OIL INDIA LIMITED Investor Presentation

Transcription

1 OIL INDIA LIMITED Investor Presentation May, 21 Disclaimer This presentation contains certain forward looking statements concerning OIL India s future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The risks and uncertainties relating to these statements include, but not limited to, risks and uncertainties, regarding fluctuations in earnings, our ability to manage growth, competition (both domestic and international), economic growth in India, ability to attract and retain highly skilled professionals, time and cost over runs on projects, our ability to manage our international operations, government policies and actions with respect to investments, fiscal deficits, regulations, etc., interest and other fiscal costs generally prevailing in the economy. The company does not undertake to make any announcement in case any of these forward looking statements become materially incorrect in future or update any forward looking statements made from time to time by or on behalf of the company. 2

2 Oil India Investor Presentation H1 FY21 FY29 Sector outlook and opportunities OIL India An overview Business structure, performance and strategy Financial performance Oil India Investor Presentation H1 FY21 FY29 Sector outlook and opportunities OIL India An overview Business structure, performance and strategy Financial performance

3 Global Oil and Gas trends Brent oil price futures/forwards and forecasts (US$/bbl) LTM oil price and equity market performance (Rebased to Brent) % +76% +32% Mar-9 Jun-9 Aug-9 Nov-9 Mar-1 Broker high/ low range ICE Brent futures (Mar-1) CERA Global Fissures (Mar-1) CERA Break Point (Mar-1) Source: Broker reports, Bloomberg, Wood Mackenzie, CERA Historical Brent Wood Mackenzie (Mar-1) CERA Asian Phoenix (Mar-1) Broker average (Mar-1) Brent FTSE Eurofirst (Oil and Gas) FTSE AIM (Oil and Gas) Source: Datastream, FactSet market data as at March 21 Most analyst reports point to a long term increase in the prices of crude oil as reflected in the Brent oil price futures and the recovery in the Oil-related indices 5 Domestic Industry environment Steady growth in domestic energy consumption driven by India s economic growth story 1 (mmtoe) CAGR 4.36% Energy sources (%) Energy Sources - India Note: 1. As of 31 st December 28 (BP Statistical Review of World Energy, 29) Significant supply deficit in the domestic market 1 Crude Oil (mmbbls) Natural gas (bcm) Deficit Total Production Consumption 1, Coal Crude Oil Natural Gas Hydro Nuclear Energy Sources - Global Crude oil and natural gas sources would tend to grow in significance as the Indian economy develops % % Note: 1. As of 31 st December 28 (BP Statistical Review of World Energy, 29) 34.8 Coal Crude Oil Natural Gas Hydro Nuclear 6

4 India: Energy scenario Primary Energy Consumption (MTOE) Crude Oil Consumption (MTOE) UK 212 Canada 12 South Korea 24 S. Korea 13 France Germany Germany 118 Canada 33 Russia 13 India % of total India % of total Japan Russia Japan 222 China 2,3 China 376 USA 2,299 USA , 1,5 2, 2, , 53% of primary energy consumed by 5 countries India is the 5th largest consumer of Primary Energy India CAGR ( ): 4.8% vs. Global CAGR: 2.4% Note: (1) Annualized crude oil production rate of mmboe in Q2 FY21 (2) Annualized crude oil delivery rate of 26.9 mmboe in Q2 FY21 World oil consumption (28): 3,928 MTOE India is the 4th largest consumer of Oil comprising 3.4% of total India CAGR ( ): 3.9% vs. Global CAGR: 1.3% Note: (1) 1 BCM of Natural Gas = MMBOE 7 OIL at a glance India s premier Oil & Gas company engaged in the exploration, development, production and transportation of crude oil and natural gas in India Acreage Domestic acreage: 127,881 square kilometers; International acreage: 41,656 square kilometers Management Professionally managed company with experienced management with a proven track record Credit rating ICRA has assigned an A1+ (A one plus) rating to Rs. 5 billion short-term debt programme of OIL indicating highest safety Size Revenue: USD 1,666 m (FY1) PAT : USD 55m (FY 1) Market cap : USD 6.54 bn A corporate citizen committed towards corporate social responsibility, environment protection, implementation of safety measures & conservation of natural resources 8

5 Oil India Investor Presentation H1 FY21 FY29 Sector outlook and opportunities OIL India An overview Business structure, performance and strategy Financial performance Rich heritage of building a company Independent India s first commercial oil discoveries were made by Assam Oil Company Nahorkatiya, Assam 1953 Moran, Assam 1956 Incorporated as Joint Sector Company on 18 February, /3 rd Owned by Assam Oil Company / Burmah Oil Company 1/3 rd Owned by Government of India Became a Public Sector Undertaking, GOI on 14 October, 1981 Five decades of experience in Exploration & Production Second largest national oil and gas company in India Achieved overwhelming response in its maiden public issue on 3 September 29 1

6 Select highlights for FY21 OIL s shares listed in Mumbai Stock Exchange on Achieved the highest daily rate of crude oil production of 3.61 MTPA (> 26 mmbbls) Achieved the highest daily rate of natural gas production of 6.67 MMSCMD in North East and potential of.93 MMSCMD in Rajasthan. Performance during 21 : Parameter Unit 29-1 % Increase over 28-9 Drilling Mtrs Crude Oil Production MMBBL Crude Oil Sales MMBBL Natural Gas Production BCM Natural Gas sales BCM Award of Block in Venezuela on 1th Feb 21, Mixed Company Contract signed on 12 th May Select Highlights of 29-1 Completed 66 Km long NRL Siliguri Product Pipeline. LPG plant completed 26 years of continuous service with excellent track record of 99% Plant Load Capacity. LPG production of 44,95 tonnes in 29-1 was 13.1% of target Made two hydrocarbon discoveries (Umatara -1 & South Tinali) in Assam. Reserve replacement was 1.65 times production. Provisionally won 9 blocks in NELP-VIII round - the highest so far by OIL - 2 as Operator, 1 as Joint Operator and PIs in 6. The first Operator to commence drilling in NELP VI block in October, 29. Commenced drilling in Libya as Operator in October, 29.The second well is showing promising prospects at shallow depths. Awarded as Heavy Weight Mini Ratna PSU by Dalal Street Journal Duliajan Numaligarh Gas Pipeline (DNPL) Project likely to be completed by June, 21. Measurement of Carbon footprint initiated. Revisiting Long Term Strategic Plan and PMS. 12

7 NAVRATNA Status to OIL NAVRATNA status awarded to OIL in April 21. The Board of NAVRATNA companies enjoy enhanced autonomy and DOP in following areas: Capital expenditure without any monetary ceiling Equity investment in joint ventures / subsidiaries in India or abroad, including purchase or other arrangements, technology and know-how To raise debt from the domestic capital markets and for borrowings from international market Human resources development including to structure and implement schemes relating to personnel and human resource management, training, voluntary retirement schemes, etc To effect Organizational Restructuring including establishment of profit centres, opening of offices in India and abroad, creating new activity centres, etc The Board of the these PSEs shall have the powers for mergers and acquisitions 13 Shareholding pattern 2.1% 3.5% 2.9%.8% 12.3% 78.4% Promoters (GOI) Public & Others MF Bodies Corporate FII FI / Banks Listing :Listed on BSE/NSE on 3 th Sept 29 Number of shares : mn Dividend :FY1 Int dividend/share : Rs.18 F Dividend (Prop)/ share : Rs.16 Share price (H/L) :Rs.1374 / Rs.119 Market Cap :Rs.3153 cr / USD 6.54 bn Key shareholders Indian Oil Corporation Bharat Petroleum Corporation Hindustan Petroleum Corporation ICICI Prudential Life Insurance HDFC Standard Life Insurance HDFC Trustee Co Ltd-HDFC Top 2 Fund PCA India Equity Open Limited % Shareholding 4.45% 2.23% 2.23% 1.41%.88%.54%.34% Reliance Life Insurance Company Limited.34% 14

8 Performance of OIL s Shares (W.r.t. Sector) OIL SHARE PERFORMANCE VS OIL & GAS SECTOR (From to ) OIL Share Price (Rs.) April 5 April 6 April 7 April 8 April 9 April 12 April 13 April 15 April 16 April 19 April 2 April 21 April 22 April 23 April 26 April 27 April 28 April 29 April 3 April 3 May 4 May 5 May 6 May 7 May 1 May 11 May 12 May 13 May 14-May-1 17-May-1 18-May-1 19-May-1 2-May-1 21-May OIL OIL INDEX OIL SHARE PERFORMANCE VS ONGC (FROM TO ) OIL Share Price (Rs) Apr-1 5-Apr-1 6-Apr-1 7-Apr-1 8-Apr-1 9-Apr-1 12-Apr-1 13-Apr-1 15-Apr-1 16-Apr-1 19-Apr-1 2-Apr-1 21-Apr-1 22-Apr-1 23-Apr-1 26-Apr-1 27-Apr-1 28-Apr-1 29-Apr-1 3-Apr-1 3-May-1 4-May-1 5-May-1 6-May-1 7-May-1 1-May-1 11-May-1 12-May-1 13-May-1 14-May-1 17-May-1 18-May-1 19-May-1 2-May-1 21-May OIL ONGC 15 Performance of OIL s Shares (w.r.t. SENSEX / NIFTY) OIL VS. SENSEX (FROM TO ) OIL Share Price (Rs.) Apr-1 5-Apr-1 6-Apr-1 7-Apr-1 8-Apr-1 9-Apr-1 12-Apr-1 13-Apr-1 15-Apr-1 16-Apr-1 19-Apr-1 2-Apr-1 21-Apr-1 22-Apr-1 23-Apr-1 26-Apr-1 27-Apr-1 28-Apr-1 29-Apr-1 3-Apr-1 3-May-1 4-May-1 5-May-1 6-May-1 7-May-1 1-May-1 11-May-1 12-May-1 13-May-1 14-May-1 17-May-1 18-May-1 19-May-1 2-May-1 21-May OIL SENSEX OIL VS. NIFTY (FROM TO ) OIL Share Price (Rs.) Apr-1 5-Apr-1 6-Apr-1 7-Apr-1 8-Apr-1 9-Apr-1 12-Apr-1 13-Apr-1 15-Apr-1 16-Apr-1 19-Apr-1 2-Apr-1 21-Apr-1 22-Apr-1 23-Apr-1 26-Apr-1 27-Apr-1 28-Apr-1 29-Apr-1 3-Apr-1 3-May-1 4-May-1 5-May-1 6-May-1 7-May-1 1-May-1 11-May-1 12-May-1 13-May-1 14-May-1 17-May-1 18-May-1 19-May-1 2-May-1 21-May OIL NIFTY 16

9 Oil India Investor Presentation H1 FY21 FY29 Sector outlook and opportunities OIL India An overview Business structure, performance and strategy Financial performance Key lines of business Exploration Production Transportation Downstream Domestic: 23 exploration blocks through NELP 1 International: Egypt, Gabon, Iran, Libya, Nigeria, Timor Leste and Yemen 2 Discoveries: 11 Small to Medium 3 size discoveries from Fiscal 27 to Fiscal years of experience in Oil & Gas production Crude oil: 4 installations and est. 1,315 km of internal crude oil pipelines grid; FY1 production of 25.7 mmbbl Natural gas: 29 instllations and est. 571 km of internal gas network pipelines grid; FY1 production of 2415 mmscm Advanced Recovery Techniques - Artificial Lifting, Enhanced Oil Recovery and horizontal drilling Crude Oil: 1,157 km crude oil pipeline with an annual capacity of over 44 mn barrels Multi-Product: 66 km pipeline from NRL1 to Siliguri with an estimated capacity of 2.13 million kiloliters of refined petroleum products Overseas pipeline: 1% equity stake in a 741 km pipeline in Sudan Natural Gas: 23% stake in the 192 km DNPL 3, which proposes to lay a 192 km pipeline project to transport natural gas from Duliajan to Numaligarh Refining and marketing petroleum products: 26% equity stake in NRL 1 Gas cracker project: 1% equity stake in BCPL 2 Acquiring, transporting and distributing natural gas - 23% equity stake in DNPL 3 City gas business - Signed MOU with GAIL, HPCL, IOCL and BPCL Note: 1. 9 blocks have been provisionally awarded under NELP VIII. 2. Participating interests in exploration and development blocks. 3. Small to Medium size discoveries: Estimated proved plus probable reserves size of less than 3 million barrels of oil and oil equivalent gas 4. MMBOE Million Barrels of Oil Equivalent Note: 1. NRL Numaligarh Refinery Limited 2. BCPL Brahmaputra Cracker and Polymer Limited 3. DNPL Duliajan-Numaligarh Pipeline Limited 18

10 Exploration Blocks : National Presence AA-ONN 3% 6% 6% 75% RJ-ONN RJ-ONN RJ-ONN AA-ONN 2% ASSAM +AP AA-ONN AA-ONN AA-ONN AAP-ON 9% 5% 85% 16% AA-ONN 5% AA-ONN 85% AA-ONN 15% AA-ONN 1% 15% GK-OSJ-3 MN-OSN 2% MZ-ONN 75% 41,656 Summary of Acreage (sq. km.) 2,5194, ,41 16,6 1 PEL Nomination JV/PSC (NO) NELP (NO) 97,91 Total Area 169,537 Sq. Km 2 PML Nomination NELP (Operator) Overseas (PI) CY-DWN 5% CY-DWN Strong presence in prospective East Coast KG-OSN 2% 3% KG-DWN 15% KG-DWN AN-DWN 1% 2% KG-DWN 15% Note: AN-DWN 3% NO Non-operator PI Participatory Interests 1. Includes a 4% PI in the Kharsang fields of area 11 sq. km. 2. Includes 3,992 Sq Km of Joint Operatorship KG-DWN 1% KG-ONN 9% MN-DWN + 2% AN-DWN 4% AN-DWN 4% AN-DWN 3% WB-ONN KG-DWN 25% 1% Map Not to Scale NELP I-VIII Nomination ML(s)/PEL(s) JVC Blocks OIL as Operator + Joint Operator 19 Exploration Acreage Operator Blocks (NELP) 12* 16, , ,65 1,518 5,697 Non-Operator Blocks (NELP) 18 97,91 3* ,66 4, ,6 22,829 16, IV V VI VII VIII All Onshore (* incl Joint Operator) I II III IV VI VII VIII 4 Onshore, 1 Offshore & 7 Deepwater Petro. Mining License (PML) 1 Petro. Exploration License (PEL) JV/Production Sharing Contract (PSC) PML Areas 19 4,811 PEL Areas Pre-NELP JV/PSC (Non Operator) 3 6, ,735 2,3 5, Assam Arunachal Pradesh Rajasthan Assam Arunachal Pradesh Assam & AP Kutch Offshore Kharsang Area (Sq.km.) Blocks Block category Blocks Area (Sq.km.) Map Not to Scale 2

11 Overseas Exploration and Development Blocks (Sonatrach Sonatrach) 7,87 2,71 6,629 LIBYA Area 86 Area 12/4 Area 95/96 EGYPT* Block 3 Block 4 8,287 2,6 25 (GSPC) 17.5 (Suntera Suntera) 2,94 NIGERIA OPL 25 IRAN Farsi Offshore 3,5 2 (OVL) 45 3,761 GABON Shakti TIMOR LESTE Block K 2, (Reliance) 3.5 (Mixed Company) Repsol 11% Petronas 11% OVL 11% IOC 3.5% VENEZUELA Corabobo 1 North Corabobo 1 Central Total YEMEN Block 82 Block 83 Operator 1, Area (Sq. Km) 15 (Medco) OIL s Participating Interest (%) 19 Blocks Area 41,656 sq.km. * Government approval is awaited OIL also holds a 1% equity stake in 741 km crude oil pipeline in Sudan 21 Exploration and Development Growth Mapping (Acreage) Acreage (Sq. Km) ~ 1 Times Growth Current Acreage Domestic = 127,881 sq.km Overseas = 41,656 sq.km Nomination Including Pre- NELP JVs (Till 1998) Growth NELP (1999 onwards) + Overseas (25 onwards) Very limited Scope for Growth Operation Area NE, RJ, UP, Uttarakhand Competition Level Playing Field Operation Area Pan India + Overseas 22

12 E&P Infrastructure in India State-of-art exploration facilities 3 (2D-2, 3D-1) Seismic Crew 11 Drilling Rigs 14 W/over Rigs 6 Logging trucks 1 Mud logging Unit 23 E&P Infrastructure in India 7 Production Installations Globally comparable Production & transportation facilities >5 Km Oil & Gas Pipelines Pipeline to Deliver Crude Oil to 4 Refineries NSPL Product Pipeline No. of Pump Station 1 No. of Terminal Station KLs Crude Storage 24

13 Crude Oil and Natural Gas Reserves Crude Oil Reserves (mmboe) Natural Gas Reserves (mmboe) Overall Reserves (mmboe) 1,8 1,8 1,8 1,5 1,5 1,5 1,471 1,511 1,542 1,2 9 1, 1, ,2 9 1, Has improved the overall reserves available consistently over the past 3 years through enhanced oil recovery methods and aggressive exploration Proved Proved & Probable Proved, Probable & Possible 25 Crude Oil and Natural Gas Reserves 1P Reserves represent: 11 Years current production of Crude Oil 15 Years current production of Natural Gas 12 Years current production of O+OEG 26

14 Crude Oil and Natural Gas Production Crude Oil Production (mmbbl) Natural Gas Production (mmscm) Crude oil production during FY 1 increased by 3% over FY 9 Natural gas production during FY 1 increased by 6.44% over FY 9 27 Crude Oil and Natural Gas Sales Crude Oil Quarter on quarter sales (mmbbl) Natural Gas Quarter on quarter Sales (mmscm) Q1 9 Q2 9 Q3 9 Q4 9 Q1 1 Q2 1 Q3 1 Q4 1. Q1 9 Q2 9 Q3 9 Q4 9 Q1 1 Q2 1 Q3 1 Q4 1 28

15 Low Finding and Development costs Finding Costs (US$/bbl) F&D Costs (US$/bbl) FY FY FY FY FY FY FY FY Note: (1) BOE: Barrels of Oil Equivalent 29 Low Lifting & Production costs Lifting Costs (US$/bbl) Production Cost NG (US$/MMBTU) FY FY FY FY FY FY FY FY

16 Healthy reserve replacement ratio Crude Oil and Natural Gas (O+OEG) FY FY FY28 24 FY27 24 FY FY Adequate reserve replenishment 31 Realized Price 1 Realized Price ($/barrel) FY28 FY29 FY21 Q4 FY29 Q4 FY21 Gross Realized Price Realized Price after Subsidy/Discount Net Realized Price Current subsidy burden only on auto fuels 32

17 Impact of discount Particulars FY 29-1 FY 28-9 Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL US $ / BBL Pre - Discount Less: Discount Post Discount US $ Mn Discount Statutory Levies Impact on PBT Impact on PAT Sharing of Subsidy by Upstream Companies RS./CRORES TOTAL ONGC OIL GAIL Total % SHARING TOTAL ONGC 69% 85% 83% 86% 86% 8% 84% OIL 12% 7% 1% 9% 9% 11% 9% GAIL 19% 8% 7% 5% 5% 9% 7% Total 1% 1% 1% 1% 1% 1% 1% 34

18 Sharing of Subsidy by Upstream Companies SHARING OF SUBSIDY BY OIL INDIA LTD. VIS-A-VIS OTHER UPSTREAM COMPANIES RS. IN CRORES OIL ONGC GAIL 35 Subsidy Mechanism Recommendations of Expert Group (Kirit S. Parikh Committee) - To continue with the present system for subsidy on Kerosene & LPG (i.e. Apparently no burden to Upstream Companies) - The prices of Petrol and Diesel should be market driven - Increase of Rs. 6 per litre for Kerosene to reduce the subsidy burden - Increase of Rs. 1 per cylinder for LPG 36

19 Upside from 211 Price for Natural Gas increased to US$ 4.2/ MMBTU Consequentially additional gross revenue generation of US$ 11 mn (annualised) 37 Strategic Initiatives Increase in Exploratory and Development Drilling Meterage. Increase in Work Overs. Enhanced Water Injection to Increase Production. Endeavour to Enhance LPG production through NGL Recycling. Endeavour to Reduce Gas Flaring / Pollution by Inducting LNG Technology. Completed Preliminary Activities in order to Develop CNG Network in Assam 38

20 Business strategy 1 Geographic Diversification of Upstream Assets 5 Application of Advanced Recovery Techniques to improve the Recovery rate Capacity augmentation to increase water injection in matured fields combined with in-fill drilling to drain the reservoirs more effectively Installation of modern Artificial Pumping and Lifting equipment Implementation of Water Arrest techniques Achieve balanced growth of portfolio through acquisition of new assets Pursue selective bidding strategy in future rounds of NELP in India Integrated business portfolio leading to stable long-term shareholder value addition 2 Increase Reserves and Production Conduct detailed 2D and 3D seismic data Acquisition, Processing and Interpretation (API) in blocks Drill Exploratory wells and Development wells in identified blocks 4 Selectively diversify our domestic operations through Downstream Integration Pursue strategy of vertical integration Diversify sources of revenue through investments in downstream sectors such as refining and processing Improve profitability by extending operations into higher margin segments of product value chain 3 Monetisation of Gas reserves in the Upper Assam Basin Commercialize existing natural gas reserves in the Upper Assam basin through upstream and downstream investment Improve utilisation of natural gas through the implementation of advanced technology and techniques 39 Oil India Investor Presentation H1 FY21 FY29 Sector outlook and opportunities OIL India An overview Business structure, performance and strategy Financial performance

21 Revenue and profitability Revenue and profitability analysis (USD mn) 1,8 1,677 1,666 1,6 1,4 1,2 1, 1,239 1, FY27 FY28 FY29 FY21 Revenue PAT 41 Networth and Book Value Networth (USD mn) and Book Value Analysis (USD) Networth (LHS) Book Value (RHS) 3,5 3, 2, , , , ,5 1, 1,46 1, FY27 FY28 FY29 FY21 42

22 Cash Flow and EBITDA Margin Cash Flow (USD mn) EBITDA (USD mn) and EBITDA MARGIN (%) % % % 923 5% 48% 46% 44% 42% 4% FY27 FY28 FY29 FY21 FY28 FY29 FY21 38% Consistent and Attractive Cash Flow EBITDA EBITDA MARGIN 43 Dividends distribution and Earnings per share highlights Dividends distribution FY27 FY28 FY29 FY21 Dividend Payout (%) - LHS Dividends (%) - RHS The dividend per share has shown a consistent uptrend Earnings per share and Debt-Equity ratio x x x.2.6x.3x FY26 FY27 FY28 FY29 FY21 Earnings per share (INR) Debt/Equity Steady increase in EPS and minimal debt on the balance sheet 44

23 Investment Plans Exploration & appraisal activities Total Development Activities Capital Equipments & Facilities Total INR Million INR Million Overseas Projects Acquisition & Diversification Grand Total INR Million US$ Million THANK YOU 46

24 Venezuela - Project Carabobo Contains two Blocks North and Central OIL s PI 3.5% [PdVSA-6%, REPSOL, PETRONAS, OVL 11% each, IOC-3.5%] Contract Period 25 Years, Possible Extension 15 Years Estd Oil In Place 27.3 billion barrels Recoverable Reserve (in 25 Years) - 3 billion barrels Expected Daily Production 4, bbl Expected Annual Production 146 Mn bbl Estd. Investment for OIL - $ 424 Mn [Debt: Equity 1.5:1] Estd Capex - $ 6.37/ bbl for 25 Years Estd Opex - $ 6.47/ bbl for 25 Years Back 47