Annual Report 2011 and General Update

Presented to The Portfolio Committee on Energy

Parliament of RSA

25 October 2011

2

Agenda

PetroSA Annual Report 2010/11

1. Chairman’s Report

• Company Overview

• Annual Report

2. Annual Financial Statements

Company Overview

* Following the merger of Soekor E & P and Mossgas Pty Ltd

PetroSA was established in 2002* Employed 1836 total staff (March

2011) Owns world’s 2nd largest, fully

operational GTL refinery Business spans petroleum value chain Produces ~ 5% of RSA fuel needs Produces diesel, gasoline, kerosene

and specialty products Produced ~70 MMbbl crude & 1 Tcf of

natural gas to date Has exploration acreage in Equatorial

Guinea & Namibia Has a trading office in Rotterdam

Net Asset Value ~ R16.57 billion

Our Core Business

Exploration and production of oil and natural gas

Participation in and acquisition of local as well as

international upstream petroleum ventures

Production of synthetic fuels from offshore gas

Development of domestic refining and liquid fuels logistical infrastructure

And marketing and trading of oil and petrochemicals

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Our Current Strategic focus is

Sustain Mossel Bay,Use this as a platform for growth,

Grow PetroSA to a significant industry player in RSA and regionally,Contribute to security of energy supply,

And support economic growth, job creation and drive transformation.

Meaningful growth as an NOC includes adding oil and gas reserves.

LNG or other feedstock

MTHOMBO

3X3

2X2

2X1

25%

5%

Vision 2020: Building Blocks Vision 2020: Building Blocks

CURRENTCURRENT

Field optimisati

on

Field optimisati

on

DOWNSTREAM DOWNSTREAM

SHALE GAS ?SHALE GAS ?TRAI

NS

TRAI

NS

LOCAL M

ARKET SHARE

LOCAL M

ARKET SHARE

F-O F-O

2011 2013 2015 2018 2020 2030

© 2011 FOR INTERNAL USE ONLY

Other Block 9 prospects

Other Block 9 prospects

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2010/11 Annual Report

Annual Performance: Salient Facts

2011/12 A Turn-Around For PetroSA

Records R831-million net profit, from R356-million loss the previous year

Commenced Development of Project Ikhwezi (previously known as F-O Project), set to sustain GTL Refinery operation to 2020

Continued efforts on Project Mthombo

Continues to support BBBEE, volumes increase by 14% from previous year

Maintains an excellent safety record

Averts a potential water crisis in Mossel Bay through the construction of the largest (15 million litres/day) desalination plant in South Africa

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Performance Against Objectives

Objective Key Performance Indicator

Performance Result

People Employment Equity Women representation remains a challenge, but there are interventions under way to rectify

Finance Profitability A turn-around to R831- million net profit vs R356 million loss the previous year

BB-BEE/Stakeholder •Preferential Procurement

•BEE Sales

•53% of discretionary

spend

•14% increase in sales

Internal Business Processes

• Feedstock Solution

• New Crude Refinery

•Project Ikhwezi approved

•Business case review

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Staff Analysis

PetroSAWORKFORCE PROFILE – 31 MARCH 2011(Total Women = 26% : Total Black = 75%)

Occupational Level

Male FemaleForeign

Nationals

TotalAfrican Coloured Indian White African Coloured Indian White Male Female

Top & senior management 6 5  2  10  1            26

Senior management 7 4 2 9         2   24

Professionally qualified and experienced specialists and mid-management 125 63 16 101 58 20 5 17 11 1 417

Skilled technical and academically qualified workers, junior management, supervisors, foremen, and superintendents 179 216 11 205 90 75 4 47   1 828

Semi-skilled and discretionary decision making 89 102 1  19 66 31 1  5     314

Unskilled and defined decision making 51 43 5 6 39 4 2 2     152

TOTAL PERMANENT 450 429 35 341 254 130 12 71 13 2 1737

Temporary employees 28 33   23 8 4 1  2     99

TOTAL 478 462 35 364 262 134 13 73 13 2 1836

                       

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Annual Financial Statements

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PetroSA Group Results 2010/11

1.Consolidated Income Statement – Yr. on Yr.

Revenue variance• increased sales volumes, 14%• increased crude price, 26%

Cost of sales• additional costs of R676m as result of updated abandonment study• increased production,25%

Other opex • reduced because of delayed Mthombo FEED, reduced expenditure on Upstream activities compared to prior year as well as freezing of posts and cost saving initiatives

Investment income• reduced interest rates, even though higher cash reserves

Tax•Revised assessment 2008/9,prov.tax to be repaid

Actual 2010/2011

Actual 2009/2010 Variance

% change2010 vs.2011

R'mRevenue 10,565 8,090 2,475 31%Cost of Sales (8,854) (7,579) (1,275) -17%

- Gross Profit 1,711 511 1,200 >100Gross Profit % 16% 6% 10% 10%

Other Operating Income 256 533 (277) -52%Other Operating Expenses (1,903) (2,379) 476 20%

- Profit/(Loss) from Operations 64 (1,335) 1,399 >100%Investment Income 859 972 (113) -12%Finance Costs (422) (398) (24) -6%

- Profit before taxation 501 (761) 1,262 >100%Taxation 309 348 (39) -11%

- Profit after taxation 810 (413) 1,223 >100%

- Profit/(loss) from discontinued operations 21 57 (36) >-100%

- Profit for the year 831 (356) 1,187 >100%

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hPetroSA Group Results 2010-2011

2. Consolidated Balance Sheet – budget vs. actual

• PPE increase as a result of deferred expense of R1,2b due to change in abandonment.

• Other financial assets under spend compared to budget due to delay in Castle and Mthombo.

•Increase in non-current liabilities due to updated abandonment study.

•Assets held for sale of disposal groups represents the PetroSA Nigeria and Brass Exploration Unlimited

Actual March

2010/2011

Actual March

2009/2010

% changecurrent vs. py

R'm R'mASSETS

Non- current assets 7,928 7,484 6%- property,plant & equipment 7,241 6,658- intangibles 80 82- deferred tax - 72- other financial assets 118 135- amounts held by holding Co. 489 537Current assets 17,078 14,507 18%- inventories 1,576 1,416- trade and other receivables 2,483 2,076- non current assets held for sale 1,167 988- cash and cash equivalents 11,852 10,027 18%

TOTAL ASSETS 25,006 21,991 14%

EQUITIES AND LIABILITIES Capital and reserves 16,645 15,845 5% Non-current liabilities 5,650 3,914 44%

Current liabilities 1,992 1,705 17%

- trade and other payables and provisons 1,992 1,568

- bank overdraft 0 119

- Liabilities of disposal groups 719 527

TOTAL EQUITY AND LIABILITIES 25,006 21,991 14%

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PetroSA Group Results 2010-2011

3. Cash Flow Statement

Increased interest received• increased cash balances

Investments• delay of Mthombo FEED and Castle

Loan advances• Mthombo FEED delayed

Cash generated by operations• increased by R2b

Actual March2009/2010

Actual March2010/2011 Change

R'm R'm R'mCash from operations (1,070) 864 1,934 Interest Received 972 859 (113) Interest paid (19) (2) 17 Taxation (11) 258 269 Cash flows of discontinued operation 503 32 (471)

Cash before investing activities 375 2,011 1,636 Investing ActivitiesPPE acquired (1,274) (197) 1,077 Other Investing Activities (2) 2 4 Repayments of amounts held by holding Co. - 49 49 Purchase of financial assets - 18 18

Cash before financing activities (901) 1,883 2,784 Financing ActivitiesLoans received - - - Loan advances - Mthombo - - - Dividends paid (375) - 375 Shareholders Loan repaid (193) (18) 175

Increase/ decrease in cash (1,469) 1,865 3,334

Effects of exchange rate changes 63 80 17 Opening balance 11,313 9,907 (1,406)

Closing balance 9,907 11,852 1,945

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PetroSA Group Results

4. Historical Performance

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PetroSA Group Results

5. Audit Opinion

• The PetroSA group was issued with an unqualified audit opinion.

• An emphasis of matter, which does not modify the audit opinion, was raised for the following items:

Significant Uncertainties Brass Exploration Unlimited, a subsidiary, was sold in February 2011.

The sale was contested by the joint venture partner in July 2011.

Material Impairments Inter-company loan (R945-million) to subsidiary (PetroSA Egypt) impaired due to unsuccessful exploration activities. Inter-company loan (R270-million) to a subsidiary (PetroSA Gryphon Marin) written off

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PetroSA Group Results

5. Audit Opinion

Report on Other Legal and Regulatory Requirements

• Predetermined ObjectivesThere were no material findings on predetermined objectives

• National Environmental Management ActTimely corrective action was not taken with regards to Voorbaai sub-surface contamination

• Corrections subsequent to 31 May PFMA deadline Journal entries processed

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PetroSA Group Results

5. Audit Opinion

R13m of the 2010 fruitless and wasteful expenditure was recovered in 2011.

R16m of the 2011 fruitless and wasteful expenditure is expected to be recovered in 2012.

Fruitless and wasteful expenditure 2011

R’m

2010

R’m

Incurred 22 15

Recovered (13) -

Expensed 9 15

Net fruitless and wasteful expenditure 2010 & 2011 = R 9million

Investments – NPV

Asset Investment Net Cash inflows NPV @International R'm R'm 13%Egypt 476 - - Equatorial Guinea 999 - - Gryphon Marin (Gabon) 150 - - Sudan 119 - -

1,745 -

DomesticExploration costs only 1,126 - - Sable 975 4,177 1,930 Oribi/Oryx 630 2,237 613

2,730 6,415 2,543

Total Exploration Costs 4,476 6,415 2,543

Notes1. These costs are cumulative since April 20032. Overall cash positive of R2.5bn on exploration activities 3. The exploration costs relating to domestic activities can be regarded as research4. The above excludes revenue from gas fields supplying feedstock to the plant

Submission to CEF BACC Meeting -24 October 2011

PetroSA returns on exploration activities

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Subsidiaries

•

• T H A N K Y O U