investor presentation 1h and 2q 2015 · 2015-09-29 · 1h 2015 market environment 3 indicator...
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INVESTOR PRESENTATION 1H AND 2Q 201529 September 2015
2
DISCLAIMER
This presentation (hereinafter – the “Presentation”) of the Alliance Oil Company (hereinafter – the “AOC”) was prepared exclusively for the information purposes in order to improve the transparency of disclosure of relevant information and materials of AOC and establish a continuous dialogue with investors.
The data contained in this Presentation constitute the confidential information of the AOC group of companies and shall not be disclosed or transmitted to any third parties without the prior written consent of the disclosing party.
The information contained in this Presentation was prepared and provided by the AOC structural departments. These data can be changed with the course of time and are subject to regular update and amendment.
This presentation is not an offer or solicitation of an offer and does not cause creation of any rights or obligations from the AOC and/or potential partners to carry out transactions or to enter into negotiations on cooperation.
The information provided in this Presentation is not an offer or proposition to conclude an agreement.
AOC makes no warranty in respect of the accuracy or reliability of the information contained in the Presentation and accepts no liability for any losses suffered by third parties arising from inaccuracy or unreliability of such information as well as for other negative effects.
1H 2015 Market Environment
3
Indicator 1Н 2015average
1H 2014average
%
Urals, USD/bbl 56.73 106.56 -47%
Brent, USD/bbl 57.95 108.93 -47%
ESPO, USD/bbl 59.77 109.52 -45%
Exchange rate, RUB/USD 57.40 34.98 64%
Indicator 1H 2015average
1H 2014average
%
Naphta, USD/bbl 57.52 104.07 -45%
Diesel Fuel, USD/bbl 71.59 122.22 -41%
Fuel Oil, USD/bbl 51.12 90.34 -43%
1H 2015 results were negatively affected by weak ruble and low crude oil and oil products quotes
RUB/USD
Source: Platts Source: Platts Singapore20
30
40
50
60
70
80
30
40
50
60
70
80
90
100
110
120
Crude Oil Prices and Exchange Rate
Urals average Brent ESPO Kozmino Exchange rate
USD/bbl
30
40
50
60
70
80
90
100
110
120
130
1-Jan-14 1-Apr-14 1-Jul-14 1-Oct-14 1-Jan-15 1-Apr-15 1-Jul-15
Oil Products Price
Naphtha Diesel Fuel (Gasoil 500 ppm) Fuel Oil (HSFO 180)
USD/bbl
4
HIGHLIGHTS FOR 1H 2015 AND 2Q 2015
Indicator 1H 2015 1H 2014 2Q 2015 2Q 2014 Comments
Financial Results
Revenue, MUSD 1,118 1,747 621 886 Decrease due to RUB depreciation
EBITDA, MUSD 150 296 65 150Decrease due to loss-making upstream segment and RUB depreciation
Net Result, MUSD (16) 34 7 58Decrease due to higher MET and higher financial expenses
Operational Results
Production, mboe 9.8 10.3 5.0 5.3 Drilling and production plans amended for more sustainable oil fields development
Refining volumes, mbbl 15.4 15.4 7.5 7.4 Stable volumes
Throughput, mbbl 14.9 15.0 7.2 7.2 Stable volumes
5
1H 2015 STRATEGIC HIGHLIGHTS
Upstream Highlights• Introduced new complex technologies in order to increase current
production level, i.e. implemented horizontal drilling techniques inTatnefteotdacha and continued sidetracking activity in Pechoraneft
• Increased hydrocarbon production by 5% Q-o-Q due to newdevelopment programs and launch of 29 new wells during 1H 2015
Downstream Highlights• Increased light products production by 8% and gasoline production by
20% due to launch of hydro cracker unit in June 2014 and technology process optimization
• Entire produced diesel fuel brought in compliance with Euro 5 quality standard
Financial Highlights
• MUSD 350 Eurobonds partial repayment and prolongation till March 2019
• MRUB 13,500 short-term bank loans prolongation till September andOctober 2015
5
1Н 15 production:
2.7 mboe (27%)1
2Q 15 production:
1.4 mboe (27%)
Timano-Pechora
1H 15 production:
2.5 mboe (26%)2Q 15 production:
1.3 mboe (26%)
Tomsk
UPSTREAM OPERATIONS
Crude Oil and Gas Reserves and Production
6
1Н 15 production:
1.3 mboe2Q 15 production:
0.6 mboe
Khanty-Mansiysk and Yamalo-Nenetsk2
Notes: (1) Percentage in consolidated Alliance Oil Company production.(2) Through the Group’s operations with AROG (Alliance Repsol Oil & Gas), a joint venture with Repsol, which is accounted for under the equity method. (3) As per DeGolyer & MacNaughton as of 31 December 2014.
2P oil reserves: 614.4 mboe3
2P gas reserves: 47.5 mboe
1Н 15 production: 9.8 mboe (average daily: 54,243 boepd)2Q 15 production: 5.0 mboe (average daily: 55,182 boepd)
Alliance Oil Company, consolidated
1Н 15 production:
4.6 mboe (47%)2Q 15 production:
2.3 mboe (47%)
Volga-Urals and Kazakhstan
7
5,15,3 5,3
5,14,8
5,0
0,0
1,0
2,0
3,0
4,0
5,0
6,0
1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015
UPSTREAM OPERATIONS
Crude Oil and Gas Production
Hydrocarbon Production, mboe
+ 5%
56 129
58 098
57 210
55 726
53 295
55 182
50 000
52 000
54 000
56 000
58 000
60 000
1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015
Hydrocarbon Production, boepd
Achieved growth Q-o-Q in all major fields
Implemented 111 well interventions, launched 29 new wells in 1H 2015
UPSTREAM OPERATIONS
Crude Oil Sales
Crude Oil Sales, mbbl
8
2,02,6
2,01,9
4,6 4,5
0,0
3,0
6,0
9,0
1H14 1H15
Export CIS Domestic Intra-group
8.8 9.0
0,9 1,2
1,11,2
2,3 2.0
0,0
2,0
4,0
6,0
2Q14 2Q15
Export CIS Domestic Intra-group
4.4 4.4
Preferential shipment to export due to higher margins
No shipments to CIS market due to weak demand
UPSTREAM OPERATIONS
Crude Netback Prices, USD/bbl
Notes: The netback prices are calculated by deducting VAT, railway and pipeline transportation costs (for Russian domestic sales) or transportation, export duty, brokers’ commission and certain other costs (for export sales) or transportation, brokers’ commission and certain other costs (for CIS countries sales) from the gross price.
Crude Oil Netbacks
58
55
8
19
25
49
51
35
50
49
28
36
0
20
40
60
80
2Q2014 3Q2014 4Q2014 1Q2015 2Q2015
Export CIS Domestic
9
55
22
49
33
0
20
40
60
1H2014 1H2015
Export Domestic
Decreased netbacks in all destinations due to lower prices for crude oil
Reduced export netbacks due to earlier prepaid shipments to offtakers at fixed FX while RUB depreciated significantly since 4Q 2014
Notes: The net prices are calculated by deducting VAT (for Russian domestic sales). 10
UPSTREAM OPERATIONS
Gas Sales and Price
Gas and Gas Liquids Sales, kboe Gas and Gas Liquids Prices, USD/boe
1 2531 121
239 189
0
400
800
1 200
1 600
1H 2014 1H 2015
680
562
120 94
0
200
400
600
800
2Q 2014 2Q 2015
Sold volume of Gas, kboe Sold volume of Gas Liquids, kboe
12,5 11,89,2 7,1 8,4
43,549,0
37,6
27,6 28,5
0,0
20,0
40,0
60,0
2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015
12,57,7
44,8
28,0
0,0
20,0
40,0
60,0
1H 2014 1H 2015
Gas, net price, USD/boe Gas Liquids, net price, USD/boe
Decreased sales volumes due to revised field development scheme
Gas and gas liquids economics negatively affected by increase in RUB/USD exchange rate
UPSTREAM OPERATIONS
Crude Oil and Gas Sales
Revenue from Sales of Crude Oil, Gas and Gas Liquids, MUSD
11
6136
73
52
117
81
0
100
200
300
2Q14 2Q15
Export CIS Domestic Intra-group
256
169
12269
132
83
231
152
0
200
400
600
1H14 1H15
Export CIS Domestic Intra-group
498
304
Two main factors contributed to the decrease in revenue from sales of crude oil: decreased netbacks in all destinations due to lower prices for crude oil and reduced export revenues due to earlier prepaid shipments to offtakers at fixed FX rate while RUB depreciated significantly since 4Q 2014
Retail gas stations:
13
The Republic of BuryatiaRefining volumes:1Н 15: 85,069 bopd (1Н 14: 85,303 bopd)2Q 15: 82,821 bopd (2Q 14: 81,617 bopd)
Throughput:1H 15: 14.9 mbbl (1H 14: 15.0 mbbl)2Q 15: 7.2 mbbl (2Q 14: 7.2 mbbl)
Khabarovsk Oil Refinery
DOWNSTREAM OPERATIONS
Assets and Refining volumes
12
Retail gas stations: 18Marine terminals: 2Jet fuel depot: 1
Kamchatka region
Retail gas stations: 280Oil depots: 20Marine terminals: 4Jet fuel depot: 1Railway tankers: 1,440
TOTAL
Retail gas stations: 249Oil depots: 20Marine terminals: 2Railway tankers: 1,440
Far East: Amur, Primorand Khabarovsk regions
DOWNSTREAM OPERATIONS
Khabarovsk Oil Refinery Khabarovsk Oil Refinery connection to ESPO
Oil Products Breakdown in 1H 2015, %
Pumping station No34 (pipeline tie-in point)
On 1 September the Group commenced commercialdelivery of crude oil through the newly launchedconnection to ESPO. It will minimize transportationcosts by approx. RUB 1 bln per month provided fulllaunch of the line.
ESPO-I (length 2,694 km)
ESPO-II (length 2,046 km)
ESPO leg (length 28 km)
Refining volumes, bopd
Refining throughput, mbbl
Light oil products yield,%
13
7,24
7,24
14,98
14,89
2Q 2014
2Q 2015
1H 2014
1H 2015
81 617
82 821
85 303
85 069
2Q 2014
2Q 2015
1H 2014
1H 2015
57,5%
61,0%
57,2%
61,9%
2Q 2014
2Q 2015
1H 2014
1H 2015
35%
18%21%
19%
7%Fuel oil
Marine fuel
Gasoline
Diesel fuel
Others
DOWNSTREAM OPERATIONS
Oil Products Sales
14
1,1 1,3
2,7 2,7
2,32,7
1,31,3
0,0
3,0
6,0
9,0
2Q14 2Q15
Export Bunkering Wholesale Retail
7.48.0
Oil Products Sales, mbbl
3,14,2
5,1 3,8
4,6 5,2
2,52.7
0,0
5,0
10,0
15,0
20,0
1H14 1H15
Export Bunkering Wholesale Retail
15.3 15.9
Reallocation of shipments from bunkering to export in Q1 2015 (effect of decrease in export duty due to tax maneuver and decrease in crude oil price) while flat bunkering volumes in Q2 2015 (due to further increase in crude oil price)
Increased wholesale and retail volumes due to increased share of light products in Khabarovsk Oil Refinery production
15
DOWNSTREAM OPERATIONS
Oil Products Prices
Oil Products Net Prices, USD/bbl
81
71
41
43
5376
73
55
38 41
111 112
82
58
78
137 136
103
85
103
0
50
100
150
2Q14 3Q14 4Q14 1Q15 2Q15
Export Bunkering Wholesale Retail
76
46
40
106
68
136
94
0
50
100
150
1H14 1H15
Export Bunkering Wholesale Retail
Net USD prices decreased primarily due to RUB depreciation for domestic sales (average RUB/USD exchange rate increased Q-o-Q by 50% and H-o-H by 64%) and decrease in quotes for export and bunkering sales
DOWNSTREAM OPERATIONS
Oil Products Sales
Revenue from sales of oil products, MUSD
16
92 70
203
109
259
212
177
133
0
200
400
600
800
2Q14 2Q15
Export Bunkering Wholesale Retail
731
237 195
388
151
482
357
343
247
0
500
1 000
1 500
1H14 1H15
Export Bunkering Wholesale Retail
1,451
950524
Despite increased volumes and increased RUB-nominated prices in the domestic market, total amount of revenue nominated in USD decreased due to dramatic increase in RUB/USD exchange rate
FINANCIALS
17
1H 2014 1H 2015 2Q 2014 2Q 2015
RUB/USD exchange rate, average 34.98 57.40 35.00 52.65
Urals, average 106.56 56.73 107.17 61.09
Revenue 1,747 1,118 886 621
Operating income 145 56 69 16
EBITDA 296 150 150 65
EBITDA Margin 17% 13% 17% 10%
FХ gain/(loss) -13 22 47 41
Profit/(Loss) for the period 34 -16 58 7
Total assets 5,866 3,651 5,866 3,651
Cash and cash equivalents 197 223 197 223
Total debt 2,344 2,181 2,344 2,181
Total cash from operating activities 348 66 -13 53
Total cash used for investments -331 -103 -77 -58
Total cash used in financing activities -100 -59 -131 -2
Profit or loss,
MUSD
Financial position,
MUSD
Cash flows, MUSD
Macro
Revenue Breakdown, MUSD
FINANCIALS
Segment Performance
Notes: Segment revenue is based on total sold volumes including external and intra-group. Segment revenue excludes other income. 18
498 304
1,451
950
0
500
1 000
1 500
2 000
1H14 1H15
Upstream Downstream
Upstream segment revenue decreased primarily due to decreased netbacks in all destinations and reduced export revenues due to earlier prepaid shipments to offtakers at fixed FX rate. In addition, RUB depreciation negatively affected upstream revenue
Downstream segment revenue decreased primarily due to RUB depreciation
256 169
731
524
0
200
400
600
800
1 000
2Q14 2Q15
Upstream Downstream
FINANCIALS
Segment Performance
EBITDA Distribution, MUSD
Notes: EBITDA for Upstream and Downstream segments is based on IFRS financial information. Segment EBITDA is based on total sold volumes including external and intra-group. 19
EBITDA, USD/bbl
243
111 129
68
112
77 64
15
0
100
200
300
1H14 1H15 2Q14 2Q15
Upstream Downstream
23,6
10,8
24,7
13,4
7,35
4,88
8,69
1,82
0
10
20
30
1H14 1H15 2Q14 2Q15
Upstream Downstream
Upstream segment EBITDA decreased due to: - decreased netbacks in all destinations - reduced export revenues due to earlier prepaid shipments to offtakers at fixed FX rate - higher MET as a result of increased RUB/USD exchange rate - RUB depreciation
Downstream segment EBITDA decreased due to:- RUB depreciation - higher crude oil component in the cost of oil products
FINANCIALS
Upstream Economics
20
Notes: (1) Based on total upstream sold volume including external and intra-group; (2) Selling, administrative and other income/expenses, include transportation tariffs and other selling expenses, administrative expenses and other operating income/expense.
Crude Oil Economics, USD/bbl1 1H 2014 1H 2015 2Q 2014 2Q 2015
Revenue 53.66 32.25 54.57 36.47
Production Costs 7.77 5.58 7.85 6.39
Production and Other Taxes 14.68 11.58 14.68 13.01
SG&A and Other2 5.79 3.70 5.14 2.61
EBITDA 25.41 11.39 26.90 14.46
Gas and Gas Liquids Economics, USD/boe
1H 2014 1H 2015 2Q 2014 2Q 2015
Revenue 17.70 10.68 17.15 11.24
Production Costs 1.83 1.36 2.13 1.54
Production and Other Taxes 2.54 2.63 2.08 2.88
SG&A and Other 0.51 0.03 0.32 0.07
EBITDA 12.82 6.65 12.62 6.76
Crude oil economics negatively affected by:- decreased netbacks in all destinations - reduced export revenues due to earlier prepaid shipments to offtakers at fixed FX rate - higher MET as a result of increased RUB/USD exchange rate - RUB depreciation
Gas and gas liquids economics negatively affected by increase in RUB/USD exchange rate
FINANCIALS
Downstream Economics
Notes: (1) Based on total downstream sold volume including external and intra-group; (2) Selling, administrative and other income/expenses, include transportation tariffs and other selling expenses, administrative expenses and other operating income/expense.
21
Downstream Economics, USD/bbl1 1H 2014 1H 2015 2Q 2014 2Q 2015
Revenue 94.86 59.77 98.49 65.46
Refining 4.27 3.35 4.72 3.54
Crude Oil Transportation 16.79 9.97 16.62 11.11
Cost of Crude Oil 44.96 29.35 45.99 36.06
Excise and Other Taxes 5.09 3.31 6.16 3.67
Oil Products Purchased for Resale 7.23 3.95 7.18 3.68
SG&A and Other2 9.17 4.96 9.13 5.58
EBITDA 7.35 4.88 8.69 1.82
Downstream economics negatively affected by:- RUB depreciation - higher crude oil component in the cost of oil products
FINANCIALS
Debt Portfolio
Debt Maturity Profile1, MUSD
Cash on balance MUSD 223
Notes: (1) Future cash flows for the repayment of loan principal. (2) Including interest accrued and net of unamortized issue costs.
Total Debt by currency as of 30 June 2015, MUSD2
22
Total debt of MUSD 2,1812
Net debt of MUSD 1,958
595
280 304
1 047
477
106
608
991
0
200
400
600
800
1000
1200
Within one year Within second year Within years three andfour
Five years and more
As of 31 December 2014
As of 30 June 2015
MUSD 350 Eurobonds
MUSD 500 Eurobonds
350 299
500 500
68631%
69332%
80137%
RUB bonds and bank loans
USD bank loans
USD Eurobonds
Leverage dynamics
Net debt to EBITDA of 3.59: - no breach of covenants - restriction on additional loans and
borrowing
804%
2 10196%
Secured debt
Unsecured debt
2 242 2 344
2 530
2 229 2 151 2 181
1 836
2 148
1 919 1 912 1 935 1 958
2,69
3,25
2,612,87 3,14
3,59
0,00
0,50
1,00
1,50
2,00
2,50
3,00
3,50
4,00
1 000
1 200
1 400
1 600
1 800
2 000
2 200
2 400
2 600
2 800
1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015
Total debt, MUSD Net debt, MUSD Net debt/EBITDA