Petrom Investor Presentation. Andreas Matje, CFO of Petrom

Transcription

1 Petrom Investor Presentation Andreas Matje, CFO of Petrom June 2014

2 Disclaimer This document does not constitute a recommendation, an offer or invitation, or solicitation of an offer, to subscribe for or purchase any securities and neither this document nor anything contained herein shall form the basis of any contract, investment decisions or commitment whatsoever. This document does not include any financial analysis or financial research and may not be construed to be a or form part of a prospectus. It is being furnished to you solely for your information. This document and its contents are proprietary to OMV Petrom S.A. ( the Company ) and neither this document nor any part of it may be reproduced or redistributed to any other person. It may be amended and supplemented. No reliance may be placed for any purpose whatsoever on the information contained in this document, or any other material discussed verbally, or on its completeness, accuracy or fairness. None of the Company, connected persons, their respective affiliates, or any other person accepts any liability whatsoever for any loss or damage howsoever arising, directly or indirectly, from any use of this document or its contents. The information and opinions contained herein are provided as at the date of this document. This document is not directed at, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. In particular, no recipient of this document or any copy or part hereof shall reproduce, forward, retransmit or otherwise redistribute this document or any copy or part hereof, directly or indirectly, in or into the United States, Canada, Japan or Australia. This document includes forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933 and section 21E of the U.S. Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this document, including, without limitation, those regarding the Company s financial position, business strategy, plans, and objectives of management for future operations (including development plans and objectives relating to the Company s products), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company s present and future business strategies and the environment in which the Company will operate in the future and speak only as of the date of this document. None of the future projections, expectations, estimates or prospects in this document should in particular be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects have been prepared or the information and statements contained herein are accurate or complete. As a result of these risks, uncertainties and assumptions, you should in particular not place reliance on these forward-looking statements as a prediction of actual results or otherwise. This document does not purport to contain all information that may be necessary in respect of the Company or its shares and in any event each person receiving this document needs to make an independent assessment. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any statements including any forward-looking statements contained herein to reflect any change in the Company s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. 1 Investor presentation

3 2 Investor presentation Petrom at a glance

4 Petrom is an operationally integrated oil & gas player 2013 FIGURES Exploration and Production Refining and Marketing Romania 4 mn toe/yr crude oil and NGL 5.2 bcm/yr gas 707 mn boe proven reserves (~11 yrs of current production) Oil: Supplies 100% of oil for Petrobrazi Petrobrazi refinery (4.2 mn t/yr capacity) 3.6 mn t marketing sales 785 filling stations (Romania, Bulgaria, Serbia, Moldova) Kazakhstan 0.4 mn toe/yr crude oil and NGL 0.1 bcm/yr gas 21 mn boe proven reserves Gas: Supplies 100% of gas for Brazi Gas and Power Gas sales 4.9 bcm/yr (up to 40% of Romanian demand) Brazi gas-fired power plant (860 MW) Dorobantu wind park (45 MW) 3 Investor presentation

5 Petrom is the leading industrial company in Romania 2013 FIGURES Largest private employer ~20,000 direct employees and more than 60,000 indirect jobs Main energy supplier Accounts for ~40% of oil, gas and fuel supply, and up to 10% of power generation capacity in Romania Largest investor Over EUR 1bn capex spent per year since privatization Largest contributor to state budget EUR ~2.3bn in 2013 (~11% share of non-consolidated budget) 1 1 Equivalent share of state budget income in 2013e (non consolidated); Include: profit tax, royalties, employer social contributions, excises incl. custom duties, VAT, employee related taxes, other direct and indirect taxes, dividends paid to state 4 Investor presentation

6 Petrom has transformed from an inefficient state-owned company into a high-performing private company From... To... Impact Corporate governance & Culture State company mindset Bureaucracy State interference in commercial decisions Professional organization Two-tier management system Blue chip on BSE Code 1 A strategy incorporating sustainability Transparency and performance mindset Turnaround & Operational efficiency Large non-core businesses Declining production and aging underinvested assets Lack of management systems Focus on oil & gas core Stable production at 171kboed with lower costs (~USD15/boe) Modern technology, facilities and management systems ROACE 2 19% HSSE 3 Lack of monitoring systems Low safety awareness Limited HSSE trainings Security Management Plans > 1.5 day/employee HSSE trainings Safety Day LTIR Bucharest Stock Exchange Code of Governance in adherence to OECD standards 2 ROACE as of HSSE: Health, safety, security and environment 5 Investor presentation 4 Lost time injury rate for 2013 compared with 1.11 in 2004

7 Petrom has benefited from an improved capital market environment Free float increased in % 51.01% 20.64% 9.36% OMV*: Austria s largest listed industrial company and integrated international oil and gas company Property Fund: listed fund, ~90% of AUM invested in the energy sector State holding, but no golden share Free float increased from 6.62% to 9.36% today Share price appreciated by 9.7% YoY in 2013 Index Jan 2009 = BET BET-NG Brent Petrom Other 2013 highlights Petrom shares trading turnover: +40% y/y Total Shareholders Return**: 16% Institutional investors: +12.4% y/y to more than 500 *Shareholder since Dec 2004; ** Dividend yield plus share price increase in gross values (2013 vs 2012) 6 Investor presentation

8 Financial performance in 2013 Clean CCS EBIT 2013 vs in RON mn 5,855 6,015 (4)% Exploration & Production First annual increase in hydrocarbon production in Romania since privatization Continued focus on cost reduction Unfavorable FX effects and higher depreciation expenses 5, (289) 2012 E&P G&P 5,542 (53)% >11x (68) 2013 R&M C&O and Consolidation Gas & Power Weaker gas and power demand Depressed electricity prices Refining & Marketing Significantly higher refinery utilization rate Strong marketing performance 7 Investor presentation

9 Evolution of financial indicators Solid financial basis for growth and sustainable performance Operating cash flows, RON bn ROACE, % Capex Operating / CFO cash ratio flows / Capex ratio, % Gearing ratio, % Investor presentation

10 9 Investor presentation Business environment

11 Macroeconomic environment Romania s resilient economy continues to recover Romania GDP continues to recover GDP growth rate, % Current Account deficit, % of GDP f EU member since January 2007 Country ratings: investment grade Moody s (Baa3), Fitch (BBB-) and S&P (BBB-) FX: in 2013 RON was relatively stable against EUR (+1%) but rose against USD by 4%; in Q1/14 RON depreciated by 3% against EUR and appreciated by 1% against USD CPI annual inflation: 2013 average at 4%, 1.3% at year-end; 2.8% (end-march) IMF support: a 2-year precautionary agreement approved in September 2013 SOEs* privatization momentum Source: IMF, WEO Database Oct 2013, NBR for GDP , INS estimates for 2013 * SOE = State Owned Enterprise 10 Investor presentation

12 Regulatory environment An investment-friendly environment is required to fully unlock growth in the energy sector Progress made Remaining challenges Oil market is fully liberalized Oil Gas Gas liberalization path: Energy Law* stipulates deadlines for price liberalization Third Energy Package largely transposed in the Energy Law Stable and investment-friendly fiscal & regulatory framework Power Power market roadmap for phasing out of regulated electricity quantities part of Energy Law Renewables support scheme initially beneficial Renewables support scheme Secondary legislation not fully defined Coal power plants EU environmental standards to be implemented Demand and competition * Law no. 123/ Investor presentation

13 Gas price liberalization on track Planned gas price liberalization steps 1 Non-households Households RON/MWh RON/MWh % % Roadmap approved by Government decision for the increase of regulated gas prices during , deadlines stipulated in the Energy Law 12 Investor presentation

14 13 Investor presentation Petrom Strategy 2021

15 PETROM STRATEGY AS OF 2012 We aim to remain the leading regional, integrated oil and gas company with sustainable performance to support potential upstream growth in the neighboring Black Sea region E&P G&P R&M C B A 2012 Sustain performance Stabilize production through field redevelopment, drilling, workovers Continue with operational excellence Optimize E&P portfolio through partnerships Bring Brazi CCPP on stream Enhance value of equity gas by strengthening gas sales Modernize/improve efficiency of Petrobrazi refinery Revamp fuel storage network 2014 Enhance mid-term value Increase ultimate oil and gas recovery Explore, appraise and start to develop 1 Neptun (Black Sea deepwater) Explore deeper and frontier hydrocarbons Optimize across commodities and leverage fair market conditions 2016 Enhance value of integrated downstream (e.g. operating model) Optimize R&M portfolio Position for long-term growth Explore additional opportunities in the neighboring Black Sea Explore unconventional opportunities Explore infrastructure needs related to equity gas (Black Sea) 2 Explore development of a potential Gas Hub, incl. from the perspective of capitalizing on new discoveries Explore partnership opportunities People. Develop a performance-based organizational culture and skill pool to achieve business growth and operational excellence Resourcefulness. Develop a sustainability culture for efficient use of natural resources, high safety and environmental standards and share value with stakeholders for common long-term growth 1 Development subject to confirmation of commercial viability 2 Updated 14 Investor presentation

16 15 Investor presentation Business overview

17 Health Safety Security and Environment (HSSE) Safer operations E&P LTIR 1 Romania Significantly improved in > 50% reduction Fatality rate in Romania reduced by 80% since 2008 Petrom LTIR substantially improved 2 (0.33 in 2013 better than international benchmark) People more intensively trained in HSSE, which has become part of our corporate DNA (mindset and lean processes) Lost time injury rate (employees and contractors) 2 LTIR for Petrom Group, excluding Kazakhstan 16 Investor presentation

18 Exploration & Production Petrom footprint is concentrated in Romania 2013 FIGURES Exploration and production concessions Key facts Romania Existing blocks/fields: 10 assets with 239 commercial oil and gas fields (~45/55% oil/gas mix) and ~9,000 operated wells Exploration licenses for 9 onshore and 3 offshore blocks Recovery factor: oil ~25%; gas ~49% RRR 1 at 48% (2012: 61%) Reserves mn boe, eoy Proved Proved and probable Kazakhstan Petrom entered Kazakhstan in 1998 Romania Production in 2013: 11.2 kboe/d Kazakhstan Total 728 1,025 1 Reserve replacement rate (3-year average) 17 Investor presentation

19 Exploration & Production First year of increased production in Romania, while containing production costs Production was stabilized by accelerating workovers and drilling, deploying state-of-the-art technologies and partnerships Production enhancement contracts (PEC) for small fields with partners Group production, kboe/d Kazakhstan Romania Operational excellence for mature field operations being deployed throughout assets to contain production costs Examples: - Modernization of facilities and equipment - Reduced mean time between well interventions - Automation of metering points skids, parks, wells and data acquisition Romania production costs, USD/boe Investor presentation

20 Mid-term production FRD projects to unlock growth potential FRDs aim at maximizing ultimate recovery EOR/ IOR (water, steam, polymer injection) Additional drillings and workovers Modernizing operations Suplac Bulbuceni Development Phoenix Madulari Tazlau Burcioaia Videle G2 Independenta Oprisenesti Istria Lebada East 11 FRDs in development phase 2P reserves of 100 mn boe Peak production: 17 kboe/d Investments: EUR 550 mn 1 Examples: Suplac: In-situ combustion and cyclic steam injection Drilling of up to 87 new wells and modernization of the facilities until 2016 Ensures 10% of the total oil production of Petrom in Romania Independenta: Identify and develop the underdeveloped areas 12 FRDs in appraisal phase Cumulative potential production of mn boe, coming on stream Examples: Bustuchin: drilling additional wells and upgrading surface facilities Phoenix: infill drilling and water injection 19 Investor presentation 1 Cumulated FRDs; forward investments; data as of end-2013

21 Black Sea exploration and production Strong position in Black Sea for future growth Romania Neptun Deep OMV Petrom (50%), ExxonMobil (Operator 50%) Domino discovery in D seismic completed (~6,000 km 2 ); processing seismic Neptun Shallow (100% operatorship) 3D seismic completed; 3D seismic data processing is ongoing XV Midia Block OMV Petrom (42.5%), ExxonMobil (Operator 42.5%) Transfer of the 85% participation to ExxonMobil and OMV Petrom approved by the Government Ukraine Skifska OMV Petrom part of the consortium led by ExxonMobil PSA negotiations on hold 20 Investor presentation

22 Black Sea exploration First exploration well in Neptun Deep highly successful Progress 3D seismic survey (~6,000 km 2 operated by CGG Veritas) completed in Q2/13 Processing of 3D seismic data is ongoing Following seismic data interpretation, a new drilling campaign is anticipated to start around mid-2014 Ocean Endeavor drilling rig currently being prepared for Black Sea operations Specifications Ocean Endeavor drilling rig Domino-1: first deep water (~930 m) exploration well, total depth >3,000 m below sea level Gas discovery: preliminary estimated resources tcf (42-84bcm; mnboe) 21 Investor presentation

23 Gas & Power Lower contribution due to challenging gas and power markets Gas sales, bcm Other* Petrom gas sales Total gas consumption in Romania down by 8% in 2013 Petrom consolidated gas sales slightly higher than in 2012 Gas Gas price liberalization positive effects reflected in E&P Power Petrom net output TWh Peakload Power price RON/MWh Baseload Domestic electricity consumption decreased by 5% (production down 2%) Power prices down by 28% Brazi covered 5% of domestic power production in Investor presentation *Other domestic producers and imports

24 Refining & Marketing Good operational performance with high refinery utilization rate Refining & Marketing positively contributes to Petrom results Strong operating profit despite margin pressure Highest Petrobrazi refinery utilization rate since privatisation Incremental improvements in product yield structure Increased energy efficiency Retail volumes constant in Romania, despite competitive market Focused cost management Clean CCS EBIT, RON mn (675) (104) Petrobrazi refinery utilization increased; fuel & loss on a downward trend Petrobrazi utilization,% Fuel & loss, % Investor presentation

25 24 Investor presentation Financial performance: Q1/14 results

26 Q1/14 overview Clean CCS EBIT, RON mn -6% 1,579 1,477 Production at kboe/d RON 1% stronger vs. USD and 3% weaker vs. EUR Average Urals crude prices of USD /bbl 1,417 1,372 Gas sales volumes of TWh (1.25 bcm) Net electrical output of 0.58 TWh Deteriorated refining margins due to lower product cracks E&P G&P R&M Co&O Cons (15) 52 (29) Q1/ (10) Q1/14 2 Strong marketing result due to stringent cost management 25 Investor presentation

27 Economic environment Average Urals price in USD/bbl (left scale) Average RON/USD (right/scale) Domestic gas price in Romania (for households) Domestic gas price in Romania (for non-households) Average import gas price in Romania Indicator refining margin (USD/bbl) Oil price (USD/bbl) and FX (RON/USD) Gas prices (USD/MWh) 1 Indicator refining margin (USD/bbl) Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 1 Import gas prices represent ANRE assumptions 26 Investor presentation

28 Results in Q1/14 Clean CCS net income attributable to stockholders (RON mn) 1,328 Q1/13-19% 1,080 Q1/14 in RON mn Q1/14 Q1/13 EBIT 1,472 1,582 (7)% Financial result (132) 2 n.m. Taxes (265) (252) 5% Effective tax rate 20% 16% 24% Net income 1,075 1,332 (19)% Minorities (0.43) 1.45 n.m. Net income attributable to stockholders 1 1,075 1,330 (19)% EPS (RON) (19)% Clean EBIT 2 1,472 1,623 (9)% Clean CCS EBIT 2 1,477 1,579 (6)% Clean CCS net income 1,080 1,328 (19)% attributable to stockholders 1,2 Clean CCS EPS (RON) (19)% Figures in this and the following tables may not add up due to rounding differences 1 After deducting net income attributable to non-controlling interests 2 Adjusted for exceptional, non-recurring items; clean CCS figures exclude special items and inventory holding effects (CCS effects) resulting from R&M 27 Investor presentation

29 CAPEX and EBITD Q1/14 (RON mn) Key investment projects for Q1/14 2,284 1,249 1,987 E&P: drilling, workover activities & sub-surface operations and surface facilities, field re-development initiatives as well as investments related to Totea Deep project E&P R&M G&P C&O Cons 1, R&M: Petrobrazi refinery modernization, 3+3 terminals strategy 1, efficiency projects and environmental compliance projects CAPEX EBITD 28 Investor presentation terminals strategy = streamlining the storage network to 6 terminals: 3 greenfield and 3 revamped

30 29 Investor presentation Management agenda 2014

31 Management agenda 2014 Maintain production stabilization Exploration activity in the Black Sea Finalize Petrobrazi modernization Continue dialogue with authorities on taxation and regulatory frameworks; impact on investments Address gas and power market challenges Shareholders return 30 Investor presentation

32 31 Petrom Group Q&A