Novatek · RUS:NVTK
Novatek — Non-Deal Roadshow (June 2020)
31 slides from Novatek's roadshow presentation, June 2020
Slide 1: Unlocking Arctic Potential: Expanding Our Global LNG Footprint to 2030
Unlocking Arctic Potential: Expanding Our Global LNG Footprint to 2030 Energy Affordability, Security & Sustainability Investor Meetings June 2020
Slide 2: 1Q 2020 Financial Highlights
1Q 2020 Financial Highlights 21% 2.8 REVENUE (US$ bln) 1.5 NORMALIZED EBITDA (US$ bln) 15% 19% 0.8 NORMALIZED PROFIT* (US$ bln) 0.3 FREE CASH FLOW (US$ bln) 7% 0.7 CAPEX (US$ bln) 15% NET DEBT -0.12 TO NORMALIZED EBITDA** (x) n/a *excluding the effect of foreign exchange gains (losses) of subsidiari
Slide 3: 1Q 2020 Operational Highlights
1Q 2020 Operational Highlights SALES VOLUMES Natural Gas LNG Oil Products Crude Oil LPG 18.2 bcm 2.5 bcm 1.7 mmt 1.2 mmt 0.7 mmt 3
Slide 4: Monetizing Our Resource Base (1Q 2020)
Monetizing Our Resource Base (1Q 2020) Yamal LNG (nameplate capacity – 17,4 mmtpa) PRODUCING FIELDS Natural gas LNG Yamal Trade Natural gas by pipeline Cryogas-Vysotsk (nameplate capacity – 660 mtpa) Separation and Unstable gas NOVATEK Gas & Power treatment condensate by Asia pipeline LNG Crude oil
Slide 5: NOVATEK at a Glance 2019
NOVATEK at a Glance 2019 1.1 BLN BOE 590 MLN BOE 65.7 BCM Total proved Hydrocarbon Natural gas sales hydrocarbon addition production in Russia (SEC) 16.3 BLN BOE 10.1 % 12.8 BCM Share of natural gas LNG sales Total proved hydrocarbon production in Russia reserves (SEC) 252% +8.6 % 18.4 MMT Organic r
Slide 6: Internally Funded Investment Program
Internally Funded Investment Program 2 000 20,0 1,724 1 500 15,0 1,260 1 000 10,0 981 1,001 932 889 830 846 842 841 729 751 769 662 684 Operating CF / CAPEX 500 595 5,0 443 US$ mln 0 0,0 -500 - 5,0 Source: Company data LNG CAPEX -1 000 2 13 20 27 14 95 32 85 70 165 187 305 385 167 234 410 304 - 10,0
Slide 7: NOVATEK Robust FCF Generation over Shale Producers
NOVATEK Robust FCF Generation over Shale Producers (USD mln) 3 000 2 500 2 000 1 500 2 580 2 087 2 239 1 000 1 950 1 386 1 281 1 350 500 1 038 919 620 0 -62 -182 -501 -532 -505 -519 -700 -773 -737 -500 -1 038 -1 000 -1 500 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 NOVATEK 34 Shale-Focused O&
Slide 8: Strategy's Objectives and Key Events 2018-2020
Strategy’s Objectives and Key Events 2018-2020 Cryogas-Vysotsk FID made for Train 1 Yamal LNG Start-up of Train 3 ARC7 LNG carriers Yamal LNG Cryogas-Vysotsk 15 carriers in Start-up of Train 4 Start-up of Train 1 Arctic LNG 2 operation FEED completion Natural gas liquefaction ARC4 LNG carriers compl
Slide 9: Stable Gas Prices in Russia to Maintain Domestic Business
Stable Gas Prices in Russia to Maintain Domestic Business 5 4 3 Henry Hub $/MMBtu 2 1 Domestic price in Russia 0 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Source: FTS Russia, NYMEX, IHS Russian domestic gas business still a critical part of our revenues and operating cash flows ✔ Energy Affordabilit
Slide 10: Global LNG Market
Global LNG Market ✔ Energy Affordability ✔ Energy Security ✔ Energy Sustainability 10
Slide 11: Significant Potential for Increased Gas Consumption by Emerging Markets
Significant Potential for Increased Gas Consumption by Emerging Markets Size of the circle depends on the population ✔ Energy Affordability ✔ Energy Security ✔ Energy Sustainability 11
Slide 12: Global LNG Demand – Stronger than Expected
Global LNG Demand – Stronger than Expected >740 800 mmtpa 700 600 Europe 500 400 314 300 Asia- Pacific 200 100 0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Asia Pacific Europe Middle East North America South America Africa Sourc
Slide 13: Asian Gas Market Prospects
Asian Gas Market Prospects 1400 bcm 1274 1200 1000 Gap to be filled mostly by LNG and pipeline gas >780 bcm 800 600 740 400 Domestic production? 200 0 2019 2022 2025 2028 2031 2034 2037 2040 Onstream Under Development Probable Development Technical Reserves YTF Demand Source: NOVATEK’s interpretatio
Slide 14: European Gas Market Prospects
European Gas Market Prospects 700 bcm 600 517 500 548 400 Need for global LNG 300 and pipeline gas >430 bcm 200 100 0 2019 2022 2025 2028 2031 2034 2037 2040 Indigenous Production* Contracted - LNG Contracted - North Africa Piped Contracted - Norway Piped Contracted - Russia Piped Contracted - South
Slide 15: LNG Demand Increase of around 10% YTD
LNG Demand Increase of around 10% YTD Import volumes increase/decrease in Jan-May 2020 vs 2019, mmt 0,6 0,5 1,3 1,3 1,4 -1,3 1,4 1,8 1,9 2,3 2,7 161 148 Increase Y-o-Y Decrease Y-o-Y Jan-May S. Korea Turkey India UK China Other Spain Belgium Taiwan France Japan Jan-May 2019 2020 Source: NOVATEK’s in
Slide 16: Historical and expected global liquefaction nominal capacity additions
Historical and expected global liquefaction nominal capacity additions 115 capacity additions 110+ capacity additions 40 39 35 32 28 30 27 23 25 20 17 20 15 13 12 11 11 10 5 5 2 0 -5 -1 -10 -8 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Asia Pacific Europe Middle East
Slide 17: NOVATEK's LNG Production Platform
NOVATEK’s LNG Production Platform 2024-25 TREKHBUGORNIY LA BUKHARINSKIY LA 2027-30 ✔ Energy Affordability ✔ Energy Security ✔ Energy Sustainability 17
Slide 18: NOVATEK's LNG Production Timeline
NOVATEK’s LNG Production Timeline 18.6 19.6 19.6 26 38 44 57-70 mmt mmt mmt mmt mmt mmt mmt 18
Slide 19: Yamal LNG Runs Above Capacity
Yamal LNG Runs Above Capacity Yamal LNG ramp-up ahead of schedule and on budget Train 1 completed on schedule 5.5 mmtpa Train 2 completed 6 months 5.5 mmtpa ahead of schedule Train 3 completed >12 months 5.5 mmtpa ahead of schedule Train 4 start-up is expected 0.9 mmtpa in 2020 >30 million tons of L
Slide 20: New LNG marketing paradigm
New LNG marketing paradigm New contracts signed by price indexation Average oil indexations in new contracts 50 15% 40 14.4% Oil-indexation level 14% 14.1% 13.9% 30 ACQ (mmtpa) 13% 13.0% 20 12.0% 12% 12.1% 11.6% 11.7% 10 11.3% 11% Only SPA’s to end-users 0 10% 2011 2012 2013 2014 2015 2016 2017 2018
Slide 21: Spot LNG market increasing volumes
Spot LNG market increasing volumes Share of major spot exporters in 2019, mmt Volume of non long-term LNG trade, mmt 120 35% 30% 100 25% 80 20% 60 >115 MMT 15% 40 10% 20 5% 0 0% 1996 2001 2008 1995 1997 1998 1999 2000 2002 2003 2004 2005 2006 2007 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20
Slide 22: Large-Scale LNG Sales
Large-Scale LNG Sales LNG Sales of NOVATEK Gas & Power Asia 1Q Total (1) 2020 from 2017 Yamal LNG Number of Norway cargos 23 200 Volumes, mmt 1.7 14.0 United Kingdom Netherlands Belgium Total dispatched from Yamal LNG France Number of Spain cargos 67 436 China Volumes, mmt 5.0 31.9 Thailand India tr
Slide 23: Arctic LNG 2
Arctic LNG 2 Natural gas production at Utrenneye field, bcm 35 30 25 20 15 10 5 0 2023 2024 2025 2026 2027 2028 2029 2030 Gas condensate production at Utrenneye field, mmt 2,0 1,5 1,0 0,5 0,0 2023 2024 2025 2026 2027 2028 2029 2030 Project Participants FID made (September 2019) CAPEX is estimate
Slide 24: Cryogas-Vysotsk
Cryogas-Vysotsk Medium-tonnage LNG plant on the Baltic Sea LNG production facility and a transshipment terminal thousand tons per annum – 660 initial design capacity designed to handle 30 mcm capacity LNG carriers 51% Our participation interest 26 shipments by tankers and 195 by trucks in 1Q2020 = 1
Slide 25: All 15 ARC7 Ice-Class LNG Tankers in Operation
All 15 ARC7 Ice-Class LNG Tankers in Operation Speed in open Speed in ice 1.5 m water thick LNG tanker Vessel power capacity ✔ Energy Affordability ✔ Energy Security ✔ Energy Sustainability 25
Slide 26: LNG Logistics to Asia
LNG Logistics to Asia 12 days 85 36 days 29 2019 2040 160 110 79 6 35 days 2019 2040 2019 2040 145 26 days 46 14 7 days days 4 2019 2040 days 15 86 days 76 2019 2040 Source: NOVATEK’s interpretation of IHS data ✔ Energy Affordability ✔ Energy Security ✔ Energy Sustainability 26
Slide 27: Sustainable Development – Integral Part of Strategy
Sustainable Development – Integral Part of Strategy* Sustainable reporting with GRI recommendations from 2005 * Corporate Strategy 2018-2030 ✔ Energy Affordability ✔ Energy Security ✔ Energy Sustainability 27
Slide 28: Sustainability Reports Since 2005
Sustainability Reports Since 2005 Longest history of sustainability reporting in the Russian O&G ✔ Energy Affordability ✔ Energy Security ✔ Energy Sustainability 28
Slide 29: Commitment to Developing Sustainable Value
Commitment to Developing Sustainable Value NOVATEK is ranked among top ESG companies FTSE Russell Ratings confirms that NOVATEK by Thomson Reuters ESG Scores in Russia remains a constituent of the across all industries FTSE4Good Emerging Index in 2019 Rating 3.4/5 NOVATEK maintained Average Performe
Slide 30: Dividends: Sharing Our Success
Dividends: Sharing Our Success DIVIDEND PAYOUT(1), (RR per ordinary share) Absolute growth: 36x 32.33 CAGR: 29% 26.06 18.10 2H 14.95 13.90 14.23 13.50 1H 10.30 7.89 6.86 6.00 4.00 1.65 2.35 2.52 2.75 0.9 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Committed to increasi
Slide 31: Disclaimer – Forward Looking Statement
Disclaimer – Forward Looking Statement Matters discussed in this presentation may constitute forward-looking statements. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which