Empresa Nacional del Petróleo 2018 Q1 Results Presentation May 2018

Transcription

1 Empresa Nacional del Petróleo 2018 Q1 Results Presentation May 2018

2 Disclaimer Forward looking statements are based on the beliefs and assumptions of ENAP s management and on information currently available to the Company. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of ENAP and could cause results to differ materially from those expressed in such forward looking statements. This presentation contains certain performance measures that do not represent Chilean GAAP and IFRS definitions, such as EBITDA and Net financial debt. These measures cannot be compared with the same previously used by ENAP and the same used by other companies. Disclaimer 2

3 1. ENAP at a Glance

4 ENAP at a Glance Empresa Nacional del Petróleo, only refiner in Chile Fully owned by the Republic of Chile ( Chile or the Republic ), Empresa Nacional del Petróleo ( ENAP or the Company ) has a strategic role in fuel supply in Chile (~60% Market Share of Chilean Demand for Refined Products) Support, Control & Supervision 100% ownership Since 1950 ~3,700 employees Downstream Upstream Refining and Marketing (R&M) Refining Capacity: ~230 kbbl / day Exploration and Production (E&P) Proved O&G Reserves:~149MM boe as of December 2017 Oil production: ~35 kbbl / day Gas production:~25kboe/day Solid & Stable Credit Ratings CHILE Aa3 (Negative) A+ (Stable) A (Stable) ENAP Baa3 (Stable) BBB (Stable) A (Stable) Gas and Energy (G&E) ENAP at a Glance 4

5 ENAP and the owner Corporate Governance A new Corporate Governance Law was promulgated in order to give more stability to ENAP in terms of long term plans, following best practices of the private sector Reduction in number of Board Members from eight to seven New Shareholder figure falls on the President of the Republic. The President can delegate its functions as Shareholder in Minister of Finance and Minister of Energy Board of Directors will present to shareholders a five year Business Plan each year before March 30 th. Shareholders also will approve Budget and long term debt issuance Board Seven Members: o Two appointed directly by the President of the Republic María Loreto Silva Rojas (Chairman) and Gonzalo de la Carrera Correa o Four elected from proposals from the High Public Management System (ADP 1 ) Ana Holuigue Barros, Rodrigo Azócar Hidalgo, José Luis Mardones Santander, Claudio Skármeta Santander o One elected by the company's employees Marcos Varas Alvarado Board Members will have four year terms and will be eligible for reelection only once Members will be changed partially, not all at the same time Support Capital injections o US$250 MM capital increase in 2008 o US$400 MM capital increase approved in 2017 to be received during 2018 in conjunction with the new Corporate Governance Law for ENAP. Capitalization of Retained Earnings (Subsidiaries) : o Yearly basis approved o The Republic has waived its right to receive any dividends for the past nine years Gas sales subsidy in Magallanes (Chile): o Approved on a yearly basis as part of the Chilean General Budget Law o Up to CLP $58,521 million (~US$90 million) approved for ENAP at a Glance (1) Sistema de Alta Dirección Pública or ADP : an autonomous agency in charge of the selection process for high positions at governmental agencies and state owned entercprises.

6 Geography Leading position in refining capacity. Downstream Extensive oil & gas wholesale distribution network in Chile. Unmatched asset base of critical importance to Chile including country s only 3 refining facilities. ENAP produces a full range of refined petroleum products, mainly distributed domestically. ENAP s refineries process crude oil, substantially all of which is purchased from foreign third parties. 1 Concón: Aconcagua Refinery Aconcagua Cogeneration Power plant 2 Santiago: ENAP Headquarters Linares: Terminal Hualpén: Bío Bío Refinery Santiago: ENAP Sipetrol S.A. (HQ) Maipú: Fuel Storage Terminal San Fernando: Terminal Chillán: Pumping Station Refining Capacity: ~230 kbbl / day. Upstream 3 Punta Arenas: Gregorio Refinery Wind farm project Cabo Negro Projects under development Egypt East Ras Qattara (50.5%) Field expertise and relationships with E&P partners and crude oil suppliers worldwide. Ecuador PBH (100%) MDC (100%) PBHI (100%) Block 28 (42%) Chile Magallanes Chile (100%) Argentina ÁreaMagallanes (50%) CAM 2/A Sur (50%) E2 (33%) * Camp. Central (50%) * Pampa del Castillo (100%) (%) Ownership * Blocks where ENAP is not an operator Fields in Chile, Argentina, Ecuador and Egypt. E&P s goal: to maintain oil and gas reserves in Chile and abroad. ENAP has total proved (1) oil & gas reserves of 149 MM boe as of December E&P s production: 35 kbbl / day and 25 kboe / day of crude and gas respectively. ENAP at a Glance 6

7 2. Highlights

8 Highlights ENAP incorporates Naviera Ultranav s tanker to its maritime fleet April 2018 ENAP added the new tanker Cabo Victoria through a contract with Ultranav, the largest and most modern vessel for the transport of hydrocarbons and liquid fuels operating on Chilean coasts. Vessel has a maximum capacity of 125,000 cubic meters. ENAP and Ultranav signed a three year agreement in May March 2018 First session of ENAP s first Board of Directors under the new Corporate Governance Law The Board of Directors will be led by the former Minister of Public Works, Loreto Silva Rojas, who was appointed directly by President Sebastián Piñera. She was a Deputy Minister of Public Works in the government of Sebastian Piñera from 2010 to Gonzalo de la Carrera Correa was also appointed by President Sebastián Piñera. He holds a Business Engineer Degree from Universidad Católica and in 2013 assumed as Director of the Asociación de Isapres de Chile and was Director of the Clínica San Carlos de Apoquindo. Both professionals join the four directors selected through High Public Management System: the economist Claudio Skármeta Magri; the industrial civil engineer José Luis Mardones Santander; the economist Ana Holuigue Barros, and the industrial civil engineer Rodrigo Azócar Hidalgo. The seventh member, Marcos Varas Alvarado, elected by vote as the workers representative on September 29, 2017, also integrates the Board. April 2018 ENAP and YPF inaugurate Off Shore Project for US$ 354 million The Area Magallanes Incremental Project (PIAM, in Spanish) increases gas production from 2.4 to more than 4 million cubic meters per day and crude oil production from 800 to 1,000 cubic meter per day. As part of the investment plan carried out during 18 months, one of the key stages of the project was the laying of a pipeline of 18 kilometers on the seabed from Faro Vírgenes shore to the AM2 platform. March 2018 Resolution favors ENAP in lawsuit for environmental damage The Second Environmental Court of Santiago rejected the claim for environmental damage regarding ENAP Refinerías S.A. for the spill of hydrocarbons from the Tanker Mimosa in Quintero Bay, which occurred in September The court ruled, according to the information gathered, that the incident had no lasting or permanent consequences for thebay'secosystem,duetotherapidactiontakenbythe company in response to the incident. 8 Highlights (1) Superintendencia de Medio Ambiente or SMA : a decentralized public Chilean agency, under the supervision of the President of the Republic via the Ministry of Environment

9 3. Financial Metrics

10 Q Results Adj. EBITDA (LTM) (1) & Adj. EBITDA Margin Investments (2) (US$ in million) (US$ in million) % 13% % 10% % 6% Q1' Q1'18 Breakdown (By Business Unit) E&P 55% G&E 4% R&M 41% Q Adj. EBITDA Margin Adj. EBITDA New projects Initiatives Revenues (US$ in million) Equity (US$ in million) Mar 18 (LTM) Mar Financial Metrics (1) Adjusted EBITDA is defined as the sum of: (i) gross margin, (ii) other income, per function, (iii) depreciation and depletion quota, (iv) abandonment of exploratory wells, (v) geological studies and non absorbed costs, (vi) deterioration and other non operational provisions and (vii) exploration costs, less (i) distribution costs, (ii) administrative expenses and (iii) other expenses, per function. (2) Initiatives include maintenance and other expenses that are not part of PP&E

11 EBITDA & Investments analysis Adj. EBITDA (1) (Breakdown) (US$ in million) Investments (Breakdown) (US$ in million) Mar 17 E&P R&M G&E Mar 18 Mar 17 E&P R&M G&E Others Mar 18 New Projects Initiatives R&M s EBITDA contribution reached US$74 million, decreasing nearly US$26 million when compared to Q1 17 US$100 million mainly due to higher crude cost. E&P s contribution to EBITDA increased to US$102 million, positively compared to last year s first quarter of US$58 million, mainly due to an increase in price of Brent and an increase in Ecuador s production. EBITDA from G&E division dramatically improved from 2017 s first quarter negative US$4,6 million to US$3 million positive, because of (i) higher parity prices, (ii) regasification capacity margin and (iii) spot sales. Investments in E&P reached US$41 million, mainly focused in Arenal and Dorado Riquelme blocks in Magallanes, Chile and Area Magallanes, Argentina. In R&M, investments reached US$30 million, mainly focused in initiatives and maintenance in Aconcagua and Biobio refineries and a Wet Gas Scrubber unit in Biobio refinery. Investments in G&E were destined to the construction of the Aconcagua Cogeneration power plant. Financial Metrics 11

12 Income Statement Summary Income Statement (US$ million) Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Mar 17 Mar 18 Sales 11,211 9,837 6,351 5,217 6,420 1,577 1,993 % growth (3%) (12%) (35%) (18%) 23% 40% 26% COGS (10,638) (9,358) (5,708) (4,670) (5,913) (1,474) (1,893) Gross profit % margin 5% 5% 10% 10% 8% 7% 5% SG&A and Distribution cost (270) (247) (292) (307) (341) (81) (91) Other income (expense) (34) (3) (77) (39) (67) (2) 24 Operational Result % margin 2% 2% 4% 4% 2% 1% 2% D&A Others* EBITDA % margin 6% 6% 12% 13% 10% 10% 9% EBITDA (LTM) Interest expense (192) (172) (185) (180) (202) (45) (54) Net income Financial Metrics (*)Dry exploration and abandonment wells, Exploration Costs, Geological Studies and Others

13 Key Financial Ratios Key Financial Ratios (US$ MM) Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Mar 17 Mar 18 Total debt 3,902 3,831 3,802 4,007 4,519 4,049 4,493 Total net debt 3,433 3,678 3,688 3,941 4,427 3,880 4,363 EBITDA (LTM) Equity Interest expense (net) (192) (172) (185) (180) (202) (45) (54) Net Profit Total net debt / EBITDA (LTM) 5.1x 5.9x 5.0x 5.8x 6.7x 6.1x 6.3x Total net debt / Equity 14.9x 6.7x 5.3x 4.9x 5.3x 4.3x 5.0x EBITDA / Interest expense 3.5x 3.6x 4.0x 3.8x 3.3x 3.4x 3.3x 5,1 x Total net debt / EBITDA (LTM) 6,7 x 5,9 x 5,8 x 5,0 x 6,3 x 14,9 x Total net debt / Equity EBITDA / Interest expense 4,0 x 3,8 x 3,5 x 3,6 x 3,3 x 3,3 x 6,7 x 5,3 x 4,9 x 5,3 x 5,0 x Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Mar 18 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Mar 18 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Mar 18 Financial Metrics 13

14 Debt Statistics & Maturity Profile Financial Debt & Supplier Credit (US$ in million) Debt Breakdown as of March 2018 Supplier's Credit Total Financial Debt % Bank debt Bond ,494 82% Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Mar 18 Debt Maturity Profile as of March 2018 (US$ in million) 819 International Bonds Local Bonds ST Bank Debt LT Bank Debt Financial Metrics 14

15 4. Results by Business Unit: Refining and Marketing

16 Refining and Marketing EBITDA (Q Q1 2018) Investments (Q Q1 2018) (US$ in million) (US$ In million) Q1'17 ENAP's Production Imported Products Petropower Q1'18 Q1'17 New Projects Initiatives Maintenance Q1'18 R&M s EBITDA for Q decreased US$24 million compared to 2017 mainly explained by: An increase in crude cost which was not compensated bytheincreasein ENAP s product prices and the increase in volume sold (increased in 300 Mm3). Investments in R&M were mainly destined to maintenance and initiatives (US$ 18 million and US$ 6 million respectively). New projects investments reached US$ 5 million, mainly destined to: Wet Gas Scrubber unit in Biobio refinery. Gross margin decreased in US$40 million compared to Q Decrease in gross margin was partially offset by a decrease in non crude cost (US$20 million). Refining and Marketing 16

17 Refining and Marketing ENAP s Utilization Rates (1) (%) Q1 18 Sales by client (m3) 75% 74% 75% 74% 76% 77% 21% 17% 45% Main Customers 17% Q1'18 Copec Esmax (Ex Petrobras) Enex Others Q1 18 Sales by refined product (m 3 ) Market Share (2) 7% 10% 4% 3% 35% Gasoline Diesel Fuel Oil 48% 50% 99% 94% 93% 96% 58% 71% 70% 70% 64% 61% 41% Kerosene LPG Others 28% 16% Diesel Gasoline LPG Fuel Oil Kerosene Other Average Mar 17 Mar Refining and Marketing (1) Utilization rate is defined as utilization of Equivalent distillation capacity (EDC). (2) Information as of January 2018

18 Refining and Marketing Crude Oil Supply by Country (Mm 3 ) Crude Oil Volume Processed (Mm 3 ) Perú 6% Total Q1: 2,912 Total Q1: 3,054 Argentina 2% Brasil 62% Ecuador 30% Total Crude Oil Purchases: 15 MMbbl in (Jan Mar 2018) from 12 different suppliers 1,454 1, Light Medium Heavy Other gross inputs Mar 17 Mar 18 ENAP s Refining Margin ( Margen Primo ) (1) Refined Products Production (Mm 3 ) US$/bbl Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17 Jun 17 Sep 17 Dec 17 Mar 18 ENAP's Refining Margin ENAP's Product Prices ENAP's Oil Cost Brent US$/bbl ,029 1, Diesel Gasoline LPG Fuel Oil Kerosene Others Mar 17 Mar 18 Total Q1: 2,871 Total Q1: 2,987 Valuable products (2) Q1: 2,131 Valuable products (2) Q1: 2, Refining and Marketing (1) It represents the difference between ENAP s product prices and their direct cost (Oil), excluding others like energy and G&A costs. (2) Diesel, Gasoline and Kerosene

19 Basket 7:3:3:1 vs. ICE Brent (US$/bbl) Basket 7:3:3:1 (US$/bbl) ICE Brent (US$/bbl) F.O N 6 ended with an average margin of US$13.3 per barrel during Q Refining and Marketing 19 Brent Q4 17 EOP: US$66.9/bbl. Brent Q1 18 EOP: US$70.3/bbl. Brent up 5.1% during this 3 month period ULSD USGC(US$/bbl) vs. ICE Brent (US$/bbl) F.O N 6 3% S. USGC (US$/bbl) vs. ICE Brent (US$/bbl) Source: Company information and Bloomberg. EOP: End of period. 35 ULSD had an average margin of US$14.3 per barrel during Q Unl87 ended Q1 with US$9.7 per barrel in average margin over Brent. US$/bbl US$/bbl US$/bbl Refining and Marketing Unl87 USGC (US$/bbl) vs. ICE Brent (US$/bbl)

20 5. Results by Business Unit: Exploration and Production

21 Exploration and Production EBITDA (by country) (US$ in million) Investments (by country) (US$ In million) Q1'17 Chile Argentina Ecuador Egypt Q1'18 Q1'17 Chile Argentina Ecuador Egypt Q1'18 E&P s EBITDA increased from US$58 million in Q to US$101 million in EBITDA from Magallanes (Chile) increased US$2 million (from US$16 million in Q to US$18 million in 2017) mainly due to an increase in prices. Argentina s contribution to E&P s EBITDA increased US$6 million mainly due to increase in price of Brent (Q1 17 reached an average of ~US$55 per barrel and ~US$67 per barrel during same period in 2018). Investments in Chile were focused mainly in glauconitic zone (Arenal and Dorado Riquelme blocks) and reached US$13 million. In Argentina, investments were destined mainly to Area Magallanes (PIAM Project), adding up a total of US$23 million. In Ecuador and Egypt, investments reached a total of US$4.4 million and US$1.4 million, respectively. In Ecuador, EBITDA increased US$9 million due to an increase in production, and in Egypt, EBITDA s contribution related to production have not changed, nevertheless, there is a positive impact in EBTIDA related to a reimbursement from NIOC. Exploration and Production 21

22 Exploration and Production Oil Production (in 000 barrels per day) Oil Gas Production (in 000 barrels per day) Proved Oil & Gas Reserves (1) Q1'18 Argentina Ecuador Egypt Chile Q1'18 Argentina Chile 6% 28% 29% 37% Argentina Ecuador Egypt Chile Proven reserves as of December 2017: 149 Mmboe Oil and gas production in Argentina increased for Q compared to average production in Oil production in Ecuador also increased due to successful results in drilling activities. Oil production in Egypt maintained at 2017 levels. 46% Crude 54% Gas Crude: 80 Mmboe Gas: 69 Mmboe 22 Exploration and Production (1) Developed and Undeveloped reserves.

23 6. Results by Business Unit: Gas and Energy

24 Gas and Energy Revenues by client (US$ in million) EBITDA (US$ in million) Investments (US$ in million) 3 14% 27% 59% Power Generators Distributors Others Q1'17 Q1'18 Q1'17 Q1'18 Revenues added a total of US$73 million, up a 22% from Q EBITDA reached US$3 million, an increase of US$7 million from US$4 million to US$3 million Revenues and EBITDA increases are mainly due to (i) higher parity prices, (ii) regasification capacity margin and (iii) spot sales. Investments were focused in Aconcagua Cogeneration power plant which is in it s final stage. It should be fully operative during Q3. Gas and Energy 24

25 Gas and Energy assets and projects First geothermal generation plant in South America Significant interest in LNG terminal and pipeline Cerro Pabellón: ENAP developed the geothermal plant Cerro Pabellón in a joint venture with ENEL, with an installed capacity of 48 MW and expected annual generation of 340 GWh. Aconcagua Cogeneration Power Plant Cogeneration in Aconcagua Refinery: ENAP developed a 77 MW cogeneration plant that will operate with NG, offering a permanent supply of steam and power to the refinery and selling the surplus to the Chilean main power grid. Self producer condition for ENAP refineries Self producer condition: ENAP presented a requirement to the Independent power system operator to declare both Aconcagua and Bío Bío refineries as self producers, giving them more autonomy and reducing some electricity payments. 535 km Physical pipeline: The LNG that ENAP receives from GNL Quintero (which has regasification capacity of 15MM m 3 /day) is injected as NG to the Electrogas gas pipeline and transported to the Aconcagua Refinery and to other customers Sell LNG and regasification capacity to thermoelectric plants Unique virtual pipeline Colbún and Enap subscribed an Agreement of sell LNG and regasification capacity ( ): LNG Sell: 3 vessel ( )/ 2 vessel ( ) Regasification Capacity: 1.65 MMm3/d ( ) and additional capacity of 125 MMm3/y ( ). Virtual pipeline (trucks): 25 trucks fleet, with a capacity of 21 tons each, ENAP can transport daily LNG from GNL Quintero Terminal to Pemuco (535 km) Small Scale Regasification Project Increase the supply capacity of LNG in VIII Region: With the objective of increasing the supply of Natural Gas to the VIII region, ENAP is studying the feasibility of to develop Small Scale Regasification Project. Wind farm in Chilean southern region Wind Farm Project in Magallanes: ENAP is developing a wind power generation project in Magallanes, with 3 aerogenerators of 3.3 MW of installed capacity. This project is expected to generate 18% of the energy demand in Punta Arenas system. Important LNG supplier for the south of Chile Satellite Regasification Plant in Pemuco (VIII Region): where the LNG (transported using trucks) is regasified andthendistributedmainlytothebiobíorefineryand also to other customers in the area through the gas pipeline Gasoducto del Pacífico Further development in NCRE energy in Chile Further development in NCRE: ENAP is continuously studying the feasibility of different NCRE projects and energy storage solutions, in order to contribute to the sustainable and safe development of Chile an power systems. Gas and Energy 25

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