An African energy company
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Transcript of An African energy company
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
An African energy company
PRESENTATION TO THE PORTFOLIO
COMMITTEE ON MINERALS AND ENERGY
Presented byDr Popo Molefe and Mr Sipho Mkhize
None - Executive Chairman and President & CEO, PetroSA
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Agenda
• Introduction
• Shareholder Objectives
• Salient Predetermined Objectives
• Major Challenges
• Way Forward
• Financial Performance
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Introduction to PetroSA
• National upstream and downstream petroleum corporation
• International player with African focus
• Established 2002 through merger of State oil E&P company (Soekor) 1969 and GTL company (Mossgas) 1987
• Current business
Exploration, oil and gas production
GTL manufacturing - SA
Oil and chemicals trading
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
The business strategy for PetroSA is based on achieving and contributing to the following shareholder (Government) objectives:
• PetroSA to achieve sustained commercial viability
• PetroSA to achieve transformation on a continuous basis. • Operating PetroSA in line with best international practices with
regard to Safety, Health, Environment, Quality.
• To contribute to the macro-economic objectives of the country.
Shareholder Objectives
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Salient Predetermined Objectives
• Financial viability and sustainability
• SHEQ
• Employment Equity
• Black Economic Empowerment
• Corporate Social Investment
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Salient Predetermined Objectives
• Favourable operating environment
•Steady plant performance
•Sable field performing above expectations
•Oribi / Oryx producing beyond original estimates
• Macro economic environment
•Higher international oil prices
•Rand strengthening against the Dollar
•Declining interest rates
Operational Environment
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
• Financial results
•Revenue growth – 19% increase
•Operating Margin – 20% increase
•Profit before tax – 80% increase
•Cost containment
•Lower Gearing
•Strong liquidity
Financial Viability
Salient Predetermined Objectives
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Salient Predetermined objectives
• Financial viability
• SHEQ
• Employment Equity
• Black Economic Empowerment
• Corporate Social Investment
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Salient Predetermined objectives
• Retained all ISO accreditations
• Obtain a NOSCAR platinum award for the seventh time
• Orca achieves 2 756 days without disabling injury
• FA platform wins Excellence in Mining and Environmental Management award for the second year
• ZERO fatalities and Environmental spills
• HIV/Aids programme roll out
SHEQ
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Salient Predetermined objectives
• Financial viability
• SHEQ
• Employment Equity
• Black Economic Empowerment
• Corporate Social Investment
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Salient Predetermined objectives
• 1 263 employees
• Achieved 69:31 employment equity against a target of 60:40
• 19 % comprise women and aggressive target of 35% set for 2005/6
• First female shift supervisor appointed at the refinery
• Appointed female Process Controller at the offshore platform
Employment Equity
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Salient Predetermined objectives
• Financial viability
• SHEQ
• Employment Equity
• Black Economic Empowerment
• Corporate Social Investment
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Salient Predetermined objectives
• R804 million comprising 34% (Target of 50% not achieved)
• R14 million allocated for supplier development
• Five companies included in the pilot phase creating 98 jobs
• Centre of Excellence produced over 300 graduates in various trades such as electricians, welders, riggers, fitters etc.
Black Economic Empowerment
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Salient Predetermined objectives
• Financial viability
• SHEQ
• Employment Equity
• Black Economic Empowerment
• Corporate Social Investment
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Salient Predetermined objectives
• PetroSA Development Trust capitalised by R55 million to focus on:> Education and Training> Health > Empowerment of women
• Flagship Projects assisted by the Trust are
•Protec
•Limpopo Online Project
•Computer Laboratories in Limpopo and KwaNonqaba
•Construction of schools in Mossel Bay and Limpopo
Corporate Social Investment
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Major Challenges
• Major cash flow stream of PetroSA under threat as FA/EM gas supply to Manufacturing plant depleted by 2007
• Secure long-term feedstock supply to Manufacturing plant on a commercial viable basis
• Uncertainty exists as to total investment required to secure feedstock for Manufacturing plant
• Expand E& P asset base aggressively
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Major Challenges
• Financing of projects by utilising strength of balance sheet limited due to short period of secured cash flow generation from current operations
• Streamlining of internal business processes
• Supply agreements and retail markets
Supply agreement/MOU with other petroleum companies is limited to 3 years.
PetroSA has no access to the retail market and is therefore always dependent on, and sometimes held to ransom by, the competition in terms of its supply agreements.
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Way Forward
• Finalise evaluations as to optimal feedstock solution for Manufacturing plant and associated investment required as matter of urgency
• Pursue aggressive growth in E & P asset base, organically and non-organically
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
FINANCIAL PERFORMANCE
31 MARCH 2005
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Economic Indicators
2004/5 2003/4 2002/3
Average crude oil price $42.10/bbl $28.97/bbl $27.58/bbl
Average R/$ exchange rate 6.28 7.20 9.82
Impact on profit: $1 change in price R124m R92m R164m
R1 change in exchange rate ? R436m R33m R382m
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
PetroSA Annual Revenues2001/2 to 2004/5
0
1000
2000
3000
4000
5000
6000
7000
Petrochemicals Crude Fuels Total
Reve
nue
(ZAR
mill
ions
)
2001/02 2002/03 2003/04 2004/05
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Abridged Income Statement
2004
R’m
Gross Revenue 3 473
Operating Profit/(Loss) (396)
Net Investment Income 636
Taxation (1)
Profit after taxation 239
2005
R’m
6 446
1 715
137
(115)
1 737
Volume variance 1 614Oil Price variance 1 648Exchange rate var (650)Subsidiary sales 361Total Sales Variance 2 973
Increased Revenue 2 973Condensate (116)Provisions (514)Shutdown 270
Other Expenses (262)Subsidiary expenses (240)Operating Profit Change 2 111
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Abridged Balance Sheet
2005 2004 2003
R’m R’m R’m
Assets
Non-current assets 4 445 5 385 5 791
Amounts held by holding company
1 594 1 594 1 594
Current Assets 1 584 2 291 1 366
Cash and cash equivalents 5573 2 637 2 973
13 196 11 907 11 724
Equity and liabilities
Capital and reserves 9 233 7 503 7 359
Long-term loans-shareholder 312 958 1 481
Non-current provisions 2 847 2 461 2 142
Current liabilities 804 985 742
13 196 11 907 11 724
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Abridged Cash Flow
2005 2004 2003
R’m R’m R’m
Cash generated by operating activities 4 053 271 801
Cash utilised in investing activities (288) (382) 67
Loans repaid (830) (224) (2 006)
Increase in cash and cash equivalents 2 935 (335) (1 138)
Cash and cash equivalents at beginning of year
2 638 2 973 4 111
Cash and cash equivalents at end of year
5 573 2 638 2 973
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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
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