Gazprom Neft · RUS:SIBN
Gazprom Neft — Q1 2013 Earnings Presentation
30 slides from Gazprom Neft's earnings presentation, May 16, 2013
Slide 1: IFRS Financial and Operating Results for First Quarter 2013
IFRS FINANCIAL AND OPERATING RESULTS FOR FIRST QUARTER 2013 16 May 2013, St. Petersburg
Slide 2: Agenda
AGENDA Highlights, Alexey Yankevich Macro Member of the Management Board, Environment, CFO Financials Upstream Vadim Yakovlev Deputy Chairman of the Management Board, First Deputy CEO Downstream Vladimir Konstantinov Head of Economics and Investment Department, Refining and Marketing Division
Slide 3: Disclaimer
DISCLAIMER This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Gazprom Neft and its consolidated subsidiaries. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements
Slide 4: Highlights
HIGHLIGHTS 1Q 2013 Financial performance: Revenue: RUB 292 bln (4.8% Y-o-Y) Higher oil product prices, increased hydrocarbon production and refining throughput resulted in 4.8% higher revenue EBITDA*: RUB 77 bln (-3.2% Y-o-Y) Higher taxes and tariffs of natural monopolies led to a 3.2% decrease
Slide 5: Macro Environment
Macro Environment Higher taxes and tariffs of natural monopolies in lower crude price environment IFRS FINANCIAL AND OPERATING RESULTS FOR FIRST QUARTER 2013 5
Slide 6: Lower Crude Prices, Higher Taxes, Stable Ruble
LOWER CRUDE PRICES, HIGHER TAXES, STABLE RUBLE Crude oil price vs. export duty Excise tax on petroleum products, RUB/tonne US$/bbl RUB/US$ Brent Duty FX / Netbacks, $/bbl Decrease in global crude prices Y-o-Y… …while crude export duty increased and ruble remained stable Increase in transportatio
Slide 7: Upstream
Upstream New projects on track, continuing resource base extension, efficient development of legacy fields IFRS FINANCIAL AND OPERATING RESULTS FOR FIRST QUARTER 2013 7
Slide 8: Legacy Fields: Exploring New Opportunities
LEGACY FIELDS: EXPLORING NEW OPPORTUNITIES 1Q 2013 Key events: Exploration: tight oil reserves Began testing Bazhenov formation at Palyanovskaya acreage of Krasnoleninskoye field Planned drilling of Palaeozoic carbonates at Archinskoye field Field Development: implementing new technologies Inc
Slide 9: Industry-Leading Growth in Hydrocarbon Production for 1Q13
INDUSTRY-LEADING GROWTH IN HYDROCARBON PRODUCTION FOR 1Q13 Group average daily hydrocarbon Peer comparison: hydrocarbon production, ktoepd production in Russia increase 180 1Q13 vs. 1Q12 175 Gazprom Neft 4.7% 170 Rosneft 2.0% 165 Surgutneftegas -1.5% 160 TNK-BP -0.6% 155 Lukoil -0.2% 150 1Q12 2Q12 3
Slide 10: Increasingly Sophisticated Application of New Technologies
INCREASINGLY SOPHISTICATED APPLICATION OF NEW TECHNOLOGIES Total horizontal wells drilled, units 30 +329% Results of new technology application in 1Q2013 7 1Q12 1Q13 Technology Activity Average flow including: Vyngapurovskoye -14 wells simple horizontal wells, units Vyngayahinskoye -1 well -29% Hori
Slide 11: Delivering 20% Hydrocarbon Production Growth with Stable Capex
DELIVERING 20% HYDROCARBON PRODUCTION GROWTH WITH STABLE CAPEX* Upstream CAPEX*, $/boe Hydrocarbon production*, MMtoe +6% -12% +13% +1% -11% +20% 40.3 9.8 37.9 33.6 8.6 8.7 2010 2011 2012 2010 2011 2012 *Excluding JV (hydrocarbon production volumes and CAPEX); the calculation of Upstream CAPEX $/boe
Slide 12: Production Growth vs. Capex Growth 2010-2012
PRODUCTION GROWTH VS. CAPEX GROWTH 2010-2012 Gazprom Neft Production growth, % Rosneft Bashneft Russneft Surgutneftegas Tatneft Lukoil Capex growth, % Circle square – production volume Source: Financial Statements of Companies Note: Surgutneftegas Capex as of FY2011 Data provided by Schlumberger Bus
Slide 13: Increased Associated Gas Utilization: 1Q13 vs. Y2012
INCREASED ASSOCIATED GAS UTILIZATION: 1Q13 VS. Y2012 Associated gas production/utilization, bcm Associated gas production/utilization +1.1 bcm of utilised associated gas 1Q13 vs. 1Q12, bcm Utilization 77%* Flaring 6.7 66%* 6.4 1.6 1.6 1.4 4.7 2.2 0.4 0.6 1.8 5.3 4.2 1.2 1.0 2.8 2011 2012 F2013 1Q12
Slide 14: Upstream Project Development Update
UPSTREAM PROJECT DEVELOPMENT UPDATE 1Q 2013 Key events: 2013 Major goals: Messoyakha: Frame development and infrastructure Russian projects concept. FEED and equipment contracting for initial oil and Messoyakha : Acquired 400 km2 of 3D seismic, tested exploration wells drilled in gas infrastruct
Slide 15: Upstream Project Development Update
UPSTREAM PROJECT DEVELOPMENT UPDATE 1Q 2013 Key events: 2013 Major goals: International Projects Iraq (Badra): Drilled second well (Bd5). Tested first of five Iraq (Badra): Test three wells. Start drilling formations at exploration well Bd4 under second contract. Launch first train (2,000 bpd).
Slide 16: Prospects for Bazhenov Development
PROSPECTS FOR BAZHENOV DEVELOPMENT Production start-up 2015 Outlook for JV Cumulative oil production: 87.5 MMTonnes Plateau production 1.7 MMTonnes Duration of plateau production 13 years (2024 - 2036) Signed partnership agreement Partnership Formed joint venture agreement with Submitted appli
Slide 17: Downstream
Downstream Increasing product quality and sustained growth in premium channels IFRS FINANCIAL AND OPERATING RESULTS FOR FIRST QUARTER 2013 17
Slide 18: Refinery Modernization Drives Premium Channel Expansion
REFINERY MODERNIZATION DRIVES PREMIUM CHANNEL EXPANSION 1Q 2013 Key events: 2013 Major goals: Refining Increased refining volumes by 1.9% Y-o-Y Launch FCC gasoline hydrotreating and Launched diesel hydrotreater at isomerization units at Moscow YANOS, allowing transition to Class Initiate FEE
Slide 19: Product Mix Continues Shift Towards Higher Value
PRODUCT MIX CONTINUES SHIFT TOWARDS HIGHER VALUE Russian refining throughput Gasoline and diesel yields (MMTonnes) Gasoline Diesel +0.9% 9.49 +0.3% 9.40 9.46 1% Yaroslavl 1.84 +1.2% 1.87 -6.6% 2.00 20% 24% 34% Class 5 Moscow 2.65 2.53 2.30 56% -4.5% +10.1% 20% Class 4 11% 20% +3.7% -1.4% Omsk 4.91 5
Slide 20: Strong Margins Direct Crude to Domestic Refining
STRONG MARGINS DIRECT CRUDE TO DOMESTIC REFINING Gazprom Neft crude mix Gazprom Neft average netbacks (MMTonnes) $/bbl Introduction of 15.64 60-66 14.25 0.95 13.96 +34.7% Crude to CIS & 1.07 +19.6% 1.28 Russia 4.02 -22.9% -42.3% Crude 3.01 2.32 Exports +12.3% 0.87 -28.3% 1.21 NIS and 0.77 CIS Refini
Slide 21: Domestic and International Premium Channels See Continued Growth
DOMESTIC AND INTERNATIONAL PREMIUM CHANNELS SEE CONTINUED GROWTH Premium sales volume growth Market share 1Q 2012 vs. 1Q 2013 1Q 2013 Increased average daily throughput per site in Russia to 17.6 tpd in 1Q 10.3% 2013 12%* Increased total number of active Retail retail stations to 1,666 * Excludi
Slide 22: Financials
Financials 4.8% revenue increase Y-o-Y IFRS FINANCIAL AND OPERATING RESULTS FOR FIRST QUARTER 2013 22
Slide 23: Profit Eroded by Taxes and Tariffs of Natural Monopolies
PROFIT ERODED BY TAXES AND TARIFFS OF NATURAL MONOPOLIES +4.8% Revenue increased 4.8% Y-o-Y on -8.4% higher petroleum products prices and 319 Revenues 278 292 expanded petroleum product sales RUB bln volumes Revenue declined 8.4% Q-o-Q on 1Q12 4Q12 1Q13 seasonally lower oil sales -3.2% -1.9% E
Slide 24: EBITDA Reconciliation 1Q13 vs. 1Q12
EBITDA RECONCILIATION 1Q13 VS. 1Q12 EBITDA 1Q13 vs 1Q12, RUB mln IFRS FINANCIAL AND OPERATING RESULTS FOR FIRST QUARTER 2013 24
Slide 25: EBITDA Reconciliation 1Q13 vs. 4Q12
EBITDA RECONCILIATION 1Q13 VS. 4Q12 EBITDA 1Q13 vs 4Q12, RUB mln IFRS FINANCIAL AND OPERATING RESULTS FOR FIRST QUARTER 2013 25
Slide 26: Free Cash Affected by Higher Capex and Working Capital Change
FREE CASH AFFECTED BY HIGHER CAPEX AND WORKING CAPITAL CHANGE RUB million Cash flow reconciliation 1Q13 (36,857) 43,928 Free cash flow 7,071 7,071 Net cash flow (16,038) (8,257) (2,508) 3,218 Operating cash CAPEX Free cash flow Net borrowings New projects Other Net cash flow flow IFRS FINANCIAL AND
Slide 27: Investments Support Strategic Goals
INVESTMENTS SUPPORT STRATEGIC GOALS 40% Y-o-Y growth in brownfield capex due Investments (RUB mln) to more intensive use of more expensive new technologies in legacy fields +33% Development of Orenburg, Novoport and Kurdistan expansion drove 69% Y-o-Y increase in greenfield capex Refining capex decr
Slide 28: Continued Improvements in Balance Sheet and Debt Portfolio
CONTINUED IMPROVEMENTS IN BALANCE SHEET AND DEBT PORTFOLIO 2.0 80% 0.7% 1.4% 1.5 60% 1.0 40% USD 43.4% RUB Euro Other 54.5% 0.5 20% 0.0 0% 2011 2012 1Q13 Net debt/EBITDA (lhs) Debt to EBITDA target (lhs) Short term debt/Total debt, % (rhs) Net debt/EBITDA 0.5x vs. target <1.5x Reduced average in
Slide 29: 25% Payout Ratio Is Expected in 2013
25% PAYOUT RATIO IS EXPECTED IN 2013 Shareholders register closed 23 April 2013 Dividend of RUB 9.3 per share recommended by the Board Dividend planned for 2012 is 25% of IFRS net income (RUB 44.09 bln) Dividends will be paid within 60 days following shareholder approval Considering paymen
Slide 30: Questions & Answers
Questions & Answers IFRS FINANCIAL AND OPERATING RESULTS FOR FIRST QUARTER 2013 30