Capital Markets Day 2013 An integrated energy player focused on exploration and production 1 Galp Energia plc Capital Markets Day March 5th 2013
Strategy overview Manuel Ferreira De Oliveira Chief Executive Officer 2 Capital Markets Day - March 5th 2013
A clear strategy to become an integrated energy player focused on E&P Allocating capital to high potential upstream assets to benefit from market trends Consistently following strategic path delineated Materialising potential…
Consistently delivering Allocating capital to high quality upstream assets Ensuring sustained upstream value creation Addressing main challenges Becoming an integrated player focused on E&P 4 Capital Markets Day - March 5th…
Galp Energia has reinforced the foundations for upstream long-term value creation High impact wells Developing world-class Expanding projects delivered projects inventory Carcar well unlocking field Focus on optimisation and…
Robust financial capacity in place to support upstream long-term value creation Reaping upstream Leveraging existing Regaining financial initial rewards downstream and gas assets flexibility Shift towards upstream Upgrade project…
Shareholder return impacted by non fundamental variables Share price evolution 110% End of shareholder Growing fears over the Eni and CGD agreement Portuguese economy placement 100% 90% MSCI Energy -4% 80% Galp Energia -7%…
Consistently delivering Allocating capital to high quality upstream assets Ensuring sustained upstream value creation Addressing main challenges Becoming an integrated player focused on E&P 8 Capital Markets Day - March 5th…
Long-term energy outlook remains robust Global energy demand Oil supply and NG net trade balance (bcm) (mtoe) spare capacity USD/bbl mbpod US Europe Asia CAGR 2010-2035 7.0 120 34 4,217 2.3% 100 5.0 2,403 -76 4,218 -118 0.8%…
A strong set of assets in upstream Brazil Mozambique Angola Other areas World-class Material and growing 3 producing fields High-impact development projects resource base already reached peak exploration portfolio in Santos…
Solid foundations to increase cash flow from downstream and gas operations Refining Oil Marketing NG supply NG infrastructure High complex refining Leading player in the Strong and diversified NG distribution system set to…
Capital allocation towards high quality upstream assets Upstream business Downstream and gas businesses High impact Integrated and Favourable global exploration complex refining Challenging environment portfolio and system and a…
Consistently delivering Allocating capital to high quality upstream assets Ensuring sustained upstream value creation Addressing main challenges Becoming an integrated player focused on E&P 14 Capital Markets Day - March 5th…
Benefiting from a unique set of competitive advantages Strong and National Who we are flexible player flag carrier Enduring partnerships What we have Financial strength Knowledge from Integrated What we bring breakthrough…
A clear and sustainable E&P strategy Exploration Production De-risk current exploration prospects and Gain the most value from every project continuously feed the exploration funnel Deliver profitable production growth in the Build…
Capturing value from early exploration to production E&P projects lifecycle Development Exploration Production Appraisal Cumulative value creation Full cycle value creation highly driven by exploration and appraisal…
Steering towards a high impact exploration activity Strong corporate commitment and reinforced budget Focus on frontier and Materiality Active risk management emerging plays Focus on basins where we can Increase Galp Energias…
Exploration pipeline potential to deliver significant shareholder value Exploration de-risking process Average PoS Unlock 100-200 mboe per year through the drillbit Time 2013 prospects to de-risk Areas to de-risk going…
Recent new portfolio additions starting to realise exploration strategy Exploration portfolio recent additions Morocco Namibia Key data: Key data: Operator Non-Operator Shallow water Deep water Gross potential1: Gross potential:…
Building a balanced E&P portfolio on a promising set of assets Portugal 8 8 Morocco Venezuela 1 Equatorial Guinea 2 East Timor Brazil 2 5 Mozambique 20 Angola 1 of projects 7 2 Core area Namibia Uruguay Potential…
Continuously adding resources through the drillbit New Exploration Contingent Reserves ventures resources1 resources Unrisked 3,203 mboe 3C +14% YoY 3,245 mboe 3P Under 783 mboe +21% YoY continuous +10% YoY evaluation 2P 2C…
Strong pipeline of projects to deliver production and value until end of decade Infrastructure net installed capacity (kboepd) 375 Key production units onstream until 2020: 300 Lula / Iracema 10x FPSO Iara 2x FPSO 225 Jpiter 1x…
Ensuring sustainable production in the long run Target long-term production profile Production target 300 kboepd Identified projects to de-risk Pre-sanctioned projects New ventures Sanctioned projects 2010 2012 2014…
Maximising value and optimising operations along the development phase Development value creation upside Maximise recovery factor Cumulative Value Optimise development concepts Exploration Reduce capital requirements…
Extracting the most value through the full cycle Delivery on downstream Delivery of profitable and gas operations enables production growth supports Fast development of Increased focus on high quality projects E+D = Max(V) early…
Consistently delivering Allocating capital to high quality upstream assets Ensuring sustained upstream value creation Addressing main challenges Becoming an integrated player focused on E&P 27 Capital Markets Day - March 5th…
Overcoming challenges to succeed on our strategy Securing funding Ensuring project Developing the right Expanding and flexibility execution people sustainable practices Risk management framework in place 28 Capital Markets Day…
Robust financial capacity is a key strategic pillar Solid funding Resilient Active Upstream and liquidity Iberian portfolio delivery position businesses management Maintaining financial flexibility to develop the portfolio…
Project execution supported by solid partnerships Partner with some of the most experienced and renowned companies worldwide Access to multiple technological options Knowledge from different projects is a valuable calling card…
Developing the right people Senior management conference Human capital is a key strategic asset and core to project execution Advanced programmes and partnerships with renowned Portuguese and Brazilian universities E&P…
Highly responsible practices are embedded in our culture Safety performance Loss of containment 37 31 30 1.2 1.3 1.0 2.06 2.24 1.80 0.35 0.43 0.53 2010 2011 2012 2010 2011 2012 Accidents resulting in work absence LTIFR…
Consistently delivering Allocating capital to high quality upstream assets Ensuring sustained upstream value creation Addressing main challenges Becoming an integrated player focused on E&P 33 Capital Markets Day - March 5th…
An integrated energy player focused on E&P and on delivering shareholder value Well positioned to take advantage of growing demand for oil and gas Pursuing a clear capital allocation towards upstream Building a balanced…
Upstream profitable growth Stephen Whyte Chief Operating Officer E&P 35 Capital Markets Day - March 5th 2013
Executing a sustainable upstream strategy Strategy in place towards a continuous high impact exploration activity Enlarging and globally diversifying exploration portfolio Reaching 300 kboepd by 2020 from existing…
Solid track record High potential exploration portfolio Profitable production growth Concluding remarks 37 Capital Markets Day - March 5th 2013
An increasingly diversified portfolio Portugal Morocco Venezuela Equatorial Guinea Brazil East Timor Angola Mozambique Exploration and development activities Namibia Uruguay Exploration activities 38 Capital Markets Day…
Solid track record in exploration Exploration performance1 (bn boe) Galp Energias major world-class discoveries in new frontier and 4.0 emerging basins: 3.3 Tupi Iracema Iara Jpiter 0.8 Carcar 2007 2012 Mamba / Coral 1…
Exceptional exploration performance achieved in the recent past Finding costs1 (USD/boe) Development costs1 (USD/boe) 2011 2011 2012 2012 0 5 10 15 20 0 10 20 30 40 Source: Evaluate Energy and company analysis. Peers include…
Three core hubs established Key geographies Current three core areas established based on previous successful exploration activity Still a lot to take from exploration, Brazil appraisal and development activities Mozambique…
Solid track record High potential exploration portfolio Profitable production growth Concluding remarks 42 Capital Markets Day - March 5th 2013
Focus on delivering sustainable value from exploration activity Exploration Key objectives Deliver high impact organic growth opportunities Access promising new exploration areas Actively manage a lasting exploration portfolio…
Continuously reinforcing and geographically diversifying our exploration portfolio Exploration resources1 (mboe) 3,203 2,821 Re-fill and diversify: Materiality Focus on frontier and emerging plays Diversification and risk…
Geological diversification with increasing weight of emerging basins Exploration portfolio 2011 2012 Emerging Frontier Maturing Mature Emerging Frontier Maturing Mature 45 Capital Markets Day - March 5th 2013
Focus on deep water projects while starting to diversify well type portfolio Exploration portfolio 2011 2012 Deep Water Shallow Water Onshore Deep Water Shallow Water Onshore 46 Capital Markets Day - March 5th 2013
Balanced risk exposure Exploration portfolio profile Esprito Santo basin Mozambique Caramba Probability of success Blocks 14/14K Namibia Campos basin Blocks 32/33 Guanxuma Bracuhy Morocco 20% Portugal onshore Potiguar…
BM-S-8: Significant exploration potential to be further de-risked BM-S-8: Geological cross-section Evaluation period extension already requested Carcar appraisal well and a contingent DST in 4Q13 key to test productivity and the…
BM-S-24: Bracuhy prospect with potential to increase resource volumes BM-S-24: Geological cross-section Jpiter NE well confirmed the continuity of the reservoir and the same hydrocarbon mix Bracuhy prospect to be drilled during…
Potiguar: A play opener of a new frontier province Potiguar basin 10 prospects identified in a predominantly stratigraphic setting (Cretaceous clastics) First exploration well, Ararauna already being drilled, followed by Pit and…
Mozambique: Oil potential in Area 4 to be tested during 2013 Area 4 Mamba structure appraisal campaign to be concluded during 1H13 K Bulge oil prospect to be drilled in 2Q13 Structure well defined and oil charge concept still…
Namibia: Emerging province offers significant resource potential Namibia: hydrocarbon seepage map Key material and independent prospects to be tested in 2013, Wingat, Moosehead and Murombe First exploration well about to start in…
Morocco: Seismic data points to a potential analogue with Cap Juby oil discovery Tarfaya Offshore area in Morocco Different Jurassic prospects identified, with Trident, the primary prospect, located in the middle Jurassic targeting…
Targeted 300 mboe to be de-risked during exploration drilling programme in 2013 2013 drilling activity Prospects: 45% Ararauna Tango Pit Obsidiana 30% K Bulge Average PoS Bracuhy Wingat Prospects Net potential (mboe)1…
Solid track record High potential exploration portfolio Profitable production growth Concluding remarks 55 Capital Markets Day - March 5th 2013
Reach 300 kboepd by 2020 maximising value creation in development phase Production Key objectives Maximise oil recoverability Reduce capital requirement through project optimisation Mitigate execution risks and ensure a fast time…
Robust resource base 3P reserves1 (mboe) 3C contingent resources2 (mboe) 3,245 2,671 783 709 2011 Brazil Angola 2012 2011 Brazil Angola Mozambique 2012 Oil Gas 1Netentitlement; 2 Working interest 57 Capital Markets Day…
Several high impact development projects coming onstream Angola Additional projects to come onstream Mozambique FID and conceptual Production Brazil development decision to 2012 be taken by 2014 14 FPSOs producing 2020 by…
Lula/Iracema: Project being successfully executed with upside potential FPSO in Lula/Iracema One FPSO in production and nine already contracted for full development Lula-1 project revealed high well productivity, reaching full…
Recovery factor increased from 23% to 28% so far 2012 RDA wells Lula geological cross section Schematic water front displacement RDA wells evaluated Continuity confirmed Homogeneous peripheral connectivity displacement improves…
FPSO construction monitored to guarantee the fast development of Lula/Iracema Next FPSO coming onstream Lula NE1 (120 kbopd) Iracema South2 (150 kbopd) First oil scheduled for 4Q14 Iracema North3 (150 kbopd) First oil…
Future FPSO to benefit from learning curve of pilot units Production ramp-up Lula-1/ Lula NE Production ramp-up schedule of pilot units combines revenue objectives 100% with dynamic reservoir data acquisiton FPSO C. Angra dos…
Replicant FPSO being developed in Brazil progressing according to plan Works at Rio Grande do Sul shipyard1 Hulls being constructed at Rio Grande do Sul shipyard Standard design and common construction strategy enables fast…
Addressing key development optimisation challenges of Lula/Iracema Key development breakthroughs Risk mitigation Development wells Oil recoverability Chartering additional FPSO Drilling and completion Test WAG CO2 injectors on the…
World-class pre-salt projects to start production by 2017/2018 Future onstream projects Iara Carcar Jpiter Forthcoming appraisal activities to de-risk the development of each project benefiting from knowledge acquired at…
Iara: De-risking development through appraisal activities Iara: Structural map Three additional appraisal wells, of which one is horizontal, to increase knowledge and de-risk development, with ongoing Iara West 2 Contingent EWT…
Carcar: Results justify a standalone development project BM-S-8: Carcar reservoir One FPSO allocated to Carcar area by 2018 Expected high well productivity given the high pressures identified Development project to be optimised…
Jpiter: No technological barriers to its development BM-S-24: Jpiter reservoir Conducting conceptual engineering development studies with several technological opportunities identified Oil rim development being matured and gas cap…
Mozambique: World-class natural gas province established with over 100 tcf Mozambique: LNG possible routes A large scale LNG project being successfully de-risked Perfectly located to arbitrage on LNG market dynamics between Asia…
ADGAS Qatargas-2 Qatargas-3 Qatargas-4 RasGas I RasGas II RL 3 NLNG Expansion NLNG Plus 70 Capital Markets Day - March 5th 2013 Arun NLNG 6 Bontang Qalhat LNG EG LNG ELNG 2 Qatargas-1 ELNG 1 Brunei LNG Atlantic LNG…
Recent progress de-risked development project Key development challenges Unitisation Infrastructure development Mozambique framework Heads of agreement already Common and coordinated Develop national infrastructure to established…
Angola is a development story Angolan assets Current producing-fields (Kuito, BBLT and Tmbua-Lndana) already reached peak production New fields in Block 14 and Block 14K to be developed Block 32 start-up production expected by…
Ensuring production increase in Angola from 2015 onwards Block 14/14K Block 32 Production of five new areas coming Two FPSO expected to be installed in Kaombo onstream from 2015 onwards split hub area by 2016 and 2017 73 Capital…
Profitable production growth strategy in place towards 300 kboepd by 2020 Working interest production profile (kboepd) 2012 2016E 2020E Angola Lula/Iracema Iara Carcar Jpiter Mozambique of which, NG 74 Capital Markets Day -…
Highly profitable development projects enabling higher returns in the future OPEX USD/boe1 DD&A USD/boe1 20.6 13.3 2012 Long term 2012 Long term 1 Based on net entitlement production 75 Capital Markets Day - March 5th…
Solid track record and long term approach A clear exploration strategy Profitable production growth Concluding remarks 76 Capital Markets Day - March 5th 2013
Ensuring enduring and rewarding upstream activity Building an increasingly diversified portfolio driven by a broad range of exploration projects Focus on delivering sustainable value from early exploration phase Reaching 300…
Appendix 78 Capital Markets Day - March 5th 2013
Maturing material exploration areas to be de-risked after 2013 Caramba Pernambuco Alentejo Uruguay Caramba appraisal well Frontier area with 3D seismic campaign Several leads identified and with significant updip multiple…
Promising exploration and appraisal drilling activity in 2013 Galp Energia 2013 drilling schedule Brazil1 Africa Spud Duration Spud Duration Area Target Interest E/ A Country Area Target Interest E/ A Date ( days) Date ( days) Lula…
Financial outlook Filipe Silva Chief Financial Officer 82 Capital Markets Day - March 5th 2013
The key building blocks are in place Well defined projects and capex priorities Focus on cash generation Healthy financial position Value creation underpins shareholder return 83 Capital Markets Day - March 5th 2013
Our capex priorities Focus on cash generation Financial strength and liquidity Concluding remarks 84 Capital Markets Day - March 5th 2013
Capital allocation reflecting focus on upstream Capex profile evolution 2008-2010 2011 2012 c.20% c.30% c.1.2 bn/yr c.1.0 bn c.0.9 bn c.70% Upstream Downstream and gas Period of intensive upstream capex already…
Recent exploration success driving capex upwards Estimated capex Capex estimate shifting upwards given new exploration and c.1.4 1.6 bn/yr development projects Downstream and gas capex of Block 32 c.1.2 LNG project bn/yr…
Continued focus on exploration Exploration vs. development capex Exploration capex to rise reflecting increased focus on new areas 1.2 - 1.4 bn/yr Development of the new projects will continue to weigh on the investment programme,…
Our capex priorities Focus on cash generation Financial strength and liquidity Concluding remarks 88 Capital Markets Day - March 5th 2013
Upstream Ebitda: from potential to reality Upstream Ebitda Upstream profitability (USD/boe)1 Ebitda (m) FPSO in Brazil 22.7 12 8 c.0.4 bn 1 4 3 2 2012 2013 2014 2015 2016 2017 2012 Going forward Upstream Ebitda growth…
Downstream and gas Ebitda: stable cash generation R&M benefiting from Stable gas business and Increased focus on refining upgrade strong trading environment cost optimisation 90 Capital Markets Day - March 5th 2013
Galp Energia Ebitda: growing over 25% p.a. until 2017 Income statement (m) Ebitda 2012-2017 (m) 2012 YoY 25% CAGR Turnover 18,507 10% EBITDA 1,015 27% EBIT 584 48% Associates 72 (1%) 1,015 Financial results (63) 49%…
Free cash flow positive during 20171 Ebitda - Capex profile 2011 2012 2013E 2014E 2015E 2016E 2017E 2020E Upstream Ebitda Downstream and gas Ebitda Capex 1 Post interest, taxes, and dividends 92 Capital Markets Day - March 5th…
Our capex priorities Focus on cash generation Financial strength and liquidity Concluding remarks 93 Capital Markets Day - March 5th 2013
A strong starting point Balance sheet YE2012 (m) Liquidity and net debt YE2012 (m) Fixed assets 6,599 Bank loans 1,924 Working capital 1,339 EIB + ECA 2 1,092 Bonds 625 Other assets (liabilities) (452) Gross debt 3,590 Net…
Financial discipline: a key priority Sustain strong liquidity position Benefit from access to broader funding options Monetise non-core assets as required Maturity extension more in line with cash flow profile 95 Capital…
Extending debt maturities Reimbursement profile (m) Addressing all our 2013 funding requirements by Q2 and starting to 1,044 re-profile our 2014 maturities during 2H13 854 Banking and private placement bond markets currently very…
Our capex priorities Focus on cash generation Financial strength and liquidity Concluding remarks 97 Capital Markets Day - March 5th 2013
Value creation underpins shareholder return Free cash flow growth driven by a very competitive set of assets Disciplined cost management and capital allocation focused on only the highest value-added projects Balanced and reliable…
Appendix 99 Capital Markets Day - March 5th 2013
2013-2017 business plan assumptions and sensitivities Mid-cycle assumptions and Ebitda sensitivities 2011 2012 Average 2013-2017 Oil price USD/bbl 111 112 93 Benchmark refining margin 1.3 1.7 3.0 USD/bbl1 EUR:USD 1.40 1.29 1.30…
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