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3Q 2013
Financial Results(US GAAP)
New York, November 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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3Q 2013 Financial Highlights
Net income$3,105million +48%
Basic earnings per share$4.11 +48%
Net income per boe of production$15.5 +47%
EBITDA$5,472 million +26%
FCF$1,578 million +440%
Q-o-Q
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40
50
38 42
50
52
59
75
90
30
60
90
120
2006 2007 2008 2009 2010 2011 2012 2013
Dividend per share, rub.
Interim dividends Level that corresponds to 15% CAGR
Increasing Dividend Growth Rate
In October we paid the second interim dividends50 RUB per share
LUKOIL is to increase dividend payout ratio to 30% in the mid-term
CAGR15%E
+27%
+20%
+25%
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LUKOIL Shares Get More Attractive Due to Dividends
2.9
3.5 3.5
4.2
4.9
2
3
4
5
2008 2009 2010 2011 2012
Dividend yield, %
2008 2010 2012 1H 2013E
Dividend payout, %
16% 18% 23%
28%
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LUKOIL Presents High Financial Efficiency AmongRussian Peers
324
339
598
1,163
0 200 400 600 800 1000 1200 1400
Company 3
Company 2
LUKOIL
Company 1
9M 2013 hydrocarbon production, mln boe
1.8
4.3
7.8
6.5*
0 5 10 15
Company 3
Company 2
Company 1
LUKOIL
9M 2013 net income, $ bln
12.9
LUKOIL maintains leadership in financial performance in Russian oil
and gas industry
* Excluding one time paper gain from assets revaluation
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LUKOIL Presents High Financial Efficiency AmongRussian Peers
LUKOIL maintains leadership in financial performance in Russian oil
and gas industry
8.5
15.4*
21.1
24.4
20.9
6 11 16 21 26
Company 3
Company 1
Company 2
LUKOIL
9M 2013 EBITDA, $ per boe
5.5*
5.6
12.6
13.0
11.1
4 6 8 10 12 14 16
Company 1
Company 3
Company 2
LUKOIL
9M 2013 Net income, $ per boe
* Excluding one time paper gain from assets revaluation
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Mineral extraction tax ($),2.2%
Crude oil export tariff ($);-3.4%
Railroad tariffs, 6.1%
Real ruble appreciation,5.1%
Freight rates (crude oil),2.0%
Pipeline tariffs, -1.0%
Freight rates (petroleumproducts), -7.2%
Fuel oil (Europe), -7.6%
Gasoline (Europe), -4.8%
Diesel fuel (Europe), -4.1%
Urals, -3.1%
High-octane gasoline(Russia), 3.2%
Diesel fuel (Russia), 9.0%
Fuel oil (Russia), 17.8%
-20% 0% 20%
9M 2013 to 9M 2012
Macroeconomic and Tax Environment
RE
VENU
E
EXPEN
SES
TAX
Positive factors
Negative factors
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Main Operating Results
Crude oil export, -11.5%
Daily hydrocarbon production,1.1%
Domestic sales of petroleumproducts, 1.5%
Refining throughput, 1.9%
Production of gas available forsale , 2.2%
Refined products production ,2.3%
Export of refined products fromRussia, 5.4%
-12% -6% 0% 6%
9M 2013 to 9M 2012, %
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Main Operating Results
2.168
2.191
9M 2012
9M 2013
Hydrocarbon production, mln boe per day
+1.1%
46.9
48.0
9M 2012
9M 2013
Refined products production, mln t
+2.3%
The increase in refined products productionwas due to increase in production volumes atNizhny Novgorod refinery after major repairworks in 2012
198.4
175.6
9M 2012
9M 2013
Crude oil export, mln bbl
-11.5%
The decrease of crude oil export was a result ofhigher sales in Russia following the increase indomestic demand and increase of throughputat our domestic refineries
The increase in hydrocarbon production was due toacquisitions of new upstream properties,development in the Caspian Sea, increase inproduction wells and successful employmentof EOR methods in Komi and Urals regions
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9M 2013 Net Income Reconciliation
8,316
7,790
794
18485 (777)
(589)
(178)
(45)
7,000
8,000
9,000
10,000
9M
2012Net
income
Increaseinrevenue
lesspurchasesof
oil,gasand
petroleump
roducts
Decreaseintaxes
otherthanincome
taxes(including
exciseandexport
tariffs)
Decreaseininterest
expense
IncreaseinDD&A
OPEXincrease
Increaseinincome
taxes
Increaseofother
expenseand
decreaseinother
income
9M
2013Net
income
$m
illion
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Hydrocarbon Production
2.169 2.168
2.191
2.16
2.17
2.18
2.19
2.20
9M 2011 9M 2012 9M 2013
Hydrocarbon production, mln boe per day
+1.1%
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1
265
270
275
280
285
290
jan
feb
mar
apr
may
jun
jul
aug
sep
okt
nov
dec
jan
feb
mar
apr
may
jun
jul
aug
sep
2012 2013
LUKOIL-Komi oil production, Kbpd
LUKOIL-KOMI (Timan-Pechora)
LUKOIL-Komi
+3.3%
0
5
10
15
20
25
1 2
East-Lambeyshorskoye field oilproduction, Kbpd
9
9
10
1011
11
12
1 2
Oshskoye field oil production,Kbpd
sep 12 sep 13
+17.9%
48
50
52
54
1 2
Usinskoye field oil production,Kbpd
sep 12 sep 13
+4.5%
sep 12 sep 13
+120%
8
9
10
11
1 2
Yaregskoye field oilproduction, Kbpd
sep 12 sep 13
+20%
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1
Promising fields in Timan-Pechora
Oshskoye field
East-Lambeyshorskoye field
81mln boeproved reserves
2012 production started
62mln boeproved reserves
2008 production started
Production growth in Timan-Pechora will provide Haryaga-Y.Hylchuyu pipeline
throughput growth resulting in additional $350-400 mln of operating cash flow
0
5
10
15
20
25
jan feb mar apr may jun jul aug sep okt nov dec
Oil production, Kbpd
2012 2013
5
6
7
8
9
10
11
12
Oil production, Kbpd
2012 2013
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1
Northern Caspian: Korchagin field
In 9M 2013 production wells 105, 117 and 122 were launched and contributed to doubling of production
Drilling and launching of extra long horizontal wells is in progress. Well 122 with flow rate 4 Kbpd waslaunched in 3Q 2013. By the end of 2013 wells 109 and 115 are planned to be launched and well 106 isplanned to be drilled.
10
15
20
25
30
9M 2012 9 2013
Korchagin field oil production, Kbpd
+104%
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1
Northern Caspian: Filanovsky field
LUKOIL selected contractors to construct ice-resistant stationary platform No. 2 (IRP-2 ) and living quarters moduleplatform No. 2 (LQP-2 ) for second construction stage of Filanovsky field. The platforms to be commissioned in the
autumn of 2016.
LUKOIL selected contractors to construct onshore facilities for the Northern Caspian fields. Onshore oil-intake facilitiesfrom the Northern Caspian fields will be ready for production by the end of 2015.
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1
Tax Initiatives
Implemented since January Approvals expected2013
Korchagin field
A lowered CED is kept in force for 2Q-3Q 2013
Hard-to-recover reserves
A lowered MET for low permeability collectors (Khadum,Bazhen, Abalaksk, Domanik, Tyumen)
Possibility to establish a special CED for Tyumen
Offshore fields
A fiscal system designed for offshore projects of the 2ndcategory of complexity for the new Caspian projects
Hard-to-reach areas
A lowered CED
Excise taxes
Retaining in 2014-2015 the differential between EURO-5 andEURO-3 motor fuels RUB 4,000
Gas MET formula
Taking into account export opportunities and field complexity
Tax holiday extension for MET in Nenets region
Export duty rates for petroleum products: Lower gasoline export duties to the level of other petroleum products (66% of CED)
Differentiation between export duties for fuel oil and other heavy finished oil products (coke, bitumen, etc.)
Not increasing export duties for fuel oil since 2015
Practical approval of the financial result tax (FRT)
In discussion with government authourities
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1
LUKOIL Increases Productionof High-Octane Gasoline In Russia
Refinery throughputs at the
Group and affiliated refineries
increased by 1.9%, includinggrowth of 2.8% at Russian
refineries
1.8
2.0
1.7
1.8
1.9
2.0
9M 2012 9M 2013
Production of premium and higher quality gasoline inRussia, mln tons
4
5
6
7
8
9
2008 2010 9M 2013A 2016E
Production of high-octane gasoline in Russia, mln tons
+20%+10%
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1
Financial Results
3Q
2013
2Q
2013
, % $ million9M
2013
9M
2012
, %
36,737 35,053 5 Sales 105,560 103,152 2
2,514 2,516 0 OPEX 7,480 6,891 9
9,255 9,183 1Taxes other than income tax
(including excise and export tariffs)27,322 27,506 (1)
3,657 2,856 28 Income from operating activities 9,891 10,695 (8)
3,853 2,843 36 Income before income tax 10,070 10,348 (3)
3,105 2,104 48 Net income 7,790 8,316 (6)
4.11 2.79 48 Basic EPS, $ 10.32 10.91 (5)
5,472 4,359 26 EBITDA 14,606 14,249 3
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2
Lifting Costs
Power consumption constitute
significant share of lifting cost
LUKOIL shows high efficiency in
cost management: while power
tariffs increased by 33% y-o-y,
lifting cost in 9M 2013 was
$5.5 per boe(+12% y-o-y)
5.4 5.35.6 5.7
0
2
4
6
4Q 2012 1Q 2013 2Q 2013 3Q 2013
Lifting cost per boe, $
Source: Federal Service for Tariffs of Russia
0.14
0.19
0.12
0.14
0.16
0.18
0.20
9 2012 9 2013
Russian average power tariff for industrial consumers,$/kWh
+33%
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2
SG&A and Transportation Expenses
-3%-1% -1%-1%
6%
2%
-8%
-4%
0%
4%
8%
Transportation Expenses(3q 2013 to 3q 2012)
Transportation volume Tariff
3Q
2013
2Q
2013, % $ million
9M
2013
9M
2012, %
1,503 1,562 (4) Transportation expenses 4,715 4,625 2
979 972 1Selling, general and administrativeexpenses
2,817 2,665 6
2,482 2,534 (2) Total 7,532 7,290 3
904
1,090
866
972979
0
300
600
900
1,200
3Q 2012 4Q 2012 1Q 2013 2Q 2013 3Q 2013
SG&A expenses, $ million
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2
3.2 3.4
6.2
6.0
-8
-6
-4
-2
0
2
4Total debt and net debt, $ bln
Cash & Cash equivalents Net debt
Robust Financial Position
Source: Companies financial statements. O&G majors include: ExxonMobil, Royal Dutch Shell, Chevron, BP, ConocoPhillips, Total, Eni.
6 2013 9 2013
LUKOIL net debt remains low
In 2Q 2013 LUKOIL successfully issued
$3 bln of eurobonds
LUKOIL net debt decreased by $141 mln(-2%) for 3q 2013
0,0
0,2
0,4
0,6
0,8
1,0
2007 2008 2009 2010 2011 2012 9M 201
Net debt to EBITDA
LUKOIL Majors
0
10
20
30
40
50
60
2007 2008 2009 2010 2011 2012 9M 2013
Debt-to-capital ratio, %
LUKOIL AverageMajors
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2
CAPEX
3Q
2013
2Q
2013, % $ million
9M
2013
9M
2012, %
2,788 2,918 (4) Exploration and production 8,243 6,367 29
1,947 2,045 (5) Russia 5,866 5,128 14
841 873 (4) International 2,377 1,239 92
766 489 57 Refining and marketing 1,885 1,219 55
487 323 51 Russia 1,281 829 55
279 166 68 International 604 390 55
19 32 (41) Chemicals 54 63 (14)
18 31 (42) Russia 52 47 11
1 1 0 International 2 16 (88)
86 52 65 Power generation 201 312 (36)
96 136 (29) Other 345 179 93
3,755 3,627 3 Total (cash and non-cash) 10,728 8,140 32
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2
Environmental Safety is Our Priority
LUKOIL presented a draft 2014-2018 Environmental Safety Program
Main goals:
Utilization of newly generated waste in a ratio of at least 1:1
95-percent utilization of associated petroleum gas by 2015
Increased production of Euro-5-compliant eco-friendly fuel
Introduction of automated systems of industrial environmental monitoring
Compliance with national and international environmental requirements
1.5
2.3
3.6
4.5
1
2
3
4
5
1995-2003 2004-2008 2009-2013 2014-2018
Environmental spending, bln USD
Recultivation
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2
2014-2018 Environmental Safety Program:
Reduction of air emissions by 100 th. t Additional produced water conditioning 7 mcm
Reduction of water usage by 8 mcm
Waste disposal 900 th. t
Including those accumulated before privatization 580 th. t
Remediation of disturbed and contaminated lands 115 km
Liquidation of waste pits 1 th.
Maintenance overhaul and replacement 4 th. km
Diagnostics 31 th. km
Inhibitory protection 20 th. km
Environmental Safety is Our Priority
Air
Water
Land
Pipelines
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2
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