Post on 15-Jul-2020
Presentation to Fixed Income Investors
December 2011
Repsol Credit Update
2
Disclaimer
ALL RIGHTS ARE RESERVED © REPSOL YPF, S.A. 2011
Repsol YPF, S.A. is the exclusive owner of this document. No part of this document may be reproduced (including photocopying), stored, duplicated, copied, distributed or introduced into a retrieval system of any nature or transmitted in any form or by any means without the prior written permission of Repsol YPF, S.A.
This document does not constitute an offer or invitation to purchase or subscribe shares, in accordance with the provisions of the Spanish Securities Market Law (Law 24/1988, of July 28, as amended and restated) and its implementing regulations. In addition, this document does not constitute an offer of purchase, sale or exchange, nor a request for an offer of purchase, sale or exchange ofsecurities in any other jurisdiction. In particular, this document does not constitute an offer to purchase, subscribe, sale or exchange of Repsol YPF's or YPF Sociedad Anonima's respective ordinary shares or ADSs in the United States or otherwise. Repsol YPF's and YPF Sociedad Anonima's respective ordinary shares and ADSs may not be sold in the United States absent registration or an exemption from registration under the US Securities Act of 1933, as amended.
The resources mentioned in this document do not constitute proved reserves and will be recognized as such when they comply with the formal conditions required by the U. S. Securities and Exchange Commission. In addition, this document contains statements that Repsol YPF believes constitute forward-looking statements which may include statements regarding the intent, belief, or current expectations of Repsol YPF and its management, including statements with respect to trends affecting Repsol YPF’s financial condition, financial ratios, results of operations, business, strategy, geographic concentration, production volume and reserves, capital expenditures, costs savings, investments and dividend payout policies. These forward-looking statements may also include assumptions regarding future economic and other conditions, such as future crude oil and other prices, refining and marketing margins and exchange rates and are generally identified by the words “expects”, “anticipates”, “forecasts”, “believes”, estimates”, “notices” and similar expressions. These statements are not guarantees of future performance, prices, margins, exchange rates or other events and are subject to material risks, uncertainties, changes and other factors which may be beyond Repsol YPF’s control or may be difficult to predict. Within those risks are those factors described in the filings made by Repsol YPF and its affiliates with the Comisión Nacional del Mercado de Valores in Spain, the Comisión Nacional de Valores in Argentina, the U.S. Securities and Exchange Commission in the United States and with any other supervisory authority of those markets where the securities issued by Repsol YPF and/or its affiliates are listed.
Repsol YPF does not undertake to publicly update or revise these forward-looking statements even if experience or future changes make it clear that the projected performance, conditions or events expressed or implied therein will not be realized.
The information contained in the document has not been verified or revised by the Auditors of Repsol YPF.
3
Introduction
Strategic Plan Update and Key Accomplishments
Financial Overview
Conclusions
Agenda
4
Introduction
• Today we will review Repsol’s operations and financial performance for 2010 -11.
• Repsol has a EUR 750 million Floating Rate Note bond maturing on February 16th, 2012.
• Our current liquidity position fully covers the refinancing of the FRN and short term maturities.
• We believe that the recapitalization of banks will reduce bank loans to corporations, creating the
need for companies to raise more funding in the capital markets.
• We expect some crowding-out to occur in the capital markets due to the significant refinancing
needs of governments, public sector and financial institutions.
• Given the above, we intend to further diversify our funding sources in 2012 .
5
Introduction
Strategic Plan Update and Key Accomplishments
Financial Overview
Conclusions
Agenda
6
Upstream - Key Accomplishments to Date
Upstream and LNG
Transformationvia successful
exploration
• Transformed into the growth engine through attractive portfolio of projects
• Delivered on the development of key upstream projects to date including I/R Libya, Brazil, Shenzi, Canaport and Peru LNG
• Strong recent exploration successes position Repsol among the top explorers worldwide: Carioca NE, North Guara, Abare, Malombe, Gavea
• Improved operational performance metrics allow favourable comparison with leading upstream players
Strategic Plan Update
71. All production figures indicate gross plateau production
Development of deepwater oil field
in the U.S. GoM -W.I. Repsol : 28% - FID: 2006
Production: 121 kboe/d
Shenzi 800 MUS$
Block 57 wet gas field delineation
and developmentW.I. Repsol : 53.8 % - FID: 2009
Production: 5 Mm3/d
Kinteroni 250 MUS$
2 gas/liquids fields under development
in Caipipendi block W.I. Repsol : 37.5%; (Op) - FID:
2010Production: 11 Mm3/d (2nd
phase)
Margarita-Huacaya 370 MUS$
Development of oil and gas fieldin the shallow waters of Santos
Basin W.I. Repsol :22.2% - FID: 2011
Production: 25 kboe/d
Piracuca 350 MUS$Development
of Santos basin pre-salt oil fieldW.I. Repsol : 15% - FID: 2010
Production: 250 kboe/d
Guara1,250 MUS$
W.I. Repsol : 6% Important pre-salt discovery
in evaluation
Albacora Leste
Perla´s offshore gas field under development
W.I. Repsol : 32.5% (co-op.) -FID: 2011
Production: 8 Mm3/d (1st phase)
Cardon IV 750 MUS$ Carabobo 750 MUS$ Lubina-Montanazo 90 MUS$
Development of new oil discoveries adjacent to
production fields.W.I. Repsol : 100% (Lubina);
75% (Montan.) (Op)Production: 5.6 kboe/d
6 onshore gas fields under development
W.I. Repsol :29.3% (Op) -FID: 2009
Production: 8 Mm3/d
Reganne 400 MUS$
I/R 140 MUS$
Projects with a betterperformance
New projects not consideredin SP Update 2010-2014 (April 2010)
MUS$ NET CAPEX 10-14
Start-up of extra-heavy crude production
field in the Orinoco BeltW.I. Repsol : 11%
FID: 2012Production: 400 kboe/d
Development of oil field I/R, belonging
to the blocks NC 186 and NC 115W.I. Repsol: 20% (NC-115), 16%
(NC-186)(foreign Op.) - FID: 2007 /
Production: 75 kboe/d
Upstream - Key Projects sustaining targets
Strategic Plan Update
8
Proved reserve replacement ratio greater than 110%
1. All figures exclude Argentina and consider 40% dilution in Brazil assets
Total reserves(MBoe)
Production growth 3-4% p.a. to 2014and 5% p.a. from 2015 to 2019
Net production(Mboe)
Upstream - On track with 2014 objectives
Expect to deliver production targets despite dilution in Brazil
Strategic Plan Update
Exploration & Contingent Resources Key growth projects Currently Producing Assets
3-4%
2019201420102009
3%
0
50
100
150
200
250
5%
2014201020090 %
40 %
120 %
160 %
200 %
80 %
2008
> 110 %
128 %
94 %
65 %
2011 E
> 140 %
9
Downstream - Key Accomplishments to Date
Downstream
• Development of best-in-class downstream portfolio which is now fully-invested (two key growth projects, Cartagena and Bilbao. completed by the end of 2011) in time and below budget
• Leading competitive position as an integrated player in Spain
• Enhanced capability to capture differentiated margins in a profitable market
• With both projects on stream we expect a premium on our refiningmargin of at least 2 US$ per barrel
Best-in-class,fully invested
assets in middle distillates
importing country
Strategic Plan Update
-
-
10
Repsol CartagenaOn stream: 4Q 2011
Repsol BilbaoOn stream: 4Q 2011
From 2012 on, solid cash generation from premier integrated position in the European downstream
+16%
2010 2012
770
Distillation capacity
890
100125
+25%
Middle distillates production
4363
+47%
2010 2012 2010 2012
Conversion(kbpd) (2010 basis) (Equivalent FCC %)
Downstream - On Track with 2014 Objectives
Conversion and expansion project• Capacity increase of 120 kbpd to 220 kppd• New hydrocracker (2.5 Mtpa) and new coker
(3 Mtpa)• Conversion improvement to +76% FCC
eq. from 0% today (up to 92 % w/o Lubes)
• Total investment 3,200 M€ (2007-2012)
• New coker unit (2 Mtpa)• Conversion improvement of +32%
FCC eq. to 63%• Total investment 800 M€ (2007-2012)
Conversion project
Strategic Plan Update
11
• Successful rebalancing of portfolio via partial divestment (99% stake in 2008, 57.43% as of today), cash from divestment: EUR 3,222 million
• Convergence into import parity supporting cash flow generation
• Ongoing successful oil reserve recovery
• Upside from unconventional resources i.e. Vacamuerta
• Dividends from 2008 until November 2011:US$ 5,349 million
• Enhanced growth and value through UF acquisition with synergies delivery on track
• Strong cash generation and demonstrated earnings resilience
Key Shareholdings - Key Operational Accomplishments to Date
YPF
Gas Natural Fenosa
Capturing hidden value
Vertically integrated market
leader in G&P
Strategic Plan Update
12
1. Repsol Sinopec Brazil 2. YPF
Repsol57.4%
Petersen25.5%
3. Non-integrated downstream assets
Sinopec’s capital contribution 40% 7.111 M$Repsol’s value of its 60% participation in Repsol Brasil
− REFAP (Brazil)− CLH (Spain)− Other minor divestments
Free Float17.1%
10,664
7,111
Value of Repsol's offer
− 11 Analysts Coverage
− Average TP: 50.0 US$/ADR
Between Feb’08 and Sep’11 Repsol has sold 41.6% of YPF generating ~EUR3.2bn
Portfolio RebalancingStrategic Plan Update
The divestment of Repsol Brazilian Assets and YPF and other non-integrated downstream assets have contributed a very positive effect on the company liquidity position and financial ratios
Cash from divestment ~ EUR1.1 bn
13
Introduction
Strategic Plan Update and Key Accomplishments
Financial Overview
Conclusions
Agenda
14
Balance Sheet Overview
Property, plant and equipment 31,900
Total Assets 58,083
Sep2011
Dec2010
Dec2009
4,733Goodwill
Current assets 14,773
Total Equity 21,391
Non-current financial liabilities 15,411
Current liabilities 11,993
Total Liabilities 58,083
33,585
67,631
4,617
21,878
25,986
14,940
15,773
67,631
34,360
68,690
4,547
21,458
29,264
14,530
14,525
68,690
Million Euro
Financial Overview
Solid and robust balance sheet, increasing assets vs. decreasing financial liabilities
Repsol Group figures
15
Capitalization
Capital Employed
Net Debt
Equity
27,549
34,697
2,909
28,786
EBITDA
EBIT
Net Income
Investments
7,067
4,060
1,786
3,384
Preferred Shares 3,002 CCS Adj. Net Income 1,533
Financial Highlights
6,683
4,102
1,901
4,273
1,568
(1) As of 2 December 2011; (2) Repsol EX-GN figures
(1)
Financial Overview
Sep 2011
Million Euro
Sep 2010
Net Income increased by 6.4% with investments of EUR 4,273 millionSound financial position reflected by a Net Debt / Capital Employed ratio of 8.4%
Repsol Group figures
(2)
(2)
(2)
(2)
Sep 2010
16
Sep 2011
Credit Ratios – Repsol EX-GN
Net Debt
Net Debt / Capital Employed %
Capital Employed
EBITDA
EBITDA / Net Debt
EBITDA / Net Interest + Dividends Preferred Shares
Net Interest
Net Interest + Dividends Preferred Shares
EBITDA / Net Interest
17.4%
5,504
31,618
5,981
1.4
21.3
191
Sep 2010
281
31.3
8.4%
2,909
34,697
5,606
2.6
28.0
120
201
46.5
Financial Overview
Million Euro
Deleverage and increase in debt coverage ratios mainly due to significant net debt reduction
17
62%23%
15%
Capital Markets Banks Others
Gross Debt Repsol EX - GN
Million Euro
Capital Markets 5,651
Bank Loans 2,063
Institutional Finance 576
Credits 247
Project Finance 450
Others 116
Total Gross Debt 9,103
Gross Debt and Liquidity Analysis as of 30 Sep 2011
External Financing available EX - GN
Million Euro
Cash and Equivalents 3,917
Total Commited Credit Lines 4,941
Long term 3,236
Short term (<12 months) 1,705
Credit Lines Utilization (247)
Total liquidity available 8,611Long Term Financial Investments* 2,277Liquidity+ Financial Investments 10,888
September 2011
Financial Overview
* Financial Investments mainly corresponds to Petersen, Hunt, Atlantic and OCP Ecuador
Capital Markets represent 62% of gross debt, with a low dependance of banks (23%)Outstanding level of liquidity
18
Repsol YPF EX – GN Debt Maturity Profile as of 30 Sep 2011Million Euro
Financial Overview
Group 4Q 2011 2012 2013 2014 2015 2016 2017 >2018
Repsol EX-GN 455 156 267 160 110 76 76 547
Capital Markets 790 794 1.018 1.996 0 0 881 0
YPF 501 789 308 77 20 19 0 68
Total 1.746 1.739 1.593 2.233 130 95 957 614
(1) Excluding Capital Markets; (2) Capital Markets Repsol EX-GN, (3) ECP
(1)
(2)
Repsol EX-GN has limited refinancing risk thanks to well-spread debt maturities mainly in theCapital Markets
0
500
1000
1500
2000
2500
4T 2011 2012 2013 2014 2015 2016 2017 >2018
YPF
Capital Markets Repsol EX-GN
Repsol EX-GN
(3)
19
• Conservative and prudent financial discipline:
• Increase in available liquidity by increasing long-term credit lines and cash generated by portfolio divestments.
• Limited refinancing risk due to well spread debt maturities and available cash.
• Repsol’s maturities until 2015 already pre-financed with available cash and undrawn credit lines.
• Short-term debt is 2.6 times covered by available liquidity.
• Available liquidity represents 94.6% of gross debt.
• Diversification of funding allows Repsol to isolate itself from turmoil in the banking sector:
• Repsol’s primary external financing comes from the capital markets, which provide 62% of the gross debt of Repsol and controlled subsidiaries.
Financial OverviewFinancial Strategy
20
• Solid domestic downstream operations (refining and marketing).• Cost-competitive production operations in Argentina, North Africa, and Trinidad and Tobago• Prudent liquidity management• Enhanced upstream position with strong production growth potential and prospects for robust reserve
replacements• “…ratings reflect its very solid domestic downstream operations, adequate liquidity, continually strong
dividends from now 68%-owned YPF S.A. and moderate financial policies” (As of March 2011)
S&P(BBB)Positive
Rating Agencies are recognising strong credit metrics as well as theimplementation of its Strategic Plan
• Strong downstream presence in Spain, Portugal and Peru, underpinned by its integrated refining and marketing network and leading market share.
• Successful exploration efforts, which led to major discoveries in areas such us Latin America (particularly offshore Brazil), North Africa and the Gulf of Mexico
• Progress made by the group in executing some of its portfolio management initiatives set out in the Strategic Plan 2010-2014, as it seeks to further rebalance its portfolio towards its integrated core businesses
• Prudent financial policies and robust liquidity• “…main competitive advantage to lie in its downstream business, specially in Spain. Its integrated business
model allows the company to actively market refined products and LPG, and maintain a positive sales margin even in a lower price environment”
Moody’s(Baa1)Stable
Fitch(BBB+)
Stable
• Repsol’s strong liquidity for the next 18 months even under a stress scenario• Resilient integrated downstream business model• Brazil transaction positive for Repsol’s creditworthiness, as it pre-fund its main upstream projects for the
2011-2014 with no additional debt• “…rating is underpinned by its rejuvenated upstream portfolio, leading regional downstream position as well
as of a fairly conservative financial framework”
Key Credit Strengths
21
Introduction
Strategic Plan Update and Key Accomplishments
Financial Overview
Conclusions
Agenda
22
Conclusions
• Repsol is delivering on the execution of its strategic plan, showing growth in upstream projects,
completing refinery investments and generating solid operating results in YPF. As a consequence, under
the present scenario, internal cash flow generation will allow Repsol to finance organic capex, pay
dividends and cover debt maturities.
• We continue to maintain a solid financial position with strong liquidity of EUR 8.61 billion representing
94.6% of gross debt. This liquidity covers 2.6 times short term debt.
• Repsol has low refinancing risk due to a wide spread of debt maturities and cash flow generation.
• Our conservative strategy is to maintain enough cash to service short-term debt, fund our growth in
upstream, and diversify our portfolio in OECD countries.
• Repsol’s metrics places it closer to the rating category "A“ than its actual ratings.
• Repsol has become a more diversified integrated oil company, positioned to generate growth in the most
attractive markets.
Investment Highlights
December 2011
Presentation to Fixed Income InvestorsRepsol Credit Update