Post on 14-Apr-2018
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1Q 2013
Financial Results(US GAAP)
Vice-PresidentLeonid Fedun
Moscow, May 2013
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Forward-Looking Statements
Certain statements in this presentation are not historical facts and are forward-looking. Examples of suchforward-looking statements include, but are not limited to:
projections or expectations of revenues, income (or loss), earnings (or loss) per share, dividends, capitalstructure or other financial items or ratios;
statements of our plans, objectives or goals, including those related to products or services;
statements of future economic performance; and
statements of assumptions underlying such statements.
Words such as believes, anticipates, expects, estimates, intends and plans and similar expressions areintended to identify forward-looking statements but are not the exclusive means of identifying such statements.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general andspecific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will notbe achieved. You should be aware that a number of important factors could cause actual results to differmaterially from the plans, objectives, expectations, estimates and intentions expressed in such forward-lookingstatements, including our ability to execute our restructuring and cost reduction program.
When relying on forward-looking statements, you should carefully consider the foregoing factors and otheruncertainties and events, especially in light of the political, economic, social and legal environment in which weoperate. Such forward-looking statements speak only as of the date on which they are made, and we do not
undertake any obligation to update or revise any of them, whether as a result of new information, future eventsor otherwise. We do not make any representation, warranty or prediction that the results anticipated by suchforward-looking statements will be achieved, and such forward-looking statements represent, in each case, onlyone of many possible scenarios and should not be viewed as the most likely or standard scenario.
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1Q 2013 Financial Highlights
Net income $2,581 million
Basic earnings per share$3.4
Net income per boe of production$13.1
EBITDA$4,775 million
Net Debt$3,935 million
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LUKOIL Presents High Financial Efficiency AmongRussian Peers
112
114
198
278
0 50 100 150 200 250 300
Gazprom Neft
Novatek
LUKOIL
Rosneft
1Q 2013 Hydrocarbon production, mln boe
0,7
1,3
2,6
3,3
0 1 2 3 4
Novatek
Gazprom Neft
LUKOIL
Rosneft
1Q 2013 Net income, $ bln
LUKOIL is the leader in financial efficiency in Russian Oil & Gas
industry
1.7*
* Excluding gain from revaluation of non-controlling interest in OJSC Verkhnechonskneftegaz to its fair value.
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LUKOIL Presents High Financial Efficiency AmongRussian Peers
10
20
21
24
5 10 15 20 25 30
Novatek
Gazprom Neft
Rosneft
LUKOIL
1Q 2013 EBITDA per boe, $
7
12
12
13
5 7 9 11 13 15
Novatek
Gazprom Neft
Rosneft
LUKOIL
1Q 2013 Net income per boe, $
LUKOIL is the leader in financial efficiency in Russian Oil & Gas
industry
6.3*
* Excluding gain from revaluation of non-controlling interest in OJSC Verkhnechonskneftegaz to its fair value.
15.3*
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Robust Competitive Position in the Industry Globally
0
5
10
15
20
25
30
35
40
45
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1Q2013
ROACE*, %
LUKOIL Oil & Gas MajorsOil & Gas Majors
*
0
2
4
6
8
10
12
14
1618
20
2006 2007 2008 2009 2010 2011 2012 1Q 2013
Lifting costs per boe, $
LUKOIL
5
10
15
20
25
30
35
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1Q2013
Net income per boe, $
LUKOILOil & Gas Majors
Oil & Gas majors include ExxonMobil, Chevron, Shell, ConocoPhillips,Total, Eni.Source: Companies financial statements.
05
10
152025303540
Total
Chevron
Exxon
Conoco
Phillips
Shell
ENI
BP
LUKOIL
E&P Capital expenditures in 1Q 2013, $ per boe
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Dynamics of roubleexchange rate for FXdifferences; -11,2%
Crude oil export tariff ($);1,4%
Mineral extraction tax ($);-1,0%
Freight rates (petroleumproducts); -2,8%
Real ruble appreciation;6.6%
Transneft tariffs; -1,4%
Freight rates (crude oil);3,3%
Railroad tariffs; 9,4%
Fuel oil (Europe); -10,6%
Urals; -5,3%
Diesel fuel (Europe); -3,7%
Gasoline (Europe); -2,0%
High-octane gasoline(Russia); 6,3%
Diesel fuel (Russia); 8,4%
Fuel oil (Russia); 18,4%
-20% 0% 20%
1Q 2013 to 1Q 2012
Macroeconomic and Tax Environment
RE
VENU
E
EXPENS
ES
TAX
Positive factors
Negative factors
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1Q 2013 Net Income Reconciliation
3,789*
2 581
171 (422)
(274)
(235)
(226)
(199)
(23)
2 000
2 500
3 000
3 500
4 000
1Q2012Netincome
Decreasein
taxes
otherthanincome
taxes(including
exciseand
export
tariffs
)
Increaseinincome
taxexpe
nse
DD&Agrowth
OPEXin
crease
Netdecreasein
revenue(less
purchasesofoil,gas
andpetroleum
products)
Increaseo
fother
expenses
Decreaseof
equity
shareinincomeof
affiliates
1Q2013Netincome
$million
*1Q 2012 results were affected by leap year effect and currency translation gain
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Main Operating Results
Domestic sale of petroleumproducts; 13.6%
Average daily marketable gas
production; 0.9%
Average daily refiningthroughput; 0.7%
Average dailyhydrocarbon production;
-0.1%
Average daily liquidhydrocarbon
production; -0.3%
Petroleum product export;-5.5%
Crude oil export;-13.4%
-18% -12% -6% 0% 6% 12% 18%
1Q 2013 to 1Q 2012
Positive factors
Negative factors
Dynamics of operating results was affected by the leap year effect
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Hydrocarbon Production
After stabilization in 2012 LUKOIL hydrocarbon production
continues to show a steady growth in 1Q 2013
2,12
2,14
2,16
2,18
2,20
1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013
Hydrocarbon production, mln boe per day
+2.5%
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Increasing drilling efficiency
0
2
4
6
8
10
12
2010 2011 2012 1Q 2013
Average commercial rate of drilling for onedrilling unit per month
(exploration & production drilling)
75%
16%
17%
th. m
0
1
2
3
4
5
2010 2011 2012 1Q 2013
Drilling(exploration & production drilling)
9%
32%
17%
Mln m
An increase in drilling rate of one drilling unit under per-day payment
leads to decreased cost of one meter drilled
2013A
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LUKOIL Increases Productionof High-Octane Gasoline In Russia
Daily refinery throughputs at the
Group and affiliated refineries
increased by 0.7%, includinggrowth of 1.1% at Russian
refineries
1,6
1,7
1,5
1,6
1,7
1,8
1Q 2012 1Q 2013
Production of high-octane gasoline in Russia, mln tons
+7.3%
4
5
6
7
8
2008 2009 2010 2011 2012
Production of high-octane gasoline in Russia, mln tons
CAGR10%
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Gasoline quality in Russia
Excise tax savings, $/tonsTransition to European quality standards in Russia
LUKOIL has a competitive advantage in fuel quality
Excise tax differentiation due to quality lets us monetize it today
EURO-4
EURO-5
EURO-3
Diesel
Gasoline Regulations
Euro
0
20
4060
80
100
120
140
160
180
2011 2012 2013 2014 2015
Gasoline Diesel fuel
EURO-5 - EURO-2 EURO-5 - EURO-3 EURO-5 - EURO
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Financial Results
1Q
2013
4Q
2012
, % $ million1Q
2013
1Q
2012
, %
33,770 36,019 (6) Sales 33,770 35,261 (4)
(2,450) (2,468) (1) OPEX (2,450) (2,215) 11
(8,884) (8,996) (1)Taxes other than income tax
(including excise and export tariffs)(8,884) (9,055) (2)
3,374 3,375 0 Income before income tax 3,374 4,020 (16)
2,581 2,688 (4) Net income 2,581 3,789 (32)
23% 20% Effective income tax rate 23% 9%*
3.42 3.56 (4) Basic EPS, $ 3.42 4.90 (30)
4,775 4,666 2 EBITDA 4,775 5,346 (11)
* Low effective income tax rate in 1Q 2012 was achieved as a result of foreign exchange differences in the accounts for taxation purposes that lead to reduction of taxable income
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Operating Expenses
1Q
2013
4Q
2012 , % $ million1Q
2013
1Q
2012 , %
1,009 1,040 (3) Hydrocarbon extraction expenses 1,009 906 11
508 561 (9) Own refining expenses 508 315 61
121 126 (4)Refining expenses at third parties andaffiliated refineries 121 263 (54)
338 327 3Expenses for crude oil transportation torefineries 338 287 18
192 156 23Power generation and distributionexpenses 192 178 8
79 73 8 Petrochemical expenses 79 74 7
203 185 10Other operating expenses
203 192 6
2,450 2,468 (1) Total 2,450 2,215 11
15,103 17,021 (11)Cost of purchased crude oil, gas andproducts 15,103 16,368 (8)
* Including processing expenses at ISAB
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Operating Expenses
2,215
2,450
2 050
2 1002 150
2 200
2 250
2 300
2 350
2 400
2 450
2 500
1Q2012OPEX
Increasein
hydrocarbon
extractionexpenses
Increasein
expensesforcrude
oiltransportationto
refineries
Increaseincostof
processing
operationsatISAB
Increaseinpower
generation,
distributionand
petrochemicals
expenses
Increaseinother
operatingexpenses
Increaseinrefining
expensesatown,
thirdpartiesand
affiliatedrefineries
1Q2013OPEX
$million +4.7%
+2.3%
+0.8%+0.5% +0.3%
+2.0%
1Q 2013 Hydrocarbon extraction
expensesdecreased by 1.5% compared
to 4Q 2012 and reached $5.3 per boe4,7
5,0 5,1
5,4
5,3
4,0
4,5
5,0
5,5
6,0
1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013
Lifting costs per boe, $
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SG&A and Transportation Expenses
1Q
2013
4Q
2012, % $ million
1Q
2013
1Q
2012, %
1,650 1,546 7 Transportation expenses 1,650 1,605 3
866 1,090 (21)Selling, general and administrativeexpenses
866 829 4
2,516 2,636 (5) Total 2,516 2,434 3
829
932 904
1 090
866
0
300
600
900
1 200
1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013
SG&A expenses, $ million
1 6051 497 1 523 1 546
1 650
0
400
800
1 200
1 600
2 000
1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013
Transportation expenses, $ million
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0
10
20
30
40
50
2007 2008 2009 2010 2011 2012 1Q 2013
Debt-to-capital ratio, %
LUKOIL Majors average
Robust Financial Position
Source: Companies financial statements. O&G majors include: ExxonMobil, Royal Dutch Shell, Chevron, BP, ConocoPhillips, Total, Eni.
0.0
0.2
0.4
0.6
0.8
1.0
2007 2008 2009 2010 2011 2012 1Q 201
Net debt to EBITDA
LUKOIL Majors average
2,9 2,7
3.7 3.9
-5
-4
-3
-2
-1
0
1
2
3
4 Total debt and net debt, $ bln
Cash & Cash equivalents Net debt
2012 1Q 2013
Oil & Gas majors
The Company net debt remains low.
In 2Q 2013 LUKOIL successfully issued
$3 bln of eurobonds . The offering consists
of 5-year $1.5 bln of 3.4% notes and 10-
year $1.5 bln of 4.6% notes.
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CAPEX Breakdown
1Q
2013
4Q
2012, % $ million
1Q
2013
1Q
2012, %
2,537 2,606 (3) Exploration and production 2,537 2,007 26
1,874 1,957 (4) Russia 1,874 1,634 15
663 649 2 International 663 373 78
630 788 (20) Refining and marketing 630 346 82
471 610 (23) Russia 471 167 182
159 178 (11) International 159 179 (11)
3 27 (89) Chemicals 3 10 (70)
3 15 (80) Russia 3 6 (50)
0 12 (100) International 0 4 (100)
121 191 (37) Power generation 121 57 112
113 98 15 Other 113 42 169
3,404 3,710 (8) Total (cash and non-cash) 3,404 2,462 38
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Oil pipeline Kharyaga Yuzhnoye Khylchuyu
has been Launched
Length: 158 km
Throughput capacity 4 mln tons per year
0.9 mln tons were pumped in 1Q 2013
Expected growth of EBITDA is about
$500 mln per year
Capital expenditures were about $230 mln
Barents Sea
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Acquisition of Samara-Nafta
Reserves C1+C2 : 600 mln bblAcquisition cost : $2.05 bln ($3.4 per bbl)
Exploration and development licenses for more than60 fields within 23 license blocks
LUKOIL refining, petrochemical and transportationcapacities in the region will create visible synergiesSamara region
30
40
50
2009 2010 2011 2012
Samara-Nafta oil production, th. bbl per day
12thplace for the oil production in Russia(2nd place in Samara region)
CAGR10%
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Kama-Oil
In April 2013 LUKOIL acquired 49.99% of Kama-oil increasingownership to full control
Kama-Oil was created in 2007 as an oilexploration and production operator in Permregion
Owns 6 licenses
Reserves C1+C2: 175 mln bbl
Currently 3 oilfields are producing and 3 licenseareas are being explored and prepared forproduction
0
1
2
3
4
2010 2011 2012 1Q 2013
Kama-Oil oil production, th. bbl per day
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Northern Caspian
V. Filanovsky field Supporting blocks are designated for the ice-resistant
stationary platform Building of infrastructure for the field
Yu. Korchagin field Drilling was completed in May and there were testing
works of 117 well with oil flow rate of 6,2 th. bbl perday
Caspian Sea
Filanovsky
Korchagin
0
30
60
90
2011 2012 1Q
2013
2013E 2014E 2015E
Oil production in Northern Caspian, th. bbl per day
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International projects: Iraq
West Qurna-2
Currently:
15 wells were drilled, drilling is beingcompleted by 5 oil rigs
Construction of oil preparation unit andoil gathering system, gas-turbine powerplant was completed by 70%, export
pipeline was completed by more than40%
First development stage - realization ofEarly oil Mishrif project is according tothe schedule. Commercial production isplanned for the end of 2013.
Compensation oil in 2014 is expected toamount to 70 mln bbl depending onprice
Mishrif Early OilPower PlantOver 50% CompletionConstruction completion- November, 2013
Mishrif Early Oil
Oil Treatment Plant andGathering SystemOver 50% Completion
Mishrif Early Oil30 km of PipelineCompleted
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International projects: Uzbekistan
0
5
10
15
20
25
2011 2012 1Q 2013 2014E 2015E
Marketable gas production in Uzbekistan, mcm per day
0
2
4
6
810
12
14
16
18
20
Western Siberia Uzbekistan
Net income per boe in 1Q 2013, $
Uzbekistan
GissarWells 45, 55 and 56 at Gambulak field and well 7 atDzharkuduk field are completedContractation of equipment construction within Fulldevelopment project is on track
KandymDrilling of 8 wells is completedKandym gas treatment plant projecting works are underway
4 wells are completed at Shady field
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3338
42
50 52
59
75
90
0
20
40
60
80
100
2005 2006 2007 2008 2009 2010 2011 2012
Dividend per share, rub.
Increasing Dividend Growth Rate
+13%
+27%
CAGR2012-2021:
15%E
40
+4%
First-ever interimdividends
In the mid-term LUKOIL is going to increase dividend payout ratio to 30%
20%
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Conclusion
- Value creation and accelerating growth of dividends
- Increasing efficiency of operating activities
- ost control, and OPEX optimization
- Maintaining conservative financial policy
- Maintaining strong financial discipline