IFRS FINANCIAL AND OPERATING RESULTS FOR FIRST QUARTER 2013

IFRS FINANCIAL AND 

OPERATING RESULTS 

FOR FIRST QUARTER 2013 

16 May 2013, St. Petersburg

AGENDA 

Highlights, 

Macro 

Environment, 

Financials 

Upstream 

Downstream 

Strategy 

Y2012 IFRS FINANCIAL AND OPERATING RESULTS 

Alexey Yankevich 

Member of the Management Board, 

CFO 

Vadim Yakovlev 

Deputy Chairman of the Management Board, 

First Deputy CEO 

Vladimir Konstantinov 

Head of Economics and Investment Department, 

Refining and Marketing Division 

Sergey Vakulenko 

Head of Strategic Planning Department 

2

DISCLAIMER 

This presentation contains forward-looking statements concerning the financial condition, results of 

operations and businesses of Gazprom Neft and its consolidated subsidiaries. All statements other than 

statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking 

statements are statements of future expectations that are based on management’s current expectations 

and assumptions and involve known and unknown risks and uncertainties that could cause actual results, 

performance or events to differ materially from those expressed or implied in these statements. 

Forward-looking statements include, among other things, statements concerning the potential exposure of 

Gazprom Neft to market risks and statements expressing management’s expectations, beliefs, estimates, 

forecasts, projections and assumptions. These forward-looking statements are identified by their use of 

terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, 

‘‘objectives’’, ‘‘outlook’’, ‘‘probably’’, ‘‘project’’, ‘‘will’’, ‘‘seek’’, ‘‘target’’, ‘‘risks’’, ‘‘goals’’, ‘‘should’’ and similar 

terms and phrases. There are a number of factors that could affect the future operations of Gazprom Neft 

and could cause those results to differ materially from those expressed in the forward-looking statements 

included in this presentation, inclusively (without limitation): (a) price fluctuations in crude oil and oil 

products; (b) changes in demand for the Company’s products; (c) currency fluctuations; (d) drilling and 

production results; (e) reserve estimates; (f) loss of market and industry competition; (g) environmental 

and physical risks; (h) risks associated with the identification of suitable potential acquisition properties 

and targets, and successful negotiation and completion of such transactions; (i) economic and financial 

market conditions in various countries and regions; (j) political risks, project delay or advancement, 

approvals and cost estimates; and (k) changes in trading conditions. 

All forward-looking statements contained in this presentation are expressly qualified in their entirety by the 

cautionary statements contained or referred to in this section. Readers should not place undue reliance on 

these forward-looking statements. Each forward-looking statement speaks only as of the date of this 

presentation. Neither Gazprom Neft nor any of its subsidiaries undertake any obligation to publicly update 

or revise any forward-looking statement as a result of new information, future events or other information. 

Y2012 IFRS FINANCIAL AND OPERATING RESULTS 

3

HIGHLIGHTS 

*Including GPN share in EBITDA of associates and joint ventures 

IFRS FINANCIAL AND OPERATING RESULTS FOR FIRST QUARTER 2013 

1Q 2013 Financial performance: 

Revenue: RUB 292 bln (4.8% Y-o-Y) Higher oil product prices, 

increased hydrocarbon production and refining throughput resulted in 

4.8% higher revenue 

EBITDA*: RUB 77 bln (-3.2% Y-o-Y) Higher taxes and tariffs of 

natural monopolies led to a 3.2% decrease 

Net Income: RUB 40 bln (-18.2% Y-o-Y) The additional impact of 

foreign exchange losses led to an 18.2% decline in profit 

Operational progress in 1Q 2013: 

Production up 3.1% Y-o-Y 

Refining volumes up 1.9% Y-o-Y 

Delivered first oil from Novoport and Messoyakha; produced first oil 

from the Yuzhno-Kinyaminskoye field 

Signed a memorandum with Shell to partner in the exploration and 

development of liquids-rich shale 

Completed drilling prospecting and appraisal well at the Bazhenov 

formation on the Krasnoleninskoye field (“shale oil”); appraisal well 

resulted in high flow rates 

Started new diesel hydrotreating unit at Yaroslavl, increasing Class 5 

diesel fuel production 

4

Macro Environment 

Higher taxes and tariffs of natural monopolies in lower crude price 

environment 


5

LOWER CRUDE PRICES, HIGHER TAXES, STABLE RUBLE 

Crude oil price vs. export duty 

US$/bbl RUB/US$ 

/ 

Netbacks, $/bbl 

Brent 

Duty 


FX 

Excise tax on petroleum products, RUB/tonne 

Decrease in global crude prices Y-o-Y… 

…while crude export duty increased and ruble 

remained stable 

Increase in transportation costs and electricity 

tarriffs 

Increase in petroleum product excise taxes… 

…domestic motor fuel prices declined Q-o-Q 

6

Upstream 

New projects on track, continuing resource base extension, efficient 

development of legacy fields 


7

LEGACY FIELDS: EXPLORING NEW OPPORTUNITIES 

1Q 2013 Key events: 

Exploration: tight oil reserves 

Began testing Bazhenov formation at Palyanovskaya acreage of Krasnoleninskoye field 

Planned drilling of Palaeozoic carbonates at Archinskoye field 

Field Development: implementing new technologies 

Increased number of horizontal wells with multi-stage hydrofracs; two-fold increase in 

hydrofracs per well (from 3-4 to 6-8) 

Began test production at Yuzhno-Kinyaminskoye field 

Large-scale implementation of horizontal drilling technology with multi-stage hydrofracs 

in low-permeability reservoirs on Vyngapurovskoye and Priobskoye fields 

Gas: improve associated gas utilization 

Increased associated gas utilization: up 11% Y-o-Y up to 77% (with aid of Noyabrsk 

Integrated Gas Utilization project Phase I in October 2012 and gas compressor stations 

on Vyngapurovskoye and Vyngoyachinskoye fields launched in 1Q13) 

Joint project with Sibur at Priobskoye field will further increase associated gas 

utilization rate 


8

INDUSTRY-LEADING GROWTH IN HYDROCARBON 

PRODUCTION FOR 1Q13 

180 

175 

170 

165 

160 

155 

150 

Group average daily hydrocarbon 

production, ktoepd 

1Q12 2Q12 3Q12 4Q12 1Q13 

Average daily production increased Q-o-Q due to: 

• Implementation of horizontal drilling technology, including horizontal 

drilling with multi-stage hydrofracs 

• Dual-leg horizontal drilling 

• Higher natural gas production and improved associated gas 

utilization due to: 

• Muravlenkovskoye project extension 

• Noyabrsk integrated gas utilization project phase I 


Peer comparison: hydrocarbon 

production in Russia increase 

1Q13 vs. 1Q12 

Gazprom Neft 

Rosneft 

Surgutneftegas 

TNK-BP 

Lukoil 

-1.5% 

-0.6% 

-0.2% 

2% 

Source: Central Control Administration of the Fuel and Energy 

Complex 

Note: Production numbers exclude share in JV and international 

production 

4.7% 

9

INCREASINGLY SOPHISTICATED APPLICATION OF NEW 

TECHNOLOGIES 

Total horizontal wells drilled, units 

7 

0 

30 

+329% Results of new technology application in 1Q2013 

1Q12 1Q13 

including: 

simple horizontal wells, units 

-29% 

7 5 

1Q12 1Q13 

multi-stage fracking, units 

22 

1Q12 1Q13 

dual-leg horizontal wells, units 

0 

1Q12 1Q13 


3 

Technology Activity Average flow 

Horizontal 

wells with 

multi-stage 

hydrofracs 

Dual-leg 

horizontal 

wells 

Vyngapurovskoye -14 wells 

Vyngayahinskoye -1 well 

Krayneye – 1 well 

Sugmutskoye – 1 well 

Priobskoye - 5 wells 

6-7 fracs per well on average 

One dual-leg well at 

Romanovskoye 

One dual-leg well at Severo- 

Yangtinskoye 

One dual-leg well at 

Vyngayahinskoye 

88 tonnes / 

day 

90 tonnes / 

day 

10

DELIVERING 20% HYDROCARBON PRODUCTION GROWTH 

WITH STABLE CAPEX* 

9.8 

Upstream CAPEX, $/boe Hydrocarbon production, MMtoe 

-12% 

8.6 

+1% 

8.7 

2010 2011 2012 


+13% 

-11% +20% 

33.6 

37.9 

+6% 

40.3 

2010 2011 2012 

*Excluding JV (hydrocarbon production volumes and CAPEX); 

the calculation of Upstream CAPEX $/boe does not include payment for acquisition/enterance of Novoport and Kurdistan projects in 2012. 

11

Production growth, % 

PRODUCTION GROWTH VS. CAPEX GROWTH 2010-2012 

Gazprom Neft 

Surgutneftegas 

Circle square – production volume 

Source: Financial Statements of Companies 

Note: Surgutneftegas Capex as of FY2011 

Data provided by Schlumberger Business Consulting 

Rosneft 

Capex growth, % 


Tatneft 

Lukoil 

Russneft 

Bashneft 

12

INCREASED ASSOCIATED GAS UTILIZATION: 1Q13 VS. Y2012 

Associated gas production/utilization, bcm Associated gas production/utilization 

1Q13 vs. 1Q12, bcm 

55.0 

Utilization 

Flaring 

4.7 

1.8 

2.8 

+1.1 bcm of utilised associated gas 


6.4 

2.2 

4.2 

6.7 

1.4 

5.3 

2011 2012 F2013 

Associated gas utilization, % 

60.5 

65.7 

77.0 

79.8* 

2010 2011 2012 1Q13 F2013 

* Risk of Rosneft limiting access to pipeline at Priobskoye 

66%* 

1.6 1.6 

0.6 

1.0 

77%* 

Drivers of increased associated gas utilization in 

Y2013 vs. Y2012: 

• +0.5 bcm: full-year operation of Noyabrsk 

Integrated Gas Utilization project Phase I 

(launched October, 2012) 

• +0.3 bcm: increased associated gas utilization at 

Orenburg assets 

• +0.1 bcm: new gas compressor stations on 

Vyngapurovskoye and Vyngoyachinskoye fields 

0.4 

1.2 

1Q12 1Q13 

* utilization, % 

• +0.2 bcm: planned new associated gas utilization 

facility at Priobskoye field 

13

UPSTREAM PROJECT DEVELOPMENT UPDATE 

Russian projects 


1Q 2013 Key events: 2013 Major goals: 

Messoyakha: Acquired 400 km 2 of 3D 

seismic, tested exploration wells drilled in 

2012 - increased C1 reserves by 25.1 

MMTonnes (total field) 

Orenburg: Eastern part of Orenburg field: 

Launched high-pressure compressor, 

developed gas infrastructure and increased 

associated gas production, expanded 

horizontal drilling program. Tsarichanskoye 

field: Continued pilot drilling project, 

exploration drilling 

Novoport: Began building CODAP and 

CODAP-CPF manifold pipeline; first crude 

sales; executed 4 hydrofracs 

SeverEnergia: Completed 3D seismic at 

Evo-Yakhinskoye and Samburgskoye 

fields. New wells allowed full-scale 

production at Samburskoye gas processing 

facility train#2 

Prirazlomnoye: Approved oil spill 

response plan; prepared to open drilling 

center 

Dolginskoye: Contracted for support 

ships and platform to drill exploration well 

Chonskiy: Successful 2012-13 

exploration activities 

Kuyumba: Completed 2012-13 seismic 

acquisition program, drilling three wells 

Messoyakha: Frame development and infrastructure 

concept. FEED and equipment contracting for initial oil and 

gas infrastructure. Drill and test five exploration wells. Drill 

and test pilot production well pad #3 

Orenburg: Increase production 43% Y-o-Y. Intensify 

drilling program at Tsarichanskoye, explore Filatovskaya 

formation and Baleykinskoye field. Eastern part of 

Orenburg oil field: expand pilot pressure maintenance 

project, establish ESP / metering station; develop 

infrastructure for third production zone. Complete FEED for 

Tsarychanskoye field oil pipeline . Complete FEED and 

equipment contracting for gas infrastructure for western 

group of fields. 

Novoport: Drill and test pilot production well pad #2; 

frame development and external infrastructure concept. 

Complete FEED and equipment contracting for initial gas 

infrastructure. Complete FEED and order equipment for oil 

terminal; continue building external infrastructure for pilot 

production 

SeverEnergia: Launch first train of Samburgskoye and 

Yaro-Yakhinskoye crude oil central processing facility; start 

test production at oil rims. Continue drilling and 

infrastructure construction at Samburgskoye and 

Yaroyakhinskoye fields 

Prirazlomnoye: Drill exploration wells; prepare to 

commission central processing and export facilities; adjust 

field development plan 

Dolginskoye: Complete drilling №3-SD exploration well 

in 3Q 

Chonskiy: Acquire seismic using innovative UniQ 

technology 

14

UPSTREAM PROJECT DEVELOPMENT UPDATE 

International 

Projects 



Iraq (Badra): Drilled second well 

(Bd5). Tested first of five 

formations at exploration well Bd4 

(2,000 bpd). Concluded EPC 

contract with Samsung for gas 

infrastructure 

Venezuela: Transferred 

operatorship to Rosneft 

NIS: Began drilling deep 

exploration well to estimate 

unconventional resources. Tested 

small-bore drilling technology. 

Completed seismic acquisition at 

two sites in Serbia. Drilled first well 

in Romania. 

Kurdistan: Demining, preparation 

for seismic study. Expanded 

operations on Halabja block 

Iraq (Badra): Test three wells. Start drilling 

under second contract. Launch first train 

infrastructure units. Begin work on second 

phase of field camp and gas infrastructure 

Venezuela: Continue drilling under exploration 

and first oil programs. Complete pre-FEED for 

infrastructure and upgrader. 

NIS: Drill six E&A wells, accelerate seismic 

program. Begin exploration drilling in Bosnia, 

Hungary and Romania 

Kurdistan: 

• Shakal: Complete seismic, drill 

exploration well 

• Garmian: Complete seismic, drill five 

exploration wells 

15

PROSPECTS FOR BAZHENOV DEVELOPMENT 

Outlook for JV 

Partnership 

agreement with 

Shell 

Details 

Production start-up 2015 

Cumulative oil production: 87.5 MMTonnes 

Plateau production 1.7 MMTonnes 

Duration of plateau production 13 years (2024 - 2036) 

Signed partnership agreement 

Formed joint venture 

Submitted applications for geological survey and initiation of auctions for promising leases 

in KHMAO 

Lack effective current technologies for production from Bazhenov formation 

Bazhenov and Abalak formations in KHMAO estimated to hold over 2.5 billion tons of oil in 

place 

Uncertain tax regime 

Technological limitations and tax uncertainty limit current options for development of the 

Bazhenov formation 


16

Downstream 

Increasing product quality and sustained growth in premium 

channels 


17

REFINERY MODERNIZATION DRIVES PREMIUM CHANNEL 

EXPANSION 

Refining 

Premium Sales 


Increased refining volumes by 1.8% 

Y-o-Y 

Launched diesel hydrotreater at 

YANOS, allowing transition to Class 

5 product output in 2013 (100% 

Class 5 output) 

Initiated FEED at Omsk for the 

construction of primary distillation 

unit 

Produced over 1 million tons Class 4 

and 5 gasoline at Omsk 

Increased retail sales volumes 

12.3% Y-o-Y 

Developed retail network: built 2 

stations, reconstructed 8, 

rebranded 1 

Expanded G-Family lubricants, 

aviation and bunkering in 

international and domestic markets 


Launch FCC gasoline hydrotreating and 

isomerization units at Moscow 

Initiate FEED: 

• At Omsk for construction of VGO 

hydrocracker and delayed coker 

• At Moscow for construction of deep 

processing unit* 

• For Moscow complex processing unit** 

* VGO hydrocracker and flexicoker 

** Diesel hydrotreater, catalitic reforming, primary distillation and 

gas-fractionation units 

Continue retail network expansion: build 

32, reconstruct 88, acquire 28, rebrand 10 

stations 

Expand aviation refueling complex network 

to Omsk, Krasnoyarsk, Kiev 

Acquire bunker tanker at Novorossiysk 

Continue construction of lubricants 

packaging complex at Omsk (phase 2) 

18

PRODUCT MIX CONTINUES SHIFT TOWARDS HIGHER VALUE 

Yaroslavl 

Moscow 

Omsk 

NIS 

Belarus 

Russian refining throughput 

(MMTonnes) 

9.40 

9.49 

9.46 

1.84 +1.2% 1.87 

-6.6% 2.00 

2.65 2.53 2.30 

-4.5% 

+10.1% 

+3.7% 

-1.4% 

4.91 5.09 5.17 

1Q12 1Q13 4Q12 

International refining throughput 

(MMTonnes) 

0.77 

0.41 

+0.9% 

+26.4% 

0.87 

0.52 

+0.3% 

-23.6% 

0.36 -3.9% 0.34 -34.4% 

0.68 

0.52 

1Q12 1Q13 4Q12 


Class 5 

Class 4 

Class 3 

Other 

1% 

24% 

70% 

7% 

1.21 5% 2% 

Russian gasoline and diesel 

yields 

Gasoline Diesel 

56% 

35% 

1Q12 1Q13 

20% 

20% 

11% 

49% 

34% 

20% 

45% 

Increased Class 4 & 5 gasoline from 25% to 91% of 

production with startup of FCC hydrotreater and 

isomerization unit at Omsk and Yaroslavl 

Increased Class 4 & 5 diesel from 40% to 54% of 

production with startup of Deisel hydrotreater at 

Omsk and Yaroslavl 

1% 

1Q12 1Q13 

19

STRONG MARGINS DIRECT CRUDE TO DOMESTIC REFINING 

Crude to 

CIS & 

Russia 

Crude 

Exports 

NIS and 

CIS 

Refining 

Domestic 

Refining 

14.25 

1.07 

Gazprom Neft crude mix 

(MMTonnes) 

+19.6% 

-22.9% 

3.01 2.32 

0.77 +12.3% 0.87 

-28.3% 1.21 

+0.9% 

13.96 

1.28 

+34.7% 

-42.3% 

+0.3% 

15.64 

0.95 

4.02 

9.40 9.49 9.46 

1Q12 1Q13 4Q12 


$/bbl 

Gazprom Neft average netbacks 

Introduction of 

60-66 

Refining margins remain above crude export 

netback 

Crude oil export volumes declined due to 

increased sales to CIS and higher domestic 

refining throughputs 

20

DOMESTIC AND INTERNATIONAL PREMIUM CHANNELS SEE 

CONTINUED GROWTH 

v 

Retail 

Aviation 

Lubricants 

Bunkering 

Increased average daily throughput 

per site in Russia to 17.6 tpd in 1Q 

2013 

Increased total number of active 

retail stations to 1,666 

Expanded global presence to 95 

airports in 30+ countries 

Increased number of Russian and 

foreign contractors from 33 to 42 

Expanded international lubricants 

sales to 39 countries, including 

Libya, Turkey, Bulgaria and Iraq 

Increased G-family sales by 50% 

Finalized acquisition of 

Romanian bunkering operator 

Marine Bunker Balkan S.A. 

Began bunkering operations in the 

port of Constanta in March 2013 

Commissioned new Far East 

bunker tanker 


Premium sales volume growth 

1Q 2012 vs. 1Q 2013 

12%* 

* Excluding small wholesale volumes 

15% 

20% 

22% 

Market share 

1Q 2013 

10.3% 

18.3% 

12.1% 

16.0% 

21

Financials 

4.8% revenue increase Y-o-Y 


22

PROFIT ERODED BY TAXES AND TARIFFS OF NATURAL 

MONOPOLIES 

Revenues 

RUB bln 

EBITDA* 

RUB bln 

Net income 

RUB bln 

79 

*EBITDA includes share of affiliates’ EBITDA 


70 

96 

1Q12 2Q12 3Q12 4Q12 1Q13 

48 

278 

30 

+4.8% 

319 

-3.2% 

-18.2% 

-8.4% 

56 42 

78 

-1.9% 

-4.9% 

292 

1Q12 4Q12 1Q13 

1Q12 2Q12 3Q12 4Q12 1Q13 

77 

40 

Revenue increased 4.8% Y-o-Y on 

higher petroleum products prices and 

expanded petroleum product sales 

volumes 

Revenue declined 8.4% Q-o-Q on 

seasonally lower oil sales 

EBITDA decreased 3.2% Y-o-Y and 

1.9% Q-o-Q due to higher taxes 

(MET, excise) and tariffs of natural 

monopolies 

Net income decreased 18.2% Y-o-Y 

and 4.9% Q-o-Q due to: 

• Lower EBITDA 

• Negative FX effect 

23

EBITDA RECONCILIATION 1Q13 VS. 1Q12 

EBITDA 1Q13 vs 1Q12, RUB mln 


24

EBITDA RECONCILIATION 1Q13 VS. 4Q12 

EBITDA 1Q13 vs 4Q12, RUB mln 


25

FREE CASH AFFECTED BY HIGHER CAPEX AND WORKING 

CAPITAL CHANGE 

RUB million Cash flow reconciliation 1Q13 

43,928 

Operating cash 

flow 

(36,857) 

Free cash flow 

7,071 

7,071 

(16,038) 


(2,508) 

3,218 

Net cash flow 

(8,257) 

CAPEX Free cash flow Net borrowings New projects Other Net cash flow 

26

INVESTMENTS SUPPORT STRATEGIC GOALS 

40% Y-o-Y growth in brownfield capex due 

to more intensive use of more expensive 

new technologies in legacy fields 

Development of Orenburg, Novoport and 

Kurdistan expansion drove 69% Y-o-Y 

increase in greenfield capex 

Refining capex decreased 21% Y-o-Y as 

quality projects at Omsk and NIS reached 

completion 

5% Y-o-Y increase in Marketing capex due 

to increase in construction and 

reconstruction of retail sites in Russia and 

rebranding at NIS 

New projects included the development of 

Messoyakha, international and 

Prirazlomnoye offshore 

M&A spending in 1Q 2013 included 

acquisition of retail chain in Balkan region by 

Serbian subsidiary NIS 


Investments (RUB mln) 

+33% 

IFRS CAPEX 

27

CONTINUED IMPROVEMENTS IN BALANCE SHEET AND DEBT 

PORTFOLIO 

2.0 

1.5 

1.0 

0.5 

0.0 

2011 2012 1Q13 

Net debt/EBITDA (lhs) 

Debt to EBITDA target (lhs) 

Short term debt/Total debt, % (rhs) 

Net debt/EBITDA 0.5x vs. target

25% PAYOUT RATIO IS EXPECTED IN 2013 


Shareholders register closed 23 April 2013 

Dividend of RUB 9.3 per share recommended by the Board 

Dividend planned for 2012 is 25% of IFRS net income (RUB 

44.09 bln) 

Dividends will be paid within 60 days following shareholder 

approval 

Considering payment of interim dividends 

60 

55 

50 

45 

40 

35 

30 

25 

20 

15 

10 

3.57 

17 

Dividends 2009-2012 

Dividends, RUB bln (lhs) 

Dividend per share, RUB (rhs) 

4.44 

21 

7.3 

35 

9.3 

2009 2010 2011 2012 

44 

10 

8 

6 

4 

2 

0 

29

Questions & Answers 


30

IFRS FINANCIAL AND OPERATING RESULTS FOR FIRST QUARTER 2013

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