2012 Annual Results Announcement

Transcription

1 China Petroleum & Chemical Corporation 2012 Annual Results Announcement March 25, 2013 Hong Kong

2 Disclaimer This presentation and the presentation materials distributed herein include forward-looking statements. All statements, other than statements of historical facts, that address activities, events or developments that Sinopec Corp. expects or anticipates will or may occur in the future (including but not limited to projections, targets, reserves and other estimates and business plans) are forwardlooking statements. Sinopec Corp.'s actual results or developments may differ materially from those indicated by these forward-looking statements as a result of various factors and uncertainties, including but not limited to price fluctuations, actual demand, exchange rate fluctuations, exploration and development outcomes, estimates of proven reserves, market shares, competition, environmental risks, changes in legal, financial and regulatory frameworks, international economic and financial market conditions, political risks, project delay, project approval, cost estimates and other risks and factors beyond our control. In addition, Sinopec Corp. makes the forward-looking statements referred to herein as of today and undertakes no obligation to update these statements. 1

3 Agenda Performance Highlights Operational Results by Segment 2013 Operational Plan Overseas upstream asset acquisition 2

4 Performance Highlights

5 Market Environment Growth in China s economy slowed down in the first half before recovering steadily in the second half, with GDP growth of 7.8% Domestic apparent consumption of refined oil products grew by 3.3%, gasoline grew by 7.8%, diesel grew by 0.6% Domestic demand for chemical products weakened leading to a lower price, consumption of ethylene equivalent grew by 2.7% International crude price remained volatile although the average remained constant Improved refining margin primarily due to the appropriately timely adjustments of refined oil product price RMB/tonne 11,000 9,000 7,000 Max. domestic retail price of oil product vs Dubai crude price RON90 Gasoline 0# Diesel Dubai Crude (right) 11/1 11/5 11/9 12/1 12/5 12/9 13/1 USD/bbl

6 Operating Summary: Focus on Resources and Market mmboe Oil and Gas Production mm tonnes Refinery Throughput* Total Sales of Domestic Oil Products mm tonnes Wholesale Distribution Retail 000 tonnes Ethylene Production* 9,894 9,059 9,452 * 100% production of joint ventures included 5

7 Profitability RMB million YoY % Q1-Q Operating Profit RMB million Revenue 1,913,182 2,505,683 2,786, ,185 30,394 21,810 Operating Profit Profit Attributable to Shareholders 104, ,530 98,662 (6.5) 71,782 73,225 63,879 (12.8) 18,273 EPS (RMB) (12.9) Q1 Q2 Q3 Q4 6

8 Financial Position RMB million As of Dec. 31, 2010 As of Dec. 31, 2011 As of Dec. 31, 2012 Short-term debt 17,019 68,224 73,063 Long-term debt 136, , ,518 Total equity attributable to shareholders of the Company 419, , ,914 RMB million Net cash generated from operating activities 170, , ,380 Net cash used in investing activities (105,788) (140,449) (162,197) Net cash (used in) / generated from financing activities (56,294) (2,516) 5,628 7

9 Dividend Full-year cash dividend of RMB 0.30 per share, raising the payout ratio to 40.8% In addition, 2 bonus shares from retained earnings and 1 bonus share from capital reserve proposed for every 10 existing shares DPS and Dividend Payout Ratio Dividend Yield* RMB/Share 35.5% 40.8% 3.70% 4.68% 4.65% 25.4% Year end Interim Payour Ratio * Based on the average price of the year 8

10 Capital Expenditure 2012 Capex: RMB 169 billion RMB billion Plan 2012 #REF! Corporate & Others Chemicals Marketing Refining E&P RMB 79.1 billion E&P in 5 key areas in China Refining RMB 32.2 billion Facility upgrading, revamping and clean energy projects Marketing RMB 31.7 billion Construction and acquisition of service stations Chemicals RMB 23.6 billion Wuhan ethylene project, adjustments in chemical product mix Corporate & others RMB 2.4 billion 9

11 Safe Production, Energy Conservation and Emission Reduction Implement HSE management system, enhance risk management and strengthen emergency response Execute the green & low-carbon development strategy: Energy intensity declined 2.2% COD in discharged waste water reduced by 3.67% SO 2 emission declined 3.75% Over 95% of industrial water recycled Disposal of hazardous chemicals, industrial wastewater, waste gases and residues was 100% compliant with industry standards 10

12 Corporate Social Responsibility Collectively operating in an environmentally-friendly manner Published Environmental Protection Report Provided clean products through clean production Strengthening our competitive edge in product and service quality Secure and provide China s oil supply Continued services to benefit communities Help poverty-stricken areas Poverty Alleviation Projects Help to build Hope Primary Schools Encourage and promote CSR among our business partners Agree on Code of Conduct Regulate occupational health of contractors HSE management manual for contractors on overseas projects 11

13 Operational Results by Segment

14 Upstream Domestic reserves replaced YoY Change (%) Oil and gas production (mmboe) Crude oil production (mmbbls) China Overseas Natural gas production (bcf) Lifting cost (USD/bbl) * * Up 6.4% excluding exchange rate effects As of Dec. 31, 2010 As of Dec. 31, 2011 As of Dec. 31, 2012 YoY Change (%) Proven reserves of oil and gas (mmboe) 3,963 3,966 3,964 (0.05) Proven reserves of crude oil (mmbbls) 2,888 2,848 2,843 (0.2) China 2,794 2,769 2, Proven reserves of natural gas (bcf) 6,447 6,709 6, % production and reserves of SSI included 2. 1 ton=7.1 barrels for crude oil production in China, 1 m 3 =35.31 c.f. for natural gas production in China, 1 ton=7.27 barrels for overseas crude oil production 13

15 Upstream Performance Realized Price of Crude Oil Operating Profit of E&P Segment USD/bbl RMB million 71,631 70,054 47,149 Realized Price of Natural Gas 5.79 USD/'000 cubic feet

16 Refining Structure Adjustments, Quality Upgrades YoY Change (%) Refinery throughput (mm tonnes) Gasoline, diesel and kerosene production (mm tonnes) Gasoline production (mm tonnes) Diesel production (mm tonnes) Kerosene production (mm tonnes) Light chemical feedstock production (mm tonnes) (2.8) Light yield (%) bps Refining yield (%) bps Note: 1. Refinery throughput is calculated based on 1 tonne = 7.35 bbls; % production of joint ventures included 15

17 Refining Performance USD/bbl 5.84 Refining Margin Operating Profit of Refining Segment 15,851 RMB million ,444-35,780 USD/bbl 2.81 Operating Cost* Quarterly Operating profit of 2012 RMB million 4,031 3,026 Q1 Q2 Q3 Q4-9,172-9,329 * Up 5.3% excluding exchange rate effects 16

18 Marketing: Improved Marketing Structure (mm tonnes) YoY Change (%) Total sales of refined oil products Domestic sales of refined oil products Retail Distribution Wholesale Annualized average throughput of selfoperated stations (tonnes/station) 2,960 3,330 3, As of Dec. 31, 2010 As of Dec. 31, 2011 As of Dec. 31, 2012 YoY Change (%) Total number of domestic service stations 30,116 30,121 30, Company-operated stations 29,601 30,106 30,

19 Marketing Performance Revenue from 销售板块经营收益 Non-fuel Business RMB million Operating Profit of Marketing Segment RMB million 11,000 44,696 42,652 8,260 30,760 5,720 18

20 Chemicals: Optimized Utilization in Response to Market Conditions 000 tonnes YoY Change (%) Ethylene 9,059 9,894 9,452 (4.5) Synthetic resins 12,949 13,652 13,343 (2.3) Monomers & polymers for synthetic fibers 8,864 9,380 8,950 (4.6) Synthetic fibers 1,393 1,388 1,339 (3.5) Synthetic rubbers (5.5) * 100% production of joint ventures included 19

21 2010/ / / / / / / / / / / / / / / / / / /01 Chemicals Performance Chemical Products Price Index Operating Profit of Chemical Business RMB million 26, , ,178 Index Difference CPPI Naphtha Price Index Source: Sinopec 20

22 2013 Operational Plan

23 Market Outlook for 2013 World economy is expected to recover gradually with moderate growth The crude price is expected to remain volatile at high level, domestic oil and chemicals market remains challenging Chinese economy is showing signs of improvement Accelerate the change in economic structure Promote industrialization, urbanization, informatization and agricultural modernization Focus on expanding domestic demand Optimize the refined oil product and natural gas pricing mechanism 22

24 2013 Capex Plan 2013 Capex Plan: RMB billion E&P RMB 89.1 billion Exploration in key areas in China Refining RMB 33.8 billion Quality upgrading in refined oil and revamping of refining facilities Marketing RMB 27.0 billion Construction and improvement of service stations and oil product pipelines 15% 14% 3% 49% E&P Refining Marketing Chemicals Chemicals RMB 25.9 billion Fujian ethylene and Hainan aromatics projects 19% Corporate & Others Corporate & others RMB 5.9 billion 23

25 2013 Production Estimates Oil and Gas Production* mm boe mm bbls Crude Oil Production Natural Gas Production bcf E E E Refinery Throughput** mm tonnes Total Domestic Sales of Refined Oil Products mm tonnes Ethylene Production* 000 tonnes 9,452 9, E E E * Production of overseas assets acquisition is not included **100% production of joint ventures included 24

26 Overseas upstream asset acquisition

27 Transaction Overview Pre-Transaction Post Transaction Sinopec Corp SIPC Sinopec Corp SIPC 100% 100% SIPL SIPL SHI 100% 100% 100% SOOGL (Cayman) Tiptop HK SHI 100% 50% 50% 100% Tiptop HK Shareholder's Loan USD 348mn ONGC AAL 50% 49% Rosneft 50% 51% Lukoil Mansarovar (Bermuda) Taihu (Cyprus) Special Dividend* USD 92.77mn 100% 50% 50% 100% Tiptop BVI Shareholder s Loan: USD 348mn ONGC AAL 50% 50% Mansarovar (Bermuda) Rosneft JV (HK) 49% 51% Taihu (Cyprus) 100% Special Dividend* USD 92.77mn Lukoil 50% 50% Promleasing 97.14% CIR (BVI) Promleasing 97.14% CIR (BVI) Columbia Project UDM Project (Russia) Kazakhstan Project Columbia Project UDM Project (Russia) Kazakhstan Project * As defined in the connected transaction announcement 26

28 Target Assets Consideration Total Consideration by JV(HK): USD3 billion Sale Share*:USD2.559 billion Shareholder s Loan: USD0.348 billion Special Dividend*:USD93 million Reserves 1P:258.2mmbbls,equivalent to 9.91USD/bbl 2P:310.1mmbbls,equivalent to 8.25USD/bbl * As defined in the connected transaction announcement 27

29 Reserves and Production Overview Proved and Probable Reserves mmboe 2012 Production 2P Reserves and 2C Resources Gas 1.0% Gas 0.2% Proved: 83% Taihu CIR Mansarovar Total Proved reserves Probable reserves mmboe 2C Resources Oil 99.0% Total: 37.0 mmboe 2Ci 24.3% 1C 33.7% Proved reserves 34.9% Probable reserves 7.0% Total: mmboe Oil 99.8% Taihu CIR Mansarovar Total 1C 2Ci Source: Reserves evaluation report issued by reserves consultants (Ryder Scott and DeGolyer & MacNaughton) mmboe Historical Annual Production C: 58% Total net production of the three target assets surpassed 100kboepd in 2012 Well-developed assets generating strong production and stable free cash flow Reserves are predominantly crude oil, most of which are P1 reserves Significant contingent resources indicate future production and reserves upside Source: Target s operations information; production based on JV pro-forma net production Exploration potential to further increase reserve size Note: 1. Numbers may not sum to total due to rounding 2. The JV s net reserves (resources) represents the JV s working-interest reserves (resources) subtracting royalty (resources); as of December 31, Natural gas production and reserves are based on contracted sales volume 4. Due to contract terms, a significant portion of the reserves from Taihu was classified as contingent resources which will likely be converted into reserves after the licenses are extended; 2Ci means the best estimate scenario of contingent resources volumes incremental to 1C 28

30 Strengthen Upstream Reserve Base and Profitability 2012 Crude Oil Proved Reserves 2012 Operating Cost per Barrel USD/bbl 3,101 mmbbl 2,843 mmbbl Pre-Transaction Post-Transaction 2012 Crude Oil Annual Production 2012 EPS (Pro-forma) 365 mmbbl Average of International Integrated Oil Companies Target assets RMB 328 mmbbl Note: Pre-Transaction Post-Transaction 1. Post transaction, Sinopec Corp. will consolidate the JV's financials, and its total reserves and production 2. The JV's crude oil reserves represent its net equity proved reserves; based on the reserves valuation report issued by the reserves consultant, as of 31 Dec The JV s annual crude oil production is its yearly net equity crude oil production Pre-Transaction Post-Transaction Note: 1. Data on JV is based on sum of targets numbers, which are sourced from auditor report (as of Dec ) 2. Operating cost and EPS are based on PRC GAAP; EPS refers to basic EPS 29

31 Appendix1: Target Assets Overview Taihu CIR Mansarovar Assets Overview Net Production Taihu conducts oil & gas exploration, development and production activities in Russia via 97.14% interest in UDM, which holds 100% interest in 28 producing oil fields CIR conducts oil & gas exploration, development and production activities in Kazakhstan via 100% interest in Karakuduk and Arman oil fields and 50% interest in North Buzachi, Kozhasai and Alibekmola oil fields Mansarovar conducts oil & gas exploration, development and production activities in Columbia via 50% interest in Nare Contract Block and 100% interest in Velasquez Contract Block 2012: 22.4 mmboe 2012: 11.0 mmboe 2012: 3.6 mmboe Net Reserves and Resources Proved reserves: oil mmbbl Probable reserves: oil 40.21mmbbl 2C Contingent resources: oil mmbbl Proved reserves: oil 71.11mmbbl; gas 6.52bcf Probable reserves: oil 8.72mmbbl; gas 0.50bcf 2C Contingent resources: oil mmbbl; gas 2.89bcf Proved reserves: oil 17.74mmbbl Probable reserves: oil 2.88mmbbl 2C Contingent resources: oil 6.39 mmbbl Highlights Large scale, quality oil reserves and stable production profile Promising oil reserve upgrade and ramp-up potential Low operating cost and strong profitability Well established surface infrastructures Mature producing oilfields Visible reserve base with large ramp-up potential Stable operations with sustainable income Well established surface infrastructure and extensive oil and gas pipelines adjacent to oil fields High quality oil and gas assets with strong reserve and production base Visible proved oil and gas reserves and scale of production Well established infrastructures Note: 1. Calculated base on the JV s equity interests. After the transaction, the JV holds 49% of Taihu, 50% of CIR and 50% of Mansarovar 30

32 Appendix2: Transaction Overview Transaction Structure SHI (a wholly-owned subsidiary of Sinopec Corp.) and Tiptop HK (a wholly-owned subsidiary of China Petrochemical Corporation) to establish a 50%:50% joint venture in Hong Kong, named Sinopec International Petroleum E&P Hongkong Overseas Limited (JV HK) Sinopec Corp. to have actual control over the JV HK through contractual arrangements JV HK to enter into Purchase Agreements with the wholly-owned subsidiaries of SIPC for the acquisition of CIR Sale Shares, Mansarovar Sale Shares and Mansarovar Shareholder s Loan, Taihu Sale Shares and Special Dividend Entitlement Russia Kazakhstan Colombia Total Target Assets and Consideration (USD million) 49% stake in Taihu Limited (Taihu) and Special Dividend Sale Share and Special Dividend Consideration: % stake in Caspian Investment Resources Limited (CIR) Sale Share Consideration : 1,571 50% stake in Mansarovar Energy Colombia Ltd (Mansarovar) and Shareholder s Loan Sale Share and Shareholder s Loan Consideration: Sale Shares 2,559 1 Shareholder s Loan Special Dividend 93 Total Consideration 3,000 Less: Special Dividend -93 Less: Shareholder s Loan -348 Add: Net Debt +831 Less: Net Cash -325 Add: Net Debt +299 Implied EV: 1,391 Implied EV: 1,246 Implied EV: 728 Implied EV 3,365 Form of Consideration JV to make an all-cash payment approximately USD 3 billion to relevant wholly-owned subsidiaries of SIPC¹ A wholly-owned subsidiary of the Company and a wholly-owned subsidiary of SIPC to provide funding for the JV to complete the transactions on a 50%: 50% basis Other Key Arrangements Completion of three transactions are not inter-conditional upon each other According to Shanghai and Hong Kong listing rules, the transactions are not subject to the approval of shareholders Expected Completion Time 3Q 2013 Note: 1. Closing of the transactions are not inter-conditional upon each other. If one or more transaction cannot be completed, the actual consideration paid would be less than the above amount. 31

33 For Further Information Investor Relations Beijing: Tel: (8610) Fax: (8610) Hong Kong: Tel: (852) Fax: (852) New York: Tel: (212) Fax: (212)