Novatek · RUS:NVTK
Novatek — HSBC CEEMEA Investor Forum 2013
33 slides from Novatek's conference presentation, Mar 21, 2013
Slide 1: Russia's Natural Gas Frontiers: Harnessing the Energy of the Far North
Russia’s Natural Gas Frontiers: “Harnessing the Energy of the Far North” Mark Gyetvay, Chief Financial Officer and Member of the Board HSBC CEEMEA Investor Forum New York 21-22 March 2013
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements in this presentation are not historical facts and are “forward-looking”. Examples of such forward-looking statements include, but are not limited to: – projections or expectations of revenues, income (or loss), earnings (or loss) per share, dividends,
Slide 3: Main Operational Highlights – 2012
Main Operational Highlights – 2012 SEC proved reserves increased by 32% to 12.4 billion boe Increased Gross Production: – Natural gas production increased by 7.1% to 57.3 bcm – Liquid hydrocarbons production increased by 4.0% to 4.3 mmt – Total production increased by 6.8% to 411 mmboe Launche
Slide 4: SEC Reserve Growth
SEC Reserve Growth Reserve replacement ratio from 2004 to 2012 – 486% mmboe 6,416 (98) 12,394 12,394 12,394 12,394 2010 Termo- (2,127) Liquids karstovoye field Others 2012 West Zapolyarnoye PU Khancheyskoye 4,025 Nortgas Sibneftegaz 2009 South-Tambeyskoye field (51%) SeverEnergia 2010 SeverEnergia 2
Slide 5: Hydrocarbon Production
Hydrocarbon Production Natural Gas Sales Liquids Sales Total Hydrocarbon Production, bcm Production, mmt Production, mmboe CAGR 13% CAGR 9% CAGR 13% Absolute increase 169% 56.5 Absolute increase 105% 4.3 Absolute increase 161% 405 52.9 4.1 381 3.6 3.0 37.3 274 32.4 2.6 237 30.4 2.4 2.3 220 28.6 28.3
Slide 6: Increasing Natural Gas Production
Increasing Natural Gas Production (mmcm per day) Feb Feb Feb Feb May May May May Jun Jun Jun Jun Nov Nov Nov Sep Sep Sep Nov Sep Jul Jul Jul Jul Aug Oct Aug Oct Aug Oct Aug Oct Dec Dec Dec Dec Jan Jan Jan Jan Apr Apr Apr Apr Mar Mar Mar Mar Gross production (subsidiaries) Equity share in the gross p
Slide 7: Acquisition of 49% in Nortgas
Acquisition of 49% in Nortgas Nortgas block Other fields of NOVATEK Date of acquisition – November 2012 NOVATEK gas condensate Partner – Gazprom pipeline North-Urengoyskoye Producing green field with material production upside: North-Urengoyskoye field with proved SEC reserves of 157 bcm of ga
Slide 8: Natural Gas Sales
Natural Gas Sales Gas Sales Breakdown 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2008 2009 2010 2011 2012 Others Ex-field and regional • Contracts concluded with E.ON and Fortum (15 years), MMK (10,5 years), gas distributors Large industrial Mechel (10 years and longer), Severstal (5 years) and Mos
Slide 9: Liquids Sales
Liquids Sales Liquids Sales Volumes, mmt 4.1 4.2 3.4 3.1 3.5 3.4 2.6 2.8 0.5 0.6 0.6 0.8 2009 2010 2011 2012 Domestic Export 9
Slide 10: Yamal LNG Project
Yamal LNG Project Project for construction of an LNG plant on the Yamal Peninsula The onshore South-Tambeyskoye field holds 907 bcm of conventional 2P gas reserves 16.5 mmt of LNG per annum (3 trains) 1 mmt of marketable gas condensate per annum Participants – NOVATEK (80%), TOTAL (20%) 2010
Slide 11: Facts About The Yamal Peninsula
Facts About The Yamal Peninsula The Yamal Peninsula is located in the north of Western Siberia and is bordered by the Kara Sea to the west and by the Gulf of Ob to the east The administrative center is Yar-Sale and the peninsula has a total population of 16,100 inhabitants The Yamal territory
Slide 12: Arctic Climatic Conditions
Arctic Climatic Conditions Subarctic and arctic climate Average annual temperature - minus 9°С Absolute minimum temperature - minus 57°С Strong winds and blizzards with wind speeds of up to 32 meters/second Permafrost with depths of up to 300 to 500 meters Long-lasting ice cover (about 3
Slide 13: South-Tambeyskoye Field
South-Tambeyskoye Field Natural gas production1, bcm 30 New plateau 118Р Northern 27 (28 bcm) Dome 3391 115Р Old plateau 24 3392 8394 3393 4392 87Р 2391-2 86Р 4391 8392 6391 5392 83933394 8391 (25 bcm) 3221 82Р 5391 116Р 21 3222 84Р 18 3223 3224 93Р 4221 3225 119Р 15 83Р 3351 3352 3352-27351 4351 13
Slide 14: Field Development
Field Development Optimized drilling and surface facilities Current development parameters Initial Current Max. No. of drilling rigs 8 5 208 production wells to be drilled from 19 well pads: No. of well pads 35 19 58 wells to feed the 1st train of the LNG plant Gas gathering lines 350 km 288 km
Slide 15: Logistics of Material Supplies
Logistics of Material Supplies Year-round modules Heavy modules transportation delivery • By big lift RoRo vessels • Year round yard-to- transhipment Heavy modules (July to Nov) • Accumulation at storage areas (Kirkines-Murmansk) • July-October storage-to-site transportation Light modules and bulk B
Slide 16: Port of Sabetta
Port of Sabetta Seaway and approach channels Port facilities, berths and harbor Government facilities 6 3 Administrative Yamal 1 facilities peninsula Ice protection 3 construction 4 2 4 Port harbor Approach 5 channel 1 2 6 Seaway channel 1 5 2 Yamal LNG facilities 3 Administrative and Port facilitie
Slide 17: On-Site Activity
On-Site Activity Berth piling construction Arctic drilling rig assembled Materials offloading (4.5 km offshore the Gulf of Ob) Living quarters 17
Slide 18: Yamal LNG Carrier Concept
Yamal LNG Carrier Concept Based on existing operational experience and extensive studies and model tests at ice model basin by Aker Arctic Main concept - Double Acting Ship (DAS): • Bow – forward movement in open water and thin ice • Astern – reverse movement through thick ice and ice ridges Ice mod
Slide 19: LNG Marketing Logistics
LNG Marketing Logistics 10.6 Natural gas spot price1, $/mmbtu Summer transportation route to target markets, liquids & LNG All season transportation route to target markets, liquids & LNG Transportation routes to other markets 10.6 2 3 USA 3.4 14.7 12.5 15.4 16.4 Notes: 1. Based on average actual pr
Slide 20: Yamal LNG - Key Project Advantages
Yamal LNG - Key Project Advantages Low-cost, long-lived feedstock Large onshore conventional reserve base with high concentration of reserves Well known geology and proven development technologies Very low F&D and lifting costs Convenient location Reserves are located at the coast line a
Slide 21: 2012 Financial Results
a= —_ NOVATEK 2012 Financial Results
Slide 22: Another Record Year (RR million)
Another Record Year (RR million) 2012 2011 +/(-) +/(-)% Oil and gas sales 210,246 174,811 35,435 20.3% Total revenues 210,973 175,273 35,700 20.4% Operating expenses (125,775) (96,820) (28,955) 29.9% EBITDA (1 ) 95,106 148,349 (53,243) -35.9% Normalized EBITDA (2 ) 95,166 85,401 9,765 11.4% EBITDA m
Slide 23: Total Revenues Breakdown
Total Revenues Breakdown 2012 7% 3% Natural gas 22% Stable gas condensate 68% 2011 8% 2% LPG 27% Other 63% 23
Slide 24: Market Distribution – Sales Volumes
Market Distribution – Sales Volumes Natural gas sales volumes, mmcm Liquids sales volumes, mt 58 880 53 667 4,111 4,203 29 332 54.7% 40 806 69.3% 3,528 85.8% 3,449 82.1% 24 335 45.3% 18 074 30.7% 0 0 583 14.2% 754 17.9% 2011 2012 2011 2012 Ex-field End-customer Domestic Export • Growth in natural ga
Slide 25: Stable Gas Condensate in Transit
Stable Gas Condensate in Transit Yosu Singapore “Goods in transit” 30.09.2012 “Goods in transit” 31.12.2012 “Goods in transit” 31.12.2011 ~ 122 thousand tons ~ 217 thousand tons ~ 61 thousand tons 61 mt 61 mt 61 mt 61 mt 60 mt USA South Korea South Korea Singapore Singapore 36 mt 60 mt Singapore Sou
Slide 26: Realized Hydrocarbon Prices
Realized Hydrocarbon Prices (net of VAT, excise and export duties) 2012 2011 +/(-) +/(-)% Domestic prices Natural gas end-customers, RR/mcm 2,821 2,627 194 7.4% Natural gas ex-field, RR/mcm 1,518 1,392 126 9.1% Stable gas condensate, RR/ton 12,489 13,818 (1,329) -9.6% LPG, RR/ton 14,009 13,458 551 4
Slide 27: Operating Expenses (RR million and % of Total Revenues)
Operating Expenses (RR million and % of Total Revenues) 2012 % of TR 2011 % of TR Transportation expenses 60,848 28.8% 48,329 27.6% Taxes other than income tax 16,846 8.0% 16,559 9.4% Non-controllable expenses 77,694 36.8% 64,888 37.0% Depreciation and amortization 11,185 5.3% 9,277 5.3% General and
Slide 28: General and Administrative Expenses (RR million)
General and Administrative Expenses (RR million) Decrease due to the fact, that we did not consolidate compensatory payments of Yamal LNG in 2012 as a result of a disposal of 20% interest in Yamal LNG in October 2011 500 116 74 53 10,936 2,219 (33) (211) Increase largely due to consulting 8,218 serv
Slide 29: Materials, Services and Other Expenses (RR million)
Materials, Services and Other Expenses (RR million) Increase in materials used for repair Increase due to ongoing repair works works of our production assets and own at our wholly owned subsidiaries rail cars used for transportation of LPG 163 34 2 60 7,216 103 52 855 5,947 Increase due to: • a 6.0%
Slide 30: Condensed Balance Sheet (RR million)
Condensed Balance Sheet (RR million) 31 December 2012 31 December 2011 +/(-) +/(-)% Total current assets 58,243 58,316 (73) -0.1% Incl. Cash and cash equivalents 18,420 23,831 (5,411) -22.7% Total non-current assets 404,890 325,116 79,774 24.5% Incl. Net PP&E 197,376 166,784 30,592 18.3% Total asset
Slide 31: Total Debt Maturity Profile (RR million)
Total Debt Maturity Profile (RR million) 49,852 In February 2013, the Group placed Russian rouble denominated Eurobonds in 34,682 the amount of RR 14 billion with a four-year maturity and an annual coupon rate of 7.75% In February 2013, the Group repaid a 19,970 RR 15 billion loan from OAO Sberb
Slide 32: Debt Structure
Debt Structure Debt structure and maturities Net Debt (cash) evolution, RR million RR million 2012 2011 114,067 Short-term debt 34,682 20,298 Including current portion of 34,682 20,298 61,988 71,647 long-term debt Long-term debt 97,805 75,180 Scheduled maturities 2010 2011 2012 2013 n/a 35,198 2014
Slide 33: Operating CF / CAPEX
Internally Funded Investment Program 30 000 5,0 22 500 4,0 Operating CF / CAPEX 15 000 3,0 RR millions 7 500 2,0 - 1,0 (7 500) 0,0 (15 000) (1,0) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 CAPEX Operating CF Operating CF/CAPEX Core investments in