gazpromneft1h2007 operating and financial...

Gazprom Neft 1H2007 Operating and Financial Results

October 2007

ДАТА2

1H2007 Operating Highlights

� Gazprom Neft crude production was 16.353 mmtonn in 1H2007 vs.16.121 mmtonn in 1H2006.

�� 1.44% Y-o-Y

� Refining throughput was 12.918 mmtonn in 1H2007 vs. 11.021 mmtonn in 1H2006.

�� 17.21% Y-o-Y

� EBITDA was USD 2 710 mln. in 1H2007 vs. USD 2 624 mln. in 1H2006.

�� 3.28% Y-o-Y

� Net Income was USD 1 862 mln. in 1H2007 vs. USD 1 793 mln. in 1H2006.

�� 3.86% Y-o-Y

� Net Cash provided by operating activities was USD 2 301 mln. in 1H2007 vs. USD 1 188 mln. in 1H2006.

�� 93.7% Y-o-Y

ДАТА3

224

230

236

243

1H2004 1H2005 1H2006 1H2007

++33..00%%

++22..44%%

++33..11%%

Oil Production in Russia, MMTonn

� Oil prices recovered during the 1H2007 since their

fall in the end of 2006. But despite this, on average,

they were below 1H2006 levels.

� Urals Med in 1H2007 decreased by 2.9% to

USD59.8/bbl vs. USD61.5/bbl in 1H2006, resulting

many oil companies to show weak financials.

� High oil product prices at the domestic market

caused oil companies to make changes in oil

balances and increase domestic refining.

� Introduction of new ecological standards since 2008

requires oil companies to focus on modernization

of it’s refining.

Market conditions

Source: INFOTEK – Oil production & throughput in Russia

94

100

106

112

1H2004 1H2005 1H2006 1H2007

++55..88%%

++66..22%%

++55..22%%

Oil Throughput in Russia, MMtonn

Oil Price, USD/bbl

45

50

55

60

65

70

75

80

jan06 mar06 may06 jul06 sep06 nov06 jan07 mar07 may07

Urals MED Brent DT

Source: Bloomberg – Europe Brent Dated, Urals MED

ДАТА4

Oil production

� Gazprom Neft drilling in 1H2007 increased by 36% to 860 072 meters vs. 631 268 meters in

1H2006.

� The amount of active wells in 1H2007 increased by 14% to 4 704 vs. 4 123 in 1H2006 .

� The company managed to increase its production by 1.4% to 16.353 mmtonn in 1H2007 vs.

16.121 mmtonn in 1H2006.

� The company developed a strategic plan on associate gas utilization, under which most of the

deposits will utilize 95% of their associate gas by 2011. Gazprom Neft implements this

programme under close cooperation with JSC Sibur Holding.

255

185

127

87

1H2004 1H2005 1H2006 1H2007

16.416.116.616.6

1H2004 1H2005 1H2006 1H2007

0%0%

--3%3%+1+1..44%%

Oil Production, MMTonn

628 621590

2004 2005 2006

--6%6%+5%+5%

Proved Reserves, MMTonn;

R/P Ratio, years

18 18 19

+46%+46%+46%+46%

+38%+38%

New wells put into operation

Source: Company data

ДАТА5

5.394

3.0242.644

5.346

1H2004 1H2005 1H2006 1H2007

9.021

7.2466.485

7.456

1H2004 1H2005 1H2006 1H2007

-1%

78%14%

Crude oil exports, MMTonn

Oil products exports, MMTonn

Omsk

Chelyabinsk

Kazakhstan

NovokuznetskOmsk

Chelyabinsk

Moscow

Primorsk

Tuapse

Kazakhstan

Novokuznetsk

Tuapse

Moscow

Primorsk

Omsk

Chelyabinsk

Kazakhstan

NovokuznetskOmsk

Chelyabinsk

Moscow

Primorsk

Tuapse

Kazakhstan

Novokuznetsk

Tuapse

Moscow

Primorsk

Kazakhstan

NovokuznetskOmsk

Chelyabinsk

Moscow

Primorsk

Tuapse

Kazakhstan

Novokuznetsk

Tuapse

Moscow

Primorsk

Kazakhstan

NovokuznetskOmsk

Chelyabinsk

Moscow

Primorsk

Tuapse

Kazakhstan

Romania

Ukraine

Bulgaria

Belarus

Latvia

Estonia

Lithuania

Novokuznetsk

Black Sea

Poland

Slovakia

Hungary

Tuapse

Moscow

Primorsk

Chelyabinsk OmskChelyabinsk

Finland

Sweden

Omsk

Chelyabinsk

Kazakhstan

NovokuznetskOmsk

Chelyabinsk

Moscow

Primorsk

Tuapse

Kazakhstan

Novokuznetsk

Tuapse

Moscow

Primorsk

Omsk

Chelyabinsk

Kazakhstan

NovokuznetskOmsk

Chelyabinsk

Moscow

Primorsk

Tuapse

Kazakhstan

Novokuznetsk

Tuapse

Moscow

Primorsk

Kazakhstan

NovokuznetskOmsk

Chelyabinsk

Moscow

Primorsk

Tuapse

Kazakhstan

Novokuznetsk

Tuapse

Moscow

Primorsk

Kazakhstan

NovokuznetskOmsk

Chelyabinsk

Moscow

Primorsk

Tuapse

Kazakhstan

Romania

Ukraine

Bulgaria

Belarus

Latvia

Estonia

Lithuania

Novokuznetsk

Black Sea

Poland

Slovakia

Hungary

Tuapse

Moscow

Primorsk


Finland

Sweden

Omsk

Chelyabinsk

Kazakhstan

NovokuznetskOmsk

Chelyabinsk

Moscow

Primorsk

Tuapse

Kazakhstan

Novokuznetsk

Tuapse

Moscow

Primorsk

Omsk

Chelyabinsk

Kazakhstan

NovokuznetskOmsk

Chelyabinsk

Moscow

Primorsk

Tuapse

Kazakhstan

Novokuznetsk

Tuapse

Moscow

Primorsk

Kazakhstan

NovokuznetskOmsk

Chelyabinsk

Moscow

Primorsk

Tuapse

Kazakhstan

Novokuznetsk

Tuapse

Moscow

Primorsk

Kazakhstan

NovokuznetskOmsk

Chelyabinsk

Moscow

Primorsk

Tuapse

Kazakhstan

Romania

Ukraine

Bulgaria

Belarus

Latvia

Estonia

Lithuania

Novokuznetsk

Black Sea

Poland

Slovakia

Hungary

Tuapse

Moscow

Primorsk


Finland

Sweden

Omsk

Chelyabinsk

Kazakhstan

NovokuznetskOmsk

Chelyabinsk

Moscow

Primorsk

Tuapse

Kazakhstan

Novokuznetsk

Tuapse

Moscow

Primorsk

Omsk

Chelyabinsk

Kazakhstan

NovokuznetskOmsk

Chelyabinsk

Moscow

Primorsk

Tuapse

Kazakhstan

Novokuznetsk

Tuapse

Moscow

Primorsk

Kazakhstan

NovokuznetskOmsk

Chelyabinsk

Moscow

Primorsk

Tuapse

Kazakhstan

Novokuznetsk

Tuapse

Moscow

Primorsk

Kazakhstan

NovokuznetskOmsk

Chelyabinsk

Moscow

Primorsk

Tuapse

Kazakhstan

Romania

Ukraine

Bulgaria

Belarus

Latvia

Estonia

Lithuania

Novokuznetsk

Black Sea

Poland

Slovakia

Hungary

Tuapse

Moscow

Primorsk


Finland

Sweden

12%

25%

-17%


Distribution routes

�41% shipped from Baltic Sea ports (mainly Primorsk)

�30% exported through Transneft’s Druzhba pipeline (mainly to Germany and Poland)

�29% shipped from Black Sea ports Novorossiysk and Tuapse

�In 1H2007 the Company exported oil and oil products through a wholly owned subsidiary - Sibneft Oil Trade Company GmbH

�The company reallocated its export flows to the domestic market in the 1H2007 to maximize efficiency of its sales.

Export flows optimization

ДАТА6 Source: Company data

Ufim

sky

NP

Z

Kiris

hi N

OS

Refinery Depth on Russian NPZ (2006, %)

84.4% 80.1%80.0%

78.2%71.0% 69.7%

66.8% 66.5% 66.3%61.1%

ON

PZ

Novo

ufim

sky

NP

Z

AN

KhK

NK

NP

Z

MN

PZ

YA

NO

S

Rya

zNP

K

AN

PZ

Source: INFOTEK

Refining Throughput, MMTonn

Slovakia

8.07.37.2 8.1

1.5 1.41.5 1.7

3.21.6

1H2004 1H2005 1H2006 1H2007

0,2%26%

17%

88..77 88.8.8

1111.1.1

113.03.0

Crude Balance, %

1H2004 1H2005 1H2006 1H2007

Crude sales Refining

41%52%52%50%

59%48%48%50%

Excellent Balance Between Upstream and Downstream

� Compared to its sector peers, Gazprom Neft

leads in terms of refining vs crude sales

� High refining margin allows the company to

maximize profits per ton of extracted oil

� The company plans to improve efficiency of

refining assets, while increasing Downstream

share in production

� Gazprom Neft benefits from the highest share

of light oil products through its Omsk Refinery

ONPZONPZ; ; MNPZMNPZ; ; YANOSYANOS++YANPZYANPZ

ДАТА7

1H2007

Wholesale distribution of refined

products, MTonn

1 332

1 444

1H2006 1H2007

824

1 016

1H2006 1H2007

Number of distribution sites


Retail distribution through own

sites, MTonn

23%

8%

14%676

770

1H2006

Yaroslavl

region

Moscow

refinery

Kaluga

region

Tver

Saint Petersburg

YANOS refinery

Yamalo Nenetsky

Avtonomny okrug

Tomsk region Krasnoyarsky

kray

Sverdlovsk

region

Novosibirsk

region

Altaisky kray

Kemerovo

region

Omsk

refinery

Tumen

region

region

- Refineries

- Distribution sites

Yaroslavl

region

Moscow

refinery

Kaluga

region

Tver

Saint Petersburg

YANOS refinery

Yamalo Nenetsky

Avtonomny okrug

Tomsk region Krasnoyarsky

kray

Sverdlovsk

region

Novosibirsk

region

Altaisky kray

Kemerovo

region

Omsk

refinery

Tumen

region

region

- Refineries

- Distribution sites

Expanding retail network

� The Company acquired the right for long-term rent of 30 land plots for gas station construction

with the right of further redemption in St. Petersburg.

� Gazprom Neft is expanding its presence in the CIS region. In 2006 it acquired JSC “Munai

Myzra”, largest retail network operator in Kyrgyzstan. In 2007 Gazprom Neft established

LLC Gazprom Neft – Tajikistan and LLP Gazprom Neft – Kazakhstan for oil product sales on the

territory of CIS.

� The Company is working on increasing its brand awareness and is actively developing large-

scale re-branding program

� The company reallocated its wholesale volumes to retail distribution to maximize sales

effectiveness.

ДАТА8

Financial Overview

598

0.21

988

1 504

1 222

2 792

64

3 950

4 014

1H2004

0.390.380.30EPS

2 3011 188765Net cash provided by operating activities

1 8621 7931 422Net Income

2 2022 1691 612Operating Income

8 99910 0425 643Oil, Gas & Product Sales

2448285Other

2 7102 6241 944EBITDA*

7 0417 9544 116Costs and other deductions

9 24310 1235 728Total Revenues

1H20071H20061H2005(mln. USD)

*EBITDA = *EBITDA = Operating profit + DD&A

ДАТА9

44%

26%

4%

988

1 422

1 7931 862

1H2004 1H2005 1H2006 1H2007

Net income (USD mln)

2 7102 624

1 944

1 504

1H2004 1H2005 1H2006 1H2007

EBITDA (USD mln)

29%

35%

3%


43%

77%

-9%

4 014

5 728

10 1239 243

1H2004 1H2005 1H2006 1H2007

Revenues (USD mln)

Revenues decreased nearly 9% in

1H2007 due to lower oil and oil product

prices and the change in realization

structure, that in turn caused increase in

sales efficiency, which finally lead to Net

Income increase by almost 4%.

Financial Performance

Reasoning

ДАТА10

308707517352Trade re-sale

2 5862 1901 4221 060Oil products Domestic & CIS

2449111281Others

312

753

1 456

4 014

1H2004

576

2 606

3 953

10 123

1H2006

2 6731 120Oil products exports

506289Crude oil and Gas Domestic & CIS

2 268

5 728

1H2005

9 243Total revenues

2 926Crude oil exports

1H2007USD mln

508455332282DD&A

66234642Cost of Other Sales

587

945

935*

2 792

1H2004

917

3 685

2 874

7 954

1H2006

2 9671 802Taxes other than Income Taxes

1 064717SG&A

1 220*

4 116

1H2005

7 041Total costs

2 436Operating Expenses & Crude, products

purchased

1H2007USD mln

Revenue Breakdown Cost structure

* Including oil and gas exploration costs

35%15%

7% 1%

42%

Operating Expenses & Crude, products purchasedTaxes other than income taxesSG&ADD&ACost of other sales

32%

5%

28%

3% 3%

29%

Crude oil exportsOil products exportsCrude oil Domestic & CISOil products Domestic & CISTrade re-sale and commissionOthers


Revenues and Costs Breakdown

ДАТА11

CAPEX (USD mln)


811

28

56

11

30

547

434

1

1

1H2006 1H2007

Exploration & Production Refining

Marketing & Distribution Other

11Other

28

11

547

587

1H2006

30Marketing and distribution

56Refining

898Total Capex

811Exploration and production

1H2007USD mln

�The growth of CAPEX by 53% in 1H2007, the

maximum for the last years, is determined by the

Company’s focus on long-term development

�Substantial investment are made to establish the

infrastructure of Priobskoye deposit , which

production will increase to 12.3 MMTonn in 2013.

�Gazprom Neft plans to invest around USD 500 mln.

for 5 years into the modernization of Omsk refinery.

CAPEX Breakdown

53%

ДАТА12

14 102

9 930

649

977

695

14 102

5 421

2 452

1 335

2006

10 263

7 185

701

1 068

380

10 263

4 618

1 752

1 140

2004

17 07110 640Total liabilities and shareholders` equity

10 3067 656Shareholder capital

714528Accounts payable and accrued liabilities

8521 155Long-term debt

2 594356Short-term debt & current portion of long-term debt

17 07110 640Total assets

5 7804 602Oil and gas properties + PP&E

2 6521 868Accounts receivable

3 734305Cash and cash equivalents

1H20072005(mln. USD)

Balance Sheet Highlights

gazpromneft1h2007 operating and financial...

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