% yoy 7.58 7.14 6.16 Refinery utilization rate at 91% Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Retail sales volumes (mn t) +4% +
Slide 43: 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) -5% -5% 15.50 14.17 11.79 13.41 Lower gas volumes to third parties in the 10.70 context of decreased demand Larger volumes off-taken by Brazi power plant Q4/16 Q1/17 Q2/17 Q3/17 Q4/17
Slide 44: 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 Key drivers Q4/17 vs. Q4/16 (RON mn) 360 Higher sales revenues following increase in 36 demand 292 31 Improved non-oil business contribution 319 288 Lower refining margins 5 41 Q4/16 Q4
Slide 45: FY17 Results review
Chapter divider slide: Design must be alike to chosen cover style (28pt) FY17 Results review
Slide 46: Key messages 2017
Key messages 2017 Free cash flow of RON 2.7 bn Upstream: production 168 after RON 0.8 bn dividend paid kboe/d, -4% yoy; OPEX USD 10.9/boe, -7% yoy Clean CCS Operating Result at RON 3.3 bn Downstream Oil: refining margins USD +0.8/bbl yoy; Clean CCS EPS up > 2 times yoy retail sales volumes +6% yoy D
Slide 47: Upstream KPIs: improved OPEX/boe
Upstream KPIs: improved OPEX/boe OPEX1 Key drivers 2017 vs. 2016 (USD/boe) 17.3 Improved OPEX, in USD/boe terms, -7%: 15.4 15.5 -7% -7% 13.2 11.7 Abolition of tax on special constructions 10.9 MTBF 626 days; lower services costs One-off personnel-related expense 2012 2013 2014 2015 2016 2017 Hydroca
Slide 48: Upstream Clean Operating Result supported by higher realized prices
Upstream Clean Operating Result supported by higher realized prices Upstream Clean Operating Result Key drivers 2017 vs. 2016 (RON mn) 1,674 Higher realized oil prices, +29% -333 376 -110 Decreased production costs and depreciation 1,166 575 Sales volumes -3% Higher exploration expenses 2016 Realiza
Slide 49: Downstream Oil KPIs: strong refining margins and sales
Downstream Oil KPIs: strong refining margins and sales OMV Petrom Indicator refining margin Key drivers 2017 vs. 2016 (USD/bbl) 8.71 7.75 6.98 Strong refining margin, +11% yoy 1.89 Refinery utilization rate at 93% -1.39 -2.83 2012 2013 2014 2015 2016 2017 Retail sales volumes (mn t) +6% +6% 2.56 2.7
Slide 50: Downstream Gas KPIs: higher gas sales volumes
Downstream Gas KPIs: higher gas sales volumes Gas sales volumes Key drivers 2017 vs. 2016 (TWh) +2% +2% 52.16 52.70 51.39 50.36 51.40 47.70 Higher gas volumes, built on sale portfolio optimization 2012 2013 2014 2015 2016 2017 Net electrical output (TWh) Higher spark spreads supported by -7% -7% bas
Slide 51: 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 Key drivers 2017 vs. 2016 (RON mn) 1,753 Strong refining margins 209 422 Low base effect from 2016 turnaround 1,122 1,533 Higher retail sales volumes following increase in demand 1,112 I
Slide 52: CAPEX and E&A
CAPEX and E&A Group CAPEX incl. capitalized E&A CAPEX incl. capitalized E&A (RON bn) 2017 at RON 3.0 bn: +25% +25% 64 new development wells and sidetracks drilled +15% +15% 3.7 >1,000 workovers performed 3.0 2.6 2018 at RON 3.7 bn: Drilling >100 development wells and sidetracks ~1,000 workovers Refi
Slide 53: Outlook
Chapter divider slide: Design must be alike to chosen cover style (28pt) Outlook 2018
Slide 54: Outlook 2018
Outlook 2018 Indicators Actual 2017 Assumptions/Targets 2018 Brent oil price USD 54/bbl USD 60/bbl Refining margin USD 7.75/bbl <USD 7.75/bbl Production 168 kboe/d ~ -4% yoy1 CAPEX RON 3.0 bn RON 3.7 bn FCF after dividends RON 2.7 bn positive 1 Not including portfolio optimization initiatives 54 | O
Slide 55: Sensitivities in 2018
Sensitivities in 2018 OMV Petrom Group main sensitivities Operating Result impact Brent oil price USD +1/bbl EUR +20 mn OMV Petrom indicator refining margin USD +1/bbl EUR +24 mn Exchange rates (EUR/USD) USD appreciation by 5 USD cents EUR +46 mn 55 | OMV Petrom │ Capital Markets Story │ February 21
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Slide 57: Appendix
Chapter divider slide: Design must be alike to chosen cover style (28pt) Appendix
Slide 58: Upstream Romania map
Upstream Romania map 58 | OMV Petrom │ Capital Markets Story │ February 21, 2018
Slide 59: Romanian oil market overview in 2017
Romanian oil market overview in 2017 Supply IMPORTS: various 69% 31% PRODUCTION TRANSPORTATION: Conpet Refineries (combined nameplate capacity ~12 mn tpa) processed 71% 29% crude oil ~11.21 mn tpa (of which ~7.8 mn t from import) Refineries Petroleum Products Imports Petrobrazi Rompetrol (Petromidia
Slide 60: OMV Petrom Group fuel retail sales
OMV Petrom Group fuel retail sales (mn l) 188 159 140 105 117 79 2013 14 15 16 2017 2,746 2,405 2,308 2,444 2,573 Republic of Romania Moldova Serbia 2013 14 15 16 2017 195 184 181 153 402 172 170 Bulgaria Black Sea 350 337 348 342 328 91 2013 14 15 16 2017 61 2013 14 15 16 2017 60 | OMV Petrom │ Cap
Slide 61: Romanian gas market overview in 2017
Romanian gas market overview in 2017 Regula- Regulatory Body tory Romanian Energy Regulatory Authority (ANRE) IMPORTS: various 10% 90% PRODUCTION: , Romgaz, … STORAGE: Supply TRANSPORTATION: Transgaz Romgaz, Depomures, Amgaz SUPPLY: , Romgaz, Engie Romania, E.ON Energie Romania, ... Distribu- tion D
Slide 62: Romanian gas market liberalization
Romanian gas market liberalization Gas prices in Romania1 (EUR/MWh) 40 Prices for non-households liberalized since January 2015 31 29 28 Producer price for households liberalized since April 27 27 27 26 26 2017; end-price for households still regulated 24 25 21 Gas producers and suppliers must sell/
Slide 63: Romanian power market overview in 2017
Romanian power market overview in 2017 Regulatory Regulatory Body Romanian Energy Regulatory Authority (ANRE) Thermal Nuclear Hydro Renewables Supply Production Imports 43% 18% 24% 16% Transport & Distribution System Operator (TSO&DSO) Market(s) Mid/long term fwd market(s) Ancillary services & Balan
Slide 64: Romanian gas and power markets overview in 2017
Romanian gas and power markets overview in 2017 Gas demand1 Power production and demand2 (TWh) (TWh) 131 62 61 61 122 124 13 10 3 14 9 10 Renewables 22 21 23 Thermal 3 CCPP Brazi 119 110 118 3 3 Hydro 17 18 15 Import gas Nuclear Domestic gas 11 10 11 Power demand 2015 2016 2017 2015 2016 2017 Gas ma
Slide 65: Cash flow Statement
Cash flow Statement RON mn 2012 2013 2014 2015 2016 2017 Cash flow from operating activities (CFO) 7,185 8,048 6,830 5,283 4,454 5,954 Thereof, Depreciation, amortization and impairments including 2,852 3,355 4,806 6,761 3,464 3,580 write-ups Change in net working capital (NWC) 7 -77 -320 146 -27 -1
Slide 66: Income Statement
Income Statement RON mn 2012 2013 2014 2015 2016 2017 Sales1 26,574 24,492 21,862 18,493 16,647 19,435 Clean CCS Operating Result 5,857 6,019 5,213 2,529 1,700 3,273 Thereof Upstream 5,754 5,542 4,667 919 575 1,674 Downstream Oil 31 374 654 1,315 1,112 1,533 Downstream Gas 361 171 -60 -145 11 220 Co
Slide 67: Operating Result
Operating Result RON mn 2012 2013 2014 2015 2016 2017 Clean CCS Operating Result 5,857 6,019 5,213 2,529 1,700 3,273 Thereof Upstream 5,754 5,542 4,667 919 575 1,674 Downstream Oil 31 374 654 1,315 1,112 1,533 Downstream Gas 361 171 -60 -145 11 220 Corporate and Other -104 -96 -100 -68 -62 -74 Conso
Slide 68: 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 Clean CCS EBIT 3,815 1,870 3,325 5,475 5,855 6,015 5,202 2,522 1,694 EBIT 1 1,205 1,620 2,986 4,936 5,662 5,958 3,338 -530 1,469 EBITD 3
Slide 69: Key financial indicators (consolidated) – restated
Key financial indicators (consolidated) – restated1 in RON mn 2016 Q1/16 Q2/16 Q3/16 Q4/16 2017 Q1/17 Q2/17 Q3/17 Q4/17 Sales 16,647 3,649 3,733 4,571 4,694 19,435 4,653 4,608 5,032 5,142 Clean CCS Operating Result 1,700 412 231 604 453 3,273 767 892 1,042 573 2 Operating Result 1,476 346 220 575 33
Slide 70: 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 2018 Financial Calendar April 26: Annual General Meeting of Shareholders May 3: Q1 2018 results August 2: Q2 and HY 2018 results October 31: Q3 2018