Repsol s Recent Inorganic Acquisitions in Russia and in the U.S. JV with Alliance Oil Eurotek acquisition Acquisition of a stake in Mississippian

Transcription

1 Repsol s Recent Inorganic Acquisitions in Russia and in the U.S. JV with Alliance Oil Eurotek acquisition Acquisition of a stake in Mississippian Lime

2 Disclaimer A ALL RIGHTS ARE RESERVED REPSOL YPF, S.A Repsol YPF, S.A. is the exclusive owner of this document. No part of this document may be reproduced (including photocopying), stored, duplicated, copied, distributed or introduced into a retrieval system of any nature or transmitted in any form or by any means without the prior written permission of Repsol YPF, S.A. This document does not constitute an offer or invitation to purchase or subscribe shares, in accordance with the provisions of the Spanish Securities Market Law (Law 24/1988, of July 28, as amended and restated) and its implementing regulations. In addition, this document does not constitute an offer of purchase, sale or exchange, nor a request for an offer of purchase, sale or exchange of securities in any other jurisdiction. In particular, This document does not constitute an offer to purchase, subscribe, sale or exchange of Repsol YPF's or YPF Sociedad Anonima's respective ordinary shares or ADSs in the United States or otherwise. Repsol YPF's and YPF Sociedad Anonima's respective ordinary shares and ADSs may not be sold in the United States absent registration or an exemption from registration under the US Securities Act of 1933, as amended. This document contains statements that Repsol YPF believes constitute forward-looking statements which may include statements regarding the intent, belief, or current expectations of Repsol YPF and its management, including statements with respect to trends affecting Repsol YPF s financial condition, financial ratios, results of operations, business, strategy, geographic concentration, production volume and reserves, capital expenditures, costs savings, investments and dividend payout policies. These forward-looking statements may also include assumptions regarding future economic and other conditions, such as future crude oil and other prices, refining and marketing margins and exchange rates and are generally identified by the words expects, anticipates, forecasts, believes, estimates, notices and similar expressions. These statements are not guarantees of future performance, prices, margins, exchange rates or other events and are subject to material risks, uncertainties, changes and other factors which may be beyond Repsol YPF s control or may be difficult to predict. Within those risks are those factors described in the filings made by Repsol YPF and its affiliates with the Comisión Nacional del Mercado de Valores in Spain, the Comisión Nacional de Valores in Argentina, the Securities and Exchange Commission in the United States and with any other supervisory authority of those markets where the securities issued by Repsol YPF and/or its affiliates are listed. Repsol YPF does not undertake to publicly update or revise these forward-looking statements even if experience or future changes make it clear that the projected performance, conditions or events expressed or implied therein will not be realized. The information contained in the document has not been verified or revised by the Auditors of Repsol YPF.

3 Selective inorganic growth with upside potential Acquisitions of assets with upside Projects : Camisea TSP Shenzi/Gk IRR (full cycle) >14% at 100$ 2012 / bbl Brent Alaska Russia SandRidge Repsol s excellent track record in acquisitions has been behind the consolidation of our growth program and has bolstered our portfolio. Focused on the selective search for new opportunities that fit in with the strategic plan and offer upside potential.

4 Joint Venture Alliance Repsol AROG Acquisition of Eurotek Russia

5 Repsol and AOC a 6-year alliance Acquisition of 10% of WSR WSR and AOC merger Joint Venture with AOC In February 2006, Repsol acquired a10% stake in WSR worth 88M$, acquiring 50% through a new private placement. In 2008, the merger of WSR with AOC, mainly an upstream company, increased the size of the company by more than twofold. Repsol s stake in the merged company was diluted to 3.5%. Technical cooperation has enabled Repsol to gain a better understanding of the AOC upstream assets and choose the right assets for the JV JV fulfill the company s objectives of immediate output in the region with infrastructures and reserves. The partners relationship based on trust has been bolstered by the 5-year alliance.

6 Our strategy in Russia TIMAN PECHORA VOLGA URALES SK YK WEST SIBERIA Kumolsky- SNO TNO Karabashsky- Salymsky km. Our strategy in Russia focuses on: Organic growth in West Siberia and Timan Pechora Inorganic growth through the joint venture with AOC

7 Eurotek acquisition Description Situated in the Khanty-Mansiysk and Yamal-Nenets regions (West Siberia Basin) 9 exploration and production licenses The gas licenses for the SK and YF fields are of particular interest due to their level of development, especially SK which is about to come on stream (2012) Eurotek (25.1%) and Repsol (74.9%) are holders of the Eurotek-Yugra exploration licenses. The current workforce is 35 employees. License status Repsol is interested in 2 exploration licenses. Yuzhno-Khadyryakhinskoye (YK) Syskonsyninskoye (SK) Production (1) Reserves (1) PRODUCCIÓN 100%: SK &YK 2P Reserves Bcf (1) boed % % SK gas production YK gas production 2P YK Reserves2P SK Reserves (1) Technical profiles of Repsol at November 2011.

8 Eurotek acquisition: Why gas from Russia? Russia : giant producer and consumer Largest gas reserves holder in the world Second-leading gas producer of the world Second gas consumer worldwide Domestic price vs. Netback parity Russian Government decided to liberalized the market 55% discount Doubts about the possibility of reaching gas net back parity? Russian Domestic gas market Upside Rapid expansion in installed power capacity Gasprom s operated production declining. Gasprom s focus on exports. New non-discriminatory access to the network. Liberalization. Royalties much lower than those for oil production Resources of about 5800 TCF, Surplus reserves at more than 7200 TCF Nearly 42% of yet to be discovered resource in West Siberia region, where Repsol is present 8 Source: BP Statistics 2011,

9 Valuation of assets contributed to the JV Multiples and discounted cash flows JV- Market multiples valuation* *(excluding Gusikhinskoye and exploration) (1) Avg.: 4.5$/boe Eurotek- Market 230 multiples M$ valuation 586 M$ (1) Avg.: 2.4$/boe Valuation hypotheses: Brent (SNO/TNO): $/bbl at 2011, $/bbl at 2012, $/bbl at 2013, +2.5% per annum since 2014; Gas (SK/YK): 1.58 $/kscf (YK) and 1.87 $/kscf (SK) at 2011, +15% per annum from 2012 to 2016, +2.5% p.a. as of 2017; Transport: 5.75 $/bbl (SNO), 4.59 $/bbl (TNO); Valuation at June 2011 for TNO and SON and at January 2012 for SK and YK (Valuation does not include acquisition price). (1) 3,5$ multiple on the back of 2P reserves at 31 December 2010 based on DeGovler & MacNaughton report, minus production of first quarter 2011, taking into account 99.54% of TNO. Discounting working capital, the valuation at 30 June 2011 is 570 M$.

10 JV organizational chart and governance Joint management Holland ALREP OIL BV JV Company Annual General Meeting Proportional representation of JV Qualified issues: unanimous Russia Board resolutions Quorum: both shareholders JV Operating and Mgmt Co. (1) Board of Directors COO CEO CFO AOC 7 members: 4 Alliance + 3 Repsol Management instructions (SNO and TNO) NK Alliance Mgmt Co. (1) Trading Other DCFO Management instructions Repsol Quorum: at least one director from each party Qualified issues: unanimous Chairman of the Board, appointed by AOC. Saneco TNO Eurotek Future Acquisitions

11 Sandridge / Repsol Joint Venture Acquisition of stake in the Mississippi Lime Field. Oklahoma / Kansas

12 Joint Venture with SandRidge, Mississippi Lime Field Executive Summary (1/2) Repsol acquired from the oil company SandRidge a vast oil field with associated gas produced from fractured carbonates in the Mississippian Lime Play. The acquired area comprises two sectors: Original Area : 113,636 net acres for Repsol, 16.2% interest Extension Area : 250,000 net acres for Repsol - 25% interest Mississippian High Perm, Carbonate Oil Play Anadarko Basin in NW Oklahoma / SW Kansas Kansas Oklahoma ~1MM acres ( Area Extensión ) ~700K acres ( Original Area ) Both are proven areas with production throughout more than 30 years and more than14,000 vertical wells drilled in both States. Appealing improved recovery per well and lower Capex/bbl unit cost. The Original Area has a historical record of production with horizontal wells Production in the Extension Area is limited, although similar performance is anticipated based on geological elements. 2

13 Joint Venture with SandRidge, Mississippi Lime Field Executive Summary (2/2) Net resources: 382 MBOE (179 MBO and 1,139 BCF) Net production reaching a peak of 90 kboepd (45% oil and 55% gas) by Nature of the producing warehouse Option to acquire new mining acreage during the next 7 years. Nominal average acquisition cost: $2,750/Acre Initial payment of $ 250 million 200% carry of Sandridge 13

14 Joint Venture with SandRidge, Mississippi Lime Field Activity in the Original Area SandRidge 300 to 500 Mboe EUR Chesapeake SandRidge Energy SHELL Range Resources Pablo / Territory 22 days drilling (4,500 lateral) $3.0 million per well 456 Mboe EUR (NSAI Consultant) Chesapeake 290 to 435 Mboe EUR lateral $2.8 million per well Eagle Energy 300 to 650 Mboe EUR $2.5 million per well Range Resources 400 to 500 Mboe EUR lateral $3.1 million per well Ross Smith (Independent Engineers) 253 to 343 Mboe EUR $2.7 million per well Eagle Energy Plymouth Devon Calyx Horizontal Wells Horizontals operated by SandRidge Horizontals operated by other operators Vertical wells 14

15 Mississippi Lime: An emerging Resource Play Characteristics that make Mississippi Lime an attractive play: Conventional Good porosity and permeability Known storage rock: + 30 years of historical production in 15,000 wells Size: 17 million acres Low cost: 3 M$/well Bakken Niobrara Hz. Mississippian Wolfberry Eagle Ford 15

16 Joint Venture with Sandridge, Mississippi Lime Field Business and competition scenario SandRidge is the most active operatorin the area: 21 active rigs, more than 200 horizontal wells, 18,000 bopd 12/11) Sufficient collection, treatment and transport facilities. Favorable realization price Services companies and necessary materials available in the area. Companies in the Mississippi Lime are protected from inflationary tensions 16

17 Mississippi Lime: Full Cycle Economics comparison with other Resource Plays

18 Sunflower Project: Mississippi Lime Strategic sense Production: Net production contribution from start of project, with a proportion of liquids production of 46% and good quality oil. Cash flow: only 2 years of negative cash flow, followed by 3 years of neutral cash flow generation and very positive cash flow as of the 6th year. WTI and HH increases would improve cash rapidly. Earnings contribution: the project makes it possible to obtain positive operating income as of the first year. Operating efficiency: F&D of ~13.5 $/boe (including acquisition price) is in line with the current average in the Upstream Division (~ in the Upstream Division 13 $/boe). Geostrategic sense: fulfills strategic objective of increasing the relevance of our presence in OECD countries. Fiscal and legal security offered by the US is not an impediment to reaching interesting rates of profitability. Rapid access to new horizontal and fracturing drilling technologies that could be applied in other areas (Argentina). 18

19 Repsol s Recent Inorganic Acquisitions in Russia and in the U.S. JV with Alliance Oil Eurotek acquisition Acquisition of a stake in Mississippian Lime Analysts Presentation 20 January 2012