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2014 FINANCIAL RESULTS – LUKOIL

LUKOIL · Mar 3, 2015 · 41 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. 2014 FINANCIAL RESULTS – LUKOIL – slide 1
    2014 Financial Results (US GAAP) Member of the Board of Directors Vice-President for Strategic Development Leonid Fedun London, March 2015
  2. 2014 FINANCIAL RESULTS – LUKOIL – slide 2
    Main Events Liquid hydrocarbon production growth +6.3% 80% of Filanovsky field development completed 14 fields discovered the best result for the last 10 years Launch of the project in Iraq West Qurna-2 first commercial oil…
  3. 2014 FINANCIAL RESULTS – LUKOIL – slide 3
    Completion of Investment Cycle: Launch of 10 bln Assets in 2015-2016 Over 5 bln of refining assets to be launched, of which the largest: 2015* Perm delayed coking 0.6 bln Nizhny Novgorod catalytic cracking 0.9 bln Volgograd…
  4. 2014 FINANCIAL RESULTS – LUKOIL – slide 4
    2014 Financial Highlights mln Net income 4,746 Adjusted net income 7,087 EBITDA 15,982 Adjusted EBITDA 18,426 Free cash flow 925 Net debt 10,525 5
  5. 2014 FINANCIAL RESULTS – LUKOIL – slide 5
    Providing Competitive Dividend Payout Dividend per share, rub. 120 For 2013*: 110 +22% Dividends 2.3 bln Dividend payout 36.5% +20% 90 90 Dividend yield 5.5% +27% 75 59 60 52 +20% 50 +25% 60 42 38 50 40 30 0…
  6. 2014 FINANCIAL RESULTS – LUKOIL – slide 6
    Robust Financial Position Debt-to-capital Net debt to EBITDA 30% 1.0 0.8 20% 0.6 0.4 10% 0.2 0% 0.0 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 LUKOIL Average LUKOIL Average Total debt and net debt, bln 4 S&P…
  7. 2014 FINANCIAL RESULTS – LUKOIL – slide 7
    Effect of Sectoral Sanctions is Not Material for LUKOIL Operations The most significant sanctions targeting Russian oil and gas sector include prohibition on supply of the following goods, services and technologies for Russian…
  8. 2014 FINANCIAL RESULTS – LUKOIL – slide 8
    LUKOIL Net Revenue is Weakly Sensitive to Oil Price Fluctuations 100 Urals oil price per bbl Government share 80 Company net revenue* 60 70 53 40 -60% 37 When oil price falls from 20 100 to 40/bbl, LUKOIL net revenue…
  9. 2014 FINANCIAL RESULTS – LUKOIL – slide 9
    The Company Loses Revenue when Price Falls and Gain Additional Profit when Price Rises Net revenue of the Company* and oil taxes in Russia per barrel, 120 Urals oil price 108 Net revenue of the Company* 102 101 100 85 77…
  10. 2014 FINANCIAL RESULTS – LUKOIL – slide 10
    Anti-Crisis Mechanism is Integrated into Russian Oil & Gas Industry Increase in Oil price free cash flow downturn Decrease in OPEX and CAPEX Drop in budget Ruble income devaluation 11
  11. 2014 FINANCIAL RESULTS – LUKOIL – slide 11
    The Price War is Almost Over Brent oil price forecast US 120 10 110 1.5 102 9 100 1.3 8 /bbl 80 77 -36% 1.1 7 60 0.9 6 40 5 0.7 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2012 2013 2014 2015 E 2014 2014 2014 2014 2015E 2015E 2015E…
  12. 2014 FINANCIAL RESULTS – LUKOIL – slide 12
    OPEC Has Already Implemented a Policy of Defending Its Market Share in the 2nd half of the 1980s World oil trade volumes and OPEC share Price comparison of economically viable oil production in % 1985 and 2015, 2015 per bbl 50…
  13. 2014 FINANCIAL RESULTS – LUKOIL – slide 13
    Macroeconomic and Tax Environment 2014/2013 -28.8% Fuel oil (Russia) -13.7% Diesel fuel (Russia) -10.9% Fuel oil (Europe) Revenue -9.5% Urals (prices) -8.9% Diesel fuel (Europe) -7.0% High-octane gasoline (Russia) -6.9%…
  14. 2014 FINANCIAL RESULTS – LUKOIL – slide 14
    Main Operating Results 2014/2013 Daily liquid hydrocarbon production abroad 92.1% Daily hydrocarbon production abroad 44.0% Domestic crude oil sales 30.6% Daily liquid hydrocarbon production 6.3% Daily hydrocarbon…
  15. 2014 FINANCIAL RESULTS – LUKOIL – slide 15
    Liquid Hydrocarbon Production in 2014 2 000 14 1,992 11 16 104 1 950 Kbpd 1 900 1,873 -26 +6.3% 1 850 1 800 Daily liquid Western Siberia International Volga Urals Timan-Pechora Daily liquid hydrocarbon…
  16. 2014 FINANCIAL RESULTS – LUKOIL – slide 16
    Operating plans in 2015 bln Capital expenditures bln Oil production (Group), mln t 20 -20 -25% 800 15 600 100 10 400 50 5 200 0 0 0 2014 2015E* 2014 2015E* 2014 2015* In 2015 we expect CAPEX to decrease by 20-25%…
  17. 2014 FINANCIAL RESULTS – LUKOIL – slide 17
    Exploration 2014 the Best Year in Decade Exploration priorities in 2015 Hydrocarbon reserve replacement, % Denisovskaya Depression Bolshekhetskaya 121 Depression 120 Imilorsko-Istochny license area 113 Baltics 110 Samara…
  18. 2014 FINANCIAL RESULTS – LUKOIL – slide 18
    Strategic Target: Growth of Oil Recovery Factor Oil recovery factor at the LUKOIL fields in Russia 40% 35% 20% Achieved Expected Strategic Target Oil recovery factor achieved by LUKOIL: Kaliningrad 49.2% Volgograd…
  19. 2014 FINANCIAL RESULTS – LUKOIL – slide 19
    Financial Results mln 2014 y-o-y 4Q q-o-q Sales 144,167 2% 31,260 -20% OPEX 10,115 0% 2,522 -7% Taxes other than income tax, excise, export tariffs 34,256 -5% 7,330 -21% Income from operating activities 7,126 -30% -1,298 -…
  20. 2014 FINANCIAL RESULTS – LUKOIL – slide 20
    Non-Cash Assets Write-offs: Ukraine Situation in Ukraine: Unsatisfactory investment climate Sharply increasing political and macroeconomic risks in Ukraine Uncoordinated policy of regulating authorities Political and economic…
  21. 2014 FINANCIAL RESULTS – LUKOIL – slide 21
    Non-Cash Assets Write-offs: Primoryeneftegas (Tsentralno-Astrakhanskoe Field in Volga Region) Rapid ruble devaluation in 4Q 2014 lead to an internal Natural gas demand and supply balance in Russia dollar gas price decrease 100…
  22. 2014 FINANCIAL RESULTS – LUKOIL – slide 22
    Non-Cash Assets Write-offs: Block A (Saudi Arabia) LUKOIL entered Block A exploration and development project in Saudi Arabia in March 2004. Block A with 29.9 th. km area is situated in south part of Saudi Arabia in Rub' al Khali…
  23. 2014 FINANCIAL RESULTS – LUKOIL – slide 23
    Non-Cash Assets Write-offs: Ukhta Refinery Petroleum products output structure in 2014 100% 80% 60% 45% 59% 57% 40% 20% 37% 21% 27% 0% Volgograd, Nizhny Ukhta Refinery Russia average Novgorod and Perm Refineries Fuel…
  24. 2014 FINANCIAL RESULTS – LUKOIL – slide 24
    Operating Expenses 2014 y-o-y 4Q q-o-q mln Total operating expenses 10,115 0% 2,522 -7% Hydrocarbon extraction 4,718 9% 1,160 -10% Own refining 2,059 -5% 516 -5% Refining at third parties and affiliated refineries* 266…
  25. 2014 FINANCIAL RESULTS – LUKOIL – slide 25
    SG&A and Transportation Expenses Transportation expenses, mln SG&A expenses, mln 1 700 1 200 1 650 1 032 1 015 972 979 994 993 1 600 1 562 1 575 866 856 1 553 1 557 900 1 503 1 510 1 500 600 1 400 300 1 300 1 274 0 1 200 1Q 2Q…
  26. 2014 FINANCIAL RESULTS – LUKOIL – slide 26
    Effective Cost Control Lifting costs per boe, Lifting costs per boe, 8 20 6.13 6.12 16 5.75 5.42 6 5.59 5.67 5.29 5.23 5.71* 5.59* 12 4 8 4.46* 2 4 0 0 1q 2013 2q 2013 3q 2013 4q 2013 1q 2014 2q 2014 3q 2014 4q 2014…
  27. 2014 FINANCIAL RESULTS – LUKOIL – slide 27
    LUKOIL Increases Technology Intensive Drilling Introduction of new technologies in wells Directional wells drilling time in Western Siberia, days construction in Russia 140 30% 120 25% 85 -14% 100 20% 80 80 15% 60 10% 40 75…
  28. 2014 FINANCIAL RESULTS – LUKOIL – slide 28
    CAPEX Structure mln 2014 y-o-y 4Q q-o-q Total (including non-cash) 15,391 0% 3,711 -6% Exploration and production 11,882 1% 2,712 -10% Russia 8,151 -2% 1,617 -23% International 3,731 7% 1,095 21% Refining and marketing…
  29. 2014 FINANCIAL RESULTS – LUKOIL – slide 29
    Capital Expenditures Exploration and production, mln Refining, marketing and distribution, mln 14 816 15 000 4 000 3 607 -20% 11 808 11 882 2 715 12 000 3 000 -23% 2 791 8 973 2 007 9 000 6 677 59% 60% 2 000 1 354 6 000…
  30. 2014 FINANCIAL RESULTS – LUKOIL – slide 30
    LUKOIL Production Growth Regions Timan-Pechora Timan-Pechora oil production Denisovskaya Depression growth in 2014 was 4.6% Titov and Trebs Production started from Imilor Western Siberia field in 2014 Imilor Vinogradov…
  31. 2014 FINANCIAL RESULTS – LUKOIL – slide 31
    LUKOIL-Komi (Timan-Pechora) LUKOIL-Komi oil production, Kbpd 350 +27% 300 Timan-Pechora 250 2012 2013 2014 2015E 2 3 4 2 Number of launched fields 4 fields were launched in 2014 25 fields to be launched in 2015-2019,…
  32. 2014 FINANCIAL RESULTS – LUKOIL – slide 32
    Trebs and Titov Development Oil production (LUKOIL share), mln bbl 7 6 6 5 Trebs 4 3 2 1 Titov 0 2014 2015E 2016E 2017E In 2014 LUKOIL production share amounted to 1.0 mln bbl LUKOIL by joint efforts with…
  33. 2014 FINANCIAL RESULTS – LUKOIL – slide 33
    Urals Solikamsk Berezniki Kudymkar Perm Liquid hydrocarbon production, Kbpd LUKOIL has been showing consistently 320 20% growing production in Urals for many 300 years 280 In 2014 liquid hydrocarbon production…
  34. 2014 FINANCIAL RESULTS – LUKOIL – slide 34
    Imilor Field Development (Western Siberia) In 2014 we constructed roads, power lines, pipelines, Oil production, Kbpd multiple well pads, river bridge, booster compressor station and other infrastructure facilities 12 In 2015 we…
  35. 2014 FINANCIAL RESULTS – LUKOIL – slide 35
    Development of International Gas Transportation Routes in Russia Increase in Potential for Gas Monetization for All Market Participants Gas transportation infrastructure development in Russia Gas price netback (from Europe to China)…
  36. 2014 FINANCIAL RESULTS – LUKOIL – slide 36
    Northern Caspian: Filanovskiy Field Development Taxation and netback under 60/bbl oil price, /bbl 70 60 50 40 Netback 30 Export duty 54 51 20 MET 10 23 0 Standard taxation Shelf Shelf (Korchagin) (Filanovskiy) In…
  37. 2014 FINANCIAL RESULTS – LUKOIL – slide 37
    West Qurna-2 Development In 2014 we shipped 19 tankers with 31 mln bbl Added value 1 14 Achieved level of production - 380 Kbpd 4 Projects economy is relatively protected against oil price shocks Number of tankers with…
  38. 2014 FINANCIAL RESULTS – LUKOIL – slide 38
    Refining Capacities Modernization Nizhny Novgorod Perm Catalytic cracking Coker Capacity: 2.0 mln t/year Capacity: 2.1 mln t/year Launch: 2015 Launch: 2015 Burgas Volgograd Residue hydrocracking Vacuum gas oil hydrocracking…
  39. 2014 FINANCIAL RESULTS – LUKOIL – slide 39
    LUKOIL Refineries are Better Adapted to the Tax Manoeuvre than Russian Industry on Average Volgograd, Perm and Nizhny Novgorod Refineries Structure of petroleum product output 100% 80% 60% 74% 78% 89% Russia 40% average 2014 =…
  40. 2014 FINANCIAL RESULTS – LUKOIL – slide 40
    Environmental Safety is Our Priority Dirty discharge, mcm Atmospheric pollutant emission, th. t 2.3 750 2.3 2.2 2.2 -14% 725 -7% 2.1 2.1 700 2.0 2.0 675 1.9 1.9 1.8 650 2013 2014 2013 2014 Water consumption for own Total amount…
  41. 2014 FINANCIAL RESULTS – LUKOIL – slide 41
    Main Targets for 2015 - Maintaining sufficient free cash flow under oil price 40/bbl and 70 RUB/USD scenario - Securing competitive dividends - Investment programs optimization, operating costs reduction - Securing oil…

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