Investor Presentation

Transcription

1 January 2012 Investor Presentation Delivering growth through exploration and production

2 Solid foundations to deliver sustainable value creation Outstanding exploration potential Delivering high potential projects Sound downstream business Solid capital structure Upstream profitable growth Balanced funding 2

3 Outstanding exploration potential Strong production growth Sound downstream business Solid capital structure Final remarks Appendix 3

4 Exploration activities in potential areas to further unlock value Galp Energia geographical spread Core area Potential area Galp Energia has over 40 exploration projects across four continents 4

5 A lot to de-risk from Galp Energia s exploration portfolio Prospective resources 1 (Mln Boe) Other areas Gas 2,550 Brazil 2,550 Oil Mean unrisked Mean risked Mean unrisked Mean risked Potential of Galp Energia portfolio not only in Brazil Mixed portfolio with c.15% of gas prospective resources 1 Resources at the end of Source: DeGolyer and MacNaughton. 5

6 On the right track to gas portfolio diversification Rovuma basin Galp Energia is an early mover into deepwater offshore Mozambique First exploration well confirmed Rovuma as a world class province Mamba South estimated natural gas in place up to 22.5 Tcf Mamba North being drilled, as part of a larger exploration and appraisal program 6

7 Drilling activity will continue focusing on high potential projects Potiguar basin BM-S-8 First exploration well scheduled for 1Q12 Drilling third exploration well in Carcará Iara area BM-S-24 Iara W started in 4Q11 to better understand the reservoir Key appraisal well to be drilled in

8 Other high potential assets to be developed outside Santos basin Amazonas basin Other Brazilian areas Pernambuco basin Other areas Portugal Campos basin Espírito-Santo basin East Timor 8

9 Outstanding exploration potential Strong production growth Sound downstream business Solid capital structure Final remarks Appendix 9

10 Production target of 300 kboepd by 2020 Production targets 1 (kboepd) 15x 300 3x Actual production 9M Production target mainly supported by the development of Brazilian assets 1 Working interest production 10

11 Unique upstream projects will enable sustainable production growth Pre-salt Santos basin Angolan assets Galp Energia s acreage in pre-salt Santos basin comprises world-class discoveries Presence in Angola rewarded with 26 discoveries 11

12 Lula/Cernambi WI production of more than 100 kbopd by 2020 FPSO deployment in Lula/Cernambi Gross FPSO oil production capacity (kbopd) 9 FPSO already sanctioned, with 1 st FPSO, Cidade de Angra dos Reis, already producing Gross installed oil capacity up to 1,270 kbopd by

13 Developing assets in Angola Block 14 development areas Block 32 development hubs Block 14 new projects will ensure production growth Block 32 development through split hub concept, with first oil date per FPSO expected by 2016 and

14 Exceptional portfolio to offer sustained production growth Contingent resources 1 (Mln Boe) Reserves 2 (Mln Boe) Brazil Angola Brazil Angola 2, C 3C 2P 3P Pre-salt Santos basin major contributor to contingent resources Lula/Cernambi fields responsible for over 90% of total reserves 1 Working interest resources at the end of Net entitlement reserves at the end of P not available for Angola Source: DeGolyer and MacNaughton 14

15 Outstanding exploration potential Strong production growth Sound downstream business Solid capital structure Final remarks Appendix 15

16 Solid downstream business in place Refining & Marketing Gas & Power Total refining capacity of 330 kbpd 1 Nelson complexity of in Sines refinery and in Matosinhos Refinery 3 rd player in Iberia 1,408 service stations and 513 non fuel stores in Iberia Africa with 107 service stations and 84 non fuel stores Annual sales of c.17 Mln tons refined products Sourcing agreement of 6 bcm of natural gas 2 nd natural gas player in Iberia with over 1,300 thousand clients 11,000 km of NG distribution network 160 MW of total capacity installed 1,200 GWh of annual electrical power generation 16 1 Post upgrade capacity. Before the upgrade was 310 kbpd 2 Post-upgrade complexity index. Nelson complexity before the upgrade of 6.3 in Sines and 9.4 in Matosinhos.

17 Upgrade project s positive impact in earnings from 2012 onwards Integrated refining system Investment of 1.4 Bln, from which 95% of total capex already invested Vaccum Visbreaker Sulphur Recovery Unit HDS Sour Water Stupper CDU upgrade New tankage Matosinhos Optimization of refining process by using heavier crudes to produce higher-value refined products Hydrocracker Sulphur Recovery Unit Deisobutanizer Steam reformer CDU upgrade New tankage Sines Upgrade project steady production by mid 2Q12 Improving our refining margin by c. $3.0 - $3.5/bbl 1 1 Diesel-fuel oil spread assumption of c. $300/ton 17

18 Outstanding exploration potential Strong production growth Sound downstream business Solid capital structure Final remarks Appendix 18

19 Cash-in of $5.2 Bln de-risking Brazilian assets Brazilian portfolio 1 Deal with Sinopec valued Galp Energia s current portfolio at $12.5 Bln Capital increase ensures development of Brazilian projects Galp Energia remains the controlling shareholder, fully consolidating Petrogal Brasil 3P reserves of 554 million boe 3C contingent resources of 2,135 million boe Risked prospective resources (mean estimate) of 188 million boe Upside value from Brazilian projects remains 1 Reserves and resources as per DeGolyer and MacNaughton auditing at the end of

20 Committed to a solid capital structure Net debt to equity (%) 114% Transaction execution delivers a sound gearing level Net Debt to Equity below target of 50% 31% < 20% Further growth flexibility added Galp Energia pre-transaction Sector average 1 Galp Energia post-transaction Raising management focus on strategic projects 1 Includes a pool of super majors and of European integrated majors. 20

21 E&P shaping cash flow profile going forward Capex EBITDA E&P R&M G&P EBITDA as is Upgrade project Lula/Cernambi development Shift in capex focus towards upstream mainly driven by development activities in Brazil EBITDA growth supported by refining upgrade project and Lula/Cernambi development Illustrative and non-exhaustive 21

22 Outstanding exploration potential Strong production growth Sound downstream business Solid capital structure Final remarks Appendix 22

23 A well funded Company with profitable growth ahead Unlocking value through intensive portfolio de-risking Remarkable production growth within the sector Downstream business benefiting from upgrade project Solid capital structure unique among peers 23

24 SAVE THE DATE Galp Energia Capital Markets Day 2012 London March 6th

25 Outstanding exploration potential Strong production growth Sound downstream business Solid capital structure Final remarks Appendix 25

26 Upstream portfolio Brazil Mozambique Angola Other areas Corporate Third quarter 2011 results 26

27 Strong presence in Brazil Brazilian portfolio 1 Assets Basin # blocks % Galp Energia Operator Offshore Potiguar 5 20% Petrobras Santos % Petrobras Espírito Santo 1 20% Petrobras Pernambuco 3 20% Petrobras Campos 1 15% Petrobras 3P reserves of 554 million boe 3C contingent resources of 2,135 million boe Risked prospective resources (mean estimate) of 188 million boe Onshore Potiguar 14 50% Petrobras/Galp Sergipe / Alagoas 2 50% Galp Amazonas 3 40% Petrobras 1 Source: DeGolyer and MacNaughton 27

28 Santos basin is a key area in current portfolio Pre-salt Santos basin Galp Energia is the most leveraged company to Santos Basin Pre-salt Santos basin with 50 Bln boe of reserves according to ANP Galp Energia was within the first to cream the play, with Tupi discovery in wells drilled in Galp Energia s four blocks with 100% success rate 28

29 Targeting two new prospects of several identified BM-S-8 Bem-te-vi well in 2007 found a reservoir of light oil with API in the range of 28º-30º Detailed 3D seismic interpretation ongoing Biguá drilling already concluded and Carcará being spud EWT expected in 2012 Declaration of commerciality to be delivered by December

30 Exploration activity still underway in BM-S-21 BM-S-21 Presence established in 2001 Caramba light oil discovery in D seismic re-processing in 2009 and nd exploration well will be drilled in 2013 Expected declaration of commerciality by April

31 Intense appraisal works to support Júpiter development BM-S-24 Significant oil, condensate and gas discovery in 2007 with CO2 content One appraisal well scheduled for 2012 to study CO 2 distribution and oil/water contact Contingent EWT to be performed before February 2016 Expected declaration of commerciality until February

32 BM-S-11 is a great success BM-S-11 Presence in BM-S-11 established in 2000 Lula (2006) and Iara (2008) discoveries proved the existence of light oil in the pre-salt interval and Cernambi (2009) confirmed existence of high quality reservoirs 16 exploration and appraisal wells drilled so far, with 100% success rate 32

33 Iara s development plan being prepared Iara area In evaluation phase since the end of 2008 Recoverable oil and natural gas between 3 4 bln boe Iara West started to be drilled in 4Q11 EWT scheduled for 2013 Expected declaration of commerciality by December

34 Lula/Cernambi: the largest field development programme in 30 years BM-S-11: Lula and Cernambi fields 14 wells drilled so far, with 100% success rate Total recoverable volumes of 8.3 Bln boe, of which, 6.44 Bln boe in Lula and 1.82 Bln boe in Cernambi Declaration of commerciality and field development programme submitted to ANP in December

35 Lula/Cernambi WI production of more than 100 kbopd by 2020 FPSO deployment in Lula/Cernambi Gross FPSO oil production capacity (kbopd) 9 FPSO already sanctioned, with 1 st FPSO, Cidade de Angra dos Reis, already producing Gross installed oil capacity up to 1,270 kbopd by

36 Several options being studied for oil export from Santos basin Oil export solutions Oil export solutions/infrastructure to be implemented in parallel with production capacity ramp-up Before 2013: oil export via DP shuttle tankers After 2013: oil export via shallow water transhipment unit (UOTE) Technical alternatives to UOTE are also under study 36

37 Gas export solutions being evaluated Gas export solutions Gas export: currently via Mexilhão (10 M3/d capacity) sufficient for three FPSO; after 2014, via Cabiúnas (13 M3/d capacity) Beyond 2016 through FLNG or incremental gas pipeline FLNG FEEDs already concluded, with ongoing project evaluation 37

38 Other high potential Brazilian assets to be developed, outside Santos basin Other Brazilian areas Amazonas basin Potiguar basin Campos basin Espírito-Santo basin Pernambuco basin 38

39 Potiguar basin ready for the first deep water wildcat Potiguar basin blocks Strong evidence of sandy reservoirs First exploration Ararauna well will be drilled in 1Q12 in block 760 Significant resource potential Wildcat to be drilled before 2014 in block

40 Pernambuco is so far an unexplored basin Pernambuco basin blocks Stake in three deep water blocks acquired in 2007, covering an acreage of 1,713 km2 Geochemical anomalies are indicators of the presence of an active petroleum system 2,721 km2 of 3D seismic already acquired in 2010 covering all the block area 40

41 Starting de-risking resources in Espírito Santo BM-ES-31 An extensive portfolio of prospects already mapped Ambrosia well was essential to define next well location Integration of data will de-risk the prospect which will be the target of the second exploration well to be drilled in

42 Exploring Campos basin BM-C-44 Galp Energia present in Campos basin since 2007 BM-C-44 has an area of 84 km2 and is close to several oil producing fields and oil discoveries One exploration well expected to be drilled in 2012, to test the main target already identified 42

43 Amazonas basin is a new frontier province with high potential Amazonas basin blocks 2D and 3D seismic to be concluded by 2012 Great potential for natural gas, supported by existing gas discoveries close to Galp Energia blocks Significant resource potential Six exploration wells to be drilled until

44 Upstream portfolio Brazil Mozambique Angola Other areas Corporate Third quarter 2011 results 44

45 Rovuma basin is a world-class natural gas province Rovuma basin Area 4 location Galp Energia entered into deepwater offshore Mozambique in 2007 Rovuma basin contains one of the largest Tertiary delta on the coast of East Africa Discovery well encountered continuous gas pay in high quality Oligocene and Eocene sands Mamba South estimated natural gas in place up to 22.5 Tcf 45

46 Rovuma basin is now a core exploration area Rovuma basin Mamba North already being drilled Two additional wells scheduled for 2012, given the great exploration potential in that area Outstanding NG volumes will lead to large scale gas development 46

47 Upstream portfolio Brazil Mozambique Angola Other areas Corporate Third quarter 2011 results 47

48 Developing assets in Angola Location Block 14 is the only producing block (Kuito, BBLT and TL) 241 Mbbl of total reserves 1 and contingent resources 2 at YE2010 Fields in Block 14 (Malange, Gabela, Lucapa, Negage, Lianzi and Menongue) and Block 32 to be developed 10% stake in LNG II project for monetization of natural gas assets 1 Net entitlement 2P reserves 48 2 Working interest 3C contingent resources.

49 Ramp up production from Tômbua-Lândana s CPT in Block 14 Tômbua-Lândana s CPT 3rd producing field in block 14, where Galp Energia holds a 9% stake Development to date consists of one CPT, one subsea center, 11 producers and three water injection wells Hub concept, available to incorporate further tie-backs 49

50 Malange development leveraging on existing infrastructure Malange tie-back alternatives in block 14 Malange discovery in 2007 with appraisal programme completed in 2010 Two drilled wells justified submitting conceptual development plan to concessionaire Engineering studies underway to mature tie-back development alternative Aiming for project acceleration with contractual first oil date in

51 Lucapa progressing towards first oil Lucapa s development area in block 14 Lucapa discovery in 2007 with appraisal programme complete in 2010 with Lucapa-6 Six exploration and appraisal wells drilled justified submitting conceptual development plan to concessionaire Engineering studies ongoing to select optimal development alternative Contractual first oil expected for

52 Kaombo with split hub concept Block 32 development hubs Kaombo Split Hub concept approved Engineering optimization studies ongoing to mature Split Hub concept Two FPSO supporting six development areas with an aggregated capacity of c.200 kbopd First oil date staged per FPSO expected by 2016 and

53 Exploring natural gas reservoir in Angola with LNG II project LNG II project Galp Energia is part of the first integrated natural gas project consortium in Angola since 2007 Exploration and appraisal works to establish gas reserves base for LNG II First appraisal well Garoupa-2 in Block 2 successfully completed in the beginning of

54 Upstream portfolio Brazil Mozambique Angola Other areas Corporate Third quarter 2011 results 54

55 Exploring new frontier areas East-Timor Portugal First exploration well drilled in 2011 gathered valuable subsurface information Exploration now focused on 3D seismic Evaluation ongoing to determine next well to be drilled First exploration well as early as 2013, pending on evaluation outcome 55

56 Upstream portfolio Brazil Mozambique Angola Other areas Corporate Third quarter 2011 results 56

57 Shareholder structure and shareholders agreement Shareholder structure Shareholders Agreement 25,32% FREE-FLOAT 7,00% PARPÚBLICA 100% Portuguese State Exchangeable bonds Shareholders agreement in place until March % Amorim Group 33,34% 1,00% AMORIM ENERGIA CGD 45% Sonangol 100% Portuguese State The parties may only sell their holdings in one single block 33,34% ENI Parties will have either a preemptive right to buy or a tagalong right to join a sale to a third party 57

58 A focused management team Chief Executive Officer Manuel Ferreira De Oliveira Head of Refining, Supply and Logistics Head of Exploration & Production Head of Oil Marketing Chief Financial Officer Head of Gas & Power André Ribeiro Fernando Manuel dos Santos Gomes Carlos Gomes da Silva Claudio De Marco Fabrizio Dassogno 58

59 Upstream portfolio Brazil Mozambique Angola Other areas Corporate Third quarter 2011 results 59

60 Net profit reached 61 Mln in 3Q11 Profit & Loss ( Mln) 3Q11 3Q10 YoY QoQ 9M11 YoY Turnover 4,277 3, % (2%) 12, % EBITDA (1%) (4%) 585 (14%) E&P % (16%) % R&M (41%) (22%) 191 (41%) G&P % +34% 199 (6%) Others % +165% 9 (13%) EBIT (19%) (8%) 285 (27%) Associates (4%) +13% 53 +2% Financial results (29) (18) (66%) +17% (94) (32%) Taxes (35) (43) (19%) +27% (63) (37%) Net Profit (34%) (13%) 172 (35%) Net Profit (IFRS) (2%) (6%) % G&P solid performance driven by higher supply margins R&M earnings still impacted by negative refining margin environment EBIT affected by non-cash costs related to DD&A in Angola 60

61 Net debt increase driven by transformational capex execution Balance sheet ( Mln) Sep.2011 Jun.2011 Sep - Jun Dec.2010 Sep - Dec Fixed assets 5,884 5, , Work in progress 2,494 2, , Strategic stock 1,060 1, Other assets (liabilities) (371) (396) +25 (336) (35) Working capital (231) (344) +113 (333) +103 Capex decelerating with refining upgrade project coming to its end Work in progress of 2.5 Bln, not yet generating return Net debt 3,378 3, , Equity 2,964 2, , Capital employed 6,343 6, , Net debt to equity 114% 111% 2.6 p.p. 105% 9.3 p.p. Net debt increase of 170 Mln, maintaining net debt to equity at its highest levels 61

62 Additional facilities of Bln with support from international banks M/L-term debt reimbursement profile ( Mln) Major debt reimbursement scheduled for period Total net debt of 3.4 Bln, with an average life of 2.3 years Debt structure as of September % 71% Average interest rate of 4.3%, up 88 b.p. YoY 51% Fixed M/L-term Floating M/L-term Short-term 29% M/L-term 60% of current additional facilities already contract guaranteed 1 Liquidity position as of end of September

63 Short term outlook for 4Q11 4Q11 working interest production targeted at c.23 kbopd Refining margin to be positively impacted by Matosinhos refinery upgrade Marketing volumes down QoQ, still impacted by the Iberian macro economic environment Natural gas volumes to increase QoQ supported by seasonality and trading volumes 63

64 Disclaimer Matters discussed in this presentation may constitute forward-looking statements. Forward-looking statements are statements other than in respect of historical facts. The words believe, expect, anticipate, intends, estimate, will, may, "continue," should and similar expressions identify forward-looking statements. Forward-looking statements may include statements regarding: objectives, goals, strategies, outlook and growth prospects; future plans, events or performance and potential for future growth; liquidity, capital resources and capital expenditures; economic outlook and industry trends; developments of Galp Energia s markets; the impact of regulatory initiatives; and the strength of Galp Energia s competitors. The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management s examination of historical operating trends, data contained in Galp Energia s records and other data available from third parties. Although Galp Energia believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors could cause the actual results of Galp Energia or the industry to differ materially from those results expressed or implied in this presentation by such forward-looking statements. The information, opinions and forward-looking statements contained in this presentation speak only as at the date of this presentation, and are subject to change without notice. Galp Energia does not intend to, and expressly disclaim any duty, undertaking or obligation to, make or disseminate any supplement, amendment, update or revision to any of the information, opinions or forward-looking statements contained in this presentation to reflect any change in events, conditions or circumstances. 64

65 Investor Relations team Tiago Villas-Boas, Head of IR Cátia Lopes Inês Santos Maria Borrega Pedro Pinto Samuel Dias