investor presentation 9m and 3q 2015 - …...9m 2015 results were negatively affected by weak ruble...

INVESTOR PRESENTATION 9M AND 3Q 201529 December 2015

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.

2

DISCLAIMER

9M 2015 Market Environment

3

Indicator 9M 2015average

9M 2014average

%

Urals, USD/bbl 54.12 104.55 -48%

Brent, USD/bbl 55.39 106.57 -48%

ESPO, USD/bbl 56.77 107.47 -47%

Exchange rate, RUB/USD 59.28 35.39 68%

Indicator 9M 2015average

9M 2014average

%

Naphta, USD/bbl 54.29 102.66 -47%

Diesel Fuel, USD/bbl 67.96 120.10 -43%

Fuel Oil, USD/bbl 47.08 89.49 -47%

9M 2015 results were negatively affected by weak ruble and low crude oil and oil products quotes

RUB/USD

Source: Platts Source: Platts Singapore

USD/bbl

20

30

40

50

60

70

80

35

45

55

65

75

85

95

105

115

125

Crude Oil Prices and Exchange Rate

Urals average Brent ESPO Kozmino Exchange rate

0

20

40

60

80

100

120

140

1-Jan-14 1-Apr-14 1-Jul-14 1-Oct-14 1-Jan-15 1-Apr-15 1-Jul-15 1-Oct-15

Oil Products Price

Naphtha Diesel Fuel (Gasoil 500 ppm) Fuel Oil (HSFO 180)

USD/bbl

4

HIGHLIGHTS FOR 9M 2015 AND 3Q 2015

Indicator 9M 2015 9M 2014 3Q 2015 3Q 2014 Comments

Financial Results

Revenue, MUSD 1,648 2,808 529 1,061Decrease primarily due to RUB depreciation

EBITDA, MUSD 229 551 79 255Decrease due to RUB depreciation and higher costs in both operational segments

Net Result, MUSD (104) (3) (88) (37)Decrease due to RUB depreciation and higher costs in both operational segments

Operational Results

Production, mboe 14.9 15.6 5.1 5.3 Drilling and production plans amended for more sustainable oil fields development

Refining volumes, mbbl 23.1 24.9 7.7 9.4Decrease due to planned maintenance works at the Khabarovsk Refinery

Throughput, mbbl 22.4 24.1 7.5 9.1Decrease due to planned maintenance works at the Khabarovsk Refinery

5

9M 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 2% Q-o-Q and launch of 45 newwells during 9M 2015

Downstream Highlights

• In September the Group commenced commercial delivery of crude oil through the newly launched connection to ESPO

Financial Highlights• MUSD 350 Eurobonds partial repayment and prolongation till

March 2019

• MRUB 13,500 short-term bank loan prolongation till February and April2016

5

9M 15 production:

4.1 mboe (27%)1

3Q 15 production:

1.4 mboe (28%)

Timano-Pechora

9M 15 production:

3.8 mboe (25%)3Q 15 production:

1.3 mboe (25%)

Tomsk

UPSTREAM OPERATIONS

Crude Oil and Gas Reserves and Production

6

9M 15 production:

2.0 mboe3Q 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.

Alliance Oil Company, consolidated

9M 15 production:

7.0 mboe (47%)3Q 15 production:

2.4 mboe (47%)

Volga-Urals and Kazakhstan

2P oil reserves: 614.4 mboe3

2P gas reserves: 47.5 mboe

9M 2015 production: 14.9 mboe (average daily: 54,697 boepd)3Q 2015 production: 5.1 mboe (average daily: 55,588 boepd)

7

UPSTREAM OPERATIONS

Crude Oil and Gas Production

Hydrocarbon Production, mboeHydrocarbon Production, boepd

Implemented 152 well interventions, launched 45 new wells for 9M 2015

57 210

55 726

53 295

55 182

55 588

52 000

54 000

56 000

58 000

3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015

5,3 5,14,8

5,0 5,1

0,0

1,0

2,0

3,0

4,0

5,0

6,0

3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015

UPSTREAM OPERATIONS

Crude Oil Sales

Crude Oil Sales, mbbl

8

13.3 13.5

4.5 4.5

Preferential shipment to export due to higher margins

2,44,2

3,0

3,0

7,56,3

0,0

3,0

6,0

9,0

12,0

15,0

9M14 9M15

Export CIS Domestic Intra-group

0,4

1,61,0

1,1

2,9

1,8

0,0

2,0

4,0

6,0

3Q14 3Q15


UPSTREAM OPERATIONS

Crude Oil Netbacks

Crude Oil Netback Prices, USD/bbl

9

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

55

20

49

31

0

20

40

60

9M 2014 9M 2015

Export Domestic

55

8

19

25

16

51

35

49

28

36

28

0

20

40

60

3Q2014 4Q2014 1Q2015 2Q2015 3Q2015

Export CIS Domestic

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.

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

Decreased sales volumes due to revised field development scheme

Gas and gas liquids economics negatively affected by increase in RUB/USD exchange rate

1 945

1 697

362 281

0

500

1 000

1 500

2 000

2 500

9M 2014 9M2015

692

576

123 92

0

200

400

600

800

3Q 2014 3Q 2015

Sold volume of gas, kboe Sold volume of gas liqids, kboe

12,3

7,7

46,2

28,4

0,0

20,0

40,0

60,0

9M 2014 9M 2015

Gas net price, USD/boe Gas Liquids, net price, USD/boe

11,89,2 7,1 8,4 7,5

49,0

37,6

27,6 28,529,3

0,0

20,0

40,0

60,0

3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015

UPSTREAM OPERATIONS

Crude Oil and Gas Sales

Revenue from Sales of Crude Oil, Gas and Gas Liquids, MUSD

11

228

124

727

428

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

148103

25

197

121

357

204

0

200

400

600

800

9M14 9M15


27 3411

6538

126

52

0

50

100

150

200

250

300

3Q14 3Q15


Retail gas stations:

13

The Republic of BuryatiaRefining volumes:9M 15: 84,556 bopd (9M 14: 91,071 bopd)3Q 15: 83,547 bopd (3Q 14: 102,418 bopd)

Throughput:9M 15: 22.4 mbbl (9M 14: 24.1 mbbl)3Q 15: 7.5 mbbl (3Q 14: 9.1 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: 282Oil depots: 20Marine terminals: 4Jet fuel depot: 1Railway tankers: 1,440

TOTAL

Retail gas stations: 251Oil depots: 20Marine terminals: 2Railway tankers: 1,440

Far East: Amur, Primorand Khabarovsk regions


Khabarovsk Oil Refinery Khabarovsk Oil Refinery connection to ESPO

Oil Products Breakdown in 9M 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

102 418

83 547

91 071

84 556

3Q 2014

3Q 2015

9M 2014

9M 2015

9,12

7,46

24,10

22,35

3Q 2014

3Q 2015

9M 2014

9M 2015

34%

18%21%

20%

7% Fuel oil

Marine fuel

Gasoline

Diesel fuel

Others62,3%

64,3%

59,9%

64,2%

3Q 2014

3Q 2015

9M 2014

9M 2015


Oil Products Sales

Oil Products Sales, mbbl

14

Reallocation of shipments from bunkering to export due to higher margins

Decrease in overall volumes due to planned maintenance works at the Khabarovsk Refinery in Q3 2015

0,81,5

3,5 2,3

3,8

3,0

1,5

1,4

0,0

3,0

6,0

9,0

12,0

3Q14 3Q15

Export Bunkering Wholesale Retail

9.6

8.2

3,95,8

8,66,1

8,48,3

4,04,1

0,0

5,0

10,0

15,0

20,0

25,0

9M14 9M15


24.9 24.2

15


Oil Products Prices

Oil Products Net Prices, USD/bbl

Net USD prices decreased primarily due to RUB depreciation for domestic sales and decrease in quotes for export and bunkering sales

75

44

36

108

67

136

92

0

50

100

150

9M14 9M15


71

41

43

53

38

73

55

38 41 31

112

82

58

78

65

136

103

85

103

88

0

50

100

150

3Q14 4Q14 1Q15 2Q15 3Q15



Oil Products Sales

Revenue from sales of oil products, MUSD

16

Total amount of revenue nominated in USD decreased due to dramatic increase in RUB/USD exchange rate and decreased volumes due to planned maintenance works at the Khabarovsk Refinery in Q3 2015

292 253

645

222

910

555

545

374

0

500

1 000

1 500

2 000

2 500

9M14 9M15


1 403

2 392

55 57

257

71

428

195

202

127

0

200

400

600

800

1 000

3Q14 3Q15


450

942

FINANCIALS

17

9M 2014 9M 2015 3Q 2014 3Q 2015

RUB/USD exchange rate, average 35.39 59.28 36.19 62.98

Urals, average 104.55 54.12 100.52 48.88

Revenue 2 808 1 648 1 061 529

Operating income 324 90 179 34

EBITDA 551 229 255 79

EBITDA Margin 20% 14% 24% 15%

FХ gain/(loss) -179 -67 -167 -89

Profit/(Loss) for the period -3 -104 -37 -88

Total assets 5 318 3 089 5 318 3 089

Cash and cash equivalents 611 265 611 265

Total debt 2 530 2 075 2 530 2 075

Total cash from operating activities 578 174 230 108

Total cash used for investments -335 -131 -4 -27

Total cash used in financing activities 151 -60 252 -2

Profit or loss,

MUSD

Financial position,

MUSD

Cash flows, MUSD

Macro

Revenue Breakdown, MUSD

18

FINANCIALS

Segment Performance

Notes: Segment revenue is based on total sold volumes including external and intra-group. Segment revenue excludes other income.

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 and planned maintenance works at the Khabarovsk Refinery in Q3 2015

727 428

2 392

1 403

0

500

1 000

1 500

2 000

2 500

3 000

3 500

9M14 9M15

Upstream Downstream

228 124

942

450

0

200

400

600

800

1 000

1 200

3Q14 3Q15

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

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- planned maintenance works at the Khabarovsk Refinery in Q3 2015

22,6

9,7

20,7

8,210,5

5,2

14,8

5,8

0

10

20

30

9M14 9M15 3Q14 3Q15

Upstream Downstream

352

150

110

43

261

126 142

48

0

100

200

300

400

9M14 9M15 3Q14 3Q15

Upstream Downstream

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.

Gas and Gas Liquids Economics. USD/boe

9M 2014 9M 2015 3Q 2014 3Q 2015

Revenue 17.61 10.68 17.44 10.52

Production Costs 1.79 1.36 1.72 1.35

Production and Other Taxes 2.66 2.52 2.89 2.29

SG&A and Other 0.43 0.04 0.28 0.05

EBITDA 12.73 6.76 12.55 6.83

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 and higher MET

Crude Oil Economics, USD/bbl1 9M 2014 9M 2015 3Q 2014 3Q 2015

Revenue 51.58 30.07 47.53 25.76

Production Costs 7.21 4.78 6.12 4.45

Production and Other Taxes 14.31 10.87 13.58 9.47

Cost of purchased oil - 0.57 - 0.44

SG&A and Other2 5.74 3.74 5.73 2.95

EBITDA 24.32 10.11 22.11 8.45

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 9M 2014 9M 2015 3Q 2014 3Q 2015

Revenue 96.14 57.96 98.17 54.46

Refining 4.31 2.98 4.38 2.30

Crude Oil Transportation 16.44 9.43 15.88 8.48

Cost of Crude Oil 44.67 28.38 44.23 26.72

Excise and Other Taxes 6.02 3.22 7.51 3.07

Oil Products Purchased for Resale 5.67 3.94 3.19 3.95

SG&A and Other2 8.55 4.81 8.14 4.14

EBITDA 10.48 5.20 14.84 5.80

Downstream economics negatively affected by:- RUB depreciation - higher crude oil component in the cost of oil products- planned maintenance works at the Khabarovsk Refinery in Q3 2015

595

280 304

1047

431

133

557

948

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 September 2015

FINANCIALS

Debt Portfolio

Debt Maturity Profile1, MUSD

Cash on balance MUSD 265

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 September 2015, MUSD2

Leverage dynamics

22

Total debt of MUSD 2,0752

Net debt of MUSD 1,809

MUSD 350 Eurobonds

MUSD 500 Eurobonds

269

Net debt to EBITDA of 4.89: - no breach of covenants - restriction on additional loans and

borrowing

57828%

69333%

80439%

RUB bonds and bank loans

USD bank loans

USD Eurobonds

67 3%

2 008 97%

Secured debt

Unsecured debt

350

500500

30

2 530

2 229 2 151 2 181

2 075

1 919 1 912 1 935

1 958 1 809

2,57 2,76

3,07

3,59

4,89

0,00

1,00

2,00

3,00

4,00

5,00

6,00

1 000

1 200

1 400

1 600

1 800

2 000

2 200

2 400

2 600

2 800

3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015

Total debt, MUSD Net debt, MUSD Net debt/EBITDA

23

FINANCIALS

Capital Expenditures

Historical CAPEX1, MUSD

Notes: (1) CAPEX excluding financial costs capitalized and paid

High level of CAPEX in the previous years related to the reconstruction of the Khabarovsk Refinery, which is completed. Any future CAPEX will be attributable to sustaining of production in both segments

27 42 38

5 10

33

15

71

59

91

24 9

20

15

-

20

40

60

80

100

120

140

1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015

Upstream Downstream

352

604

360 262

112 59

253

343

369

444

245

44

-

100

200

300

400

500

600

700

800

900

1 000

2010 2011 2012 2013 2014 9M 2015

Upstream Downstream

investor presentation 9m and 3q 2015 - …...9m 2015 results were negatively affected by weak ruble...

Documents