unlocking potential - lukoil
TRANSCRIPT
1
RESULTS
2019
UNLOCKINGPOTENTIAL
March 11, 2020
2
Forward-looking
statements
▪ Certain statements in this presentation are not historical facts but are “forward-looking”. Examples of such
forward-looking statements include, but are not limited to:
– projections or forecasts of revenues, income (or loss), earnings (or loss) per share, dividends, capital
structure or other financial items or ratios
– statements of our plans, objectives or goals, including those related to products and services
– statements of future economic performance
– and statements of assumptions underlying such statements.
▪ Words such as “believes,” “expects,” “assumes,” “projects”, “intends” and “plans” and similar expressions are
intended to identify forward-looking statements, but are not the exclusive means of identifying such
statements
▪ By nature, forward-looking statements imply certain inherent risks and unclear points, both general and
specific, and there is a risk that plans, expectations, forecasts and other forward-looking statements will not
be realized. You should be aware that a number of important factors could cause actual results to differ
significantly from the plans, objectives, expectations, estimates and intentions expressed in such forward-
looking statements.
▪ When relying on forward-looking statements, you should carefully consider the foregoing factors and other
uncertainties and events, especially in light of the political, economic, social and legal environment in which
we operate. 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
events or otherwise. We do not make any representation, warranty or prediction that the results anticipated by
such forward-looking statements will be achieved. Such forward-looking statements represent, in each case,
only one of many possible scenarios and should not be viewed as the most likely or standard scenario.
3
Q&A
Downstream
UpstreamAzat Shamsuarov
Senior Vice President,
Upstream
FinanceAlexander Matytsyn
First Vice President,
Chief Financial Officer
Vadim Vorobyev
First Vice President,
Downstream
Interim results of
strategy implementation
Vagit Alekperov
Chief Executive Officer
ConclusionPavel Zhdanov
Vice President, Finance
4
Interim results of strategy
implementation
Outpacing strategic targets
Increasing efficiency
High investment discipline
Shareholder distributions growth
Vagit Alekperov
Chief Executive Officer
5
Operating resultsoutpacing strategic targets
Hydrocarbon production,
Mboepd
2.24 2.32 2.35
2017 2018 2019
2126
32
2017 2018 2019
Share of high-margin barrels,
%
Refinery throughput,
mln t
67.2 67.3 68.7
2017 2018 2019
8.3 7.5 6.8
2017 2018 2019
Fuel oil output,
mln t
Higher volumes
▪ Production growth 2.5x higher
than minimal strategic target
▪ Refinery throughput growth
Structural improvements
▪ Outpacing growth of share of
high-margin barrels
▪ Accelerated reduction of fuel
oil output
%
+11 p.p.+2.5% CAGR
+2.2% -18.2%
+1.4%
y-o-y
+2.1% -10%
+6 p.p.
6
Financial resultsall-time high RUB bln %
CAPEX
26.4Free cash flow
Controllable expenses
Profit to shareholders
10.9EBITDA
Sales
ROACE
2018
452
555
551
619
1,115
8,036
15%
(2.4)
3.4
(0.3)
2019
450
702
537
640
1,236
7,841
15%
2017
511
247
534
419
832
5,937
11%
(2.5)Higher profitability of business
Efficient cost control
High investment discipline
Strong balance sheet
Net debt to EBITDA 0.0 0.00.3
Controllable expenses include operating expenses (excluding extraction expenses at the West Qurna-2 field, refining expenses at third-party refineries and
expenses for crude oil transportation to refineries) and SG&A (excluding share-based compensation and expenses on allowance for expected credit losses).
7
95
19259 75 90110
154177
195215
250
542
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Interim dividend Final dividend
Dividend calculation according to
the new dividend policyRUB bln
RUB per share
New capital return policyShareholder distributions growth
$4.6 blnshares buyback
in 2018-2019
133 192
242 350
244 352
619
FCF excluding
interest paid
and leasing
Factual
shares
buyback
Dividends
1H 2019(interim dividends,
paid in 1Q 2020)
2H 2019(calculation according
to new policy)
Factual shares
buyback
RUB per
share
Final dividend for 2019 is calculated for indication purposes based on the new dividend policy, it is
subject to approval by the Board of Directors and the General Shareholders Meeting.
8
Sustainable developmentsystem approach, continuous improvements ▪ high standards of industrial
safety, reduction of
occupational injuries
▪ intolerance to corruption
▪ social programs for
employees
▪ life quality improvement in
the regions of presence
▪ reduction of pollutant
emissions and flaring
▪ full waste disposal
▪ conservation of biodiversity
▪ remediation of disturbed
land
▪ increasing share of
independent directors
▪ expansion of functions of the
Board Strategy and
investment committee by
sustainable development
issues
▪ continuous improvement of
informational transparency
ENVIRONMENT CORPORATE
GOVERNANCE
SOCIAL
RESPONSIBILITY
social programs and charity
expenses in 2019
share of independent
directors at the end of
2019
reduction of Scope 1
СО2e emissions in Russia
compared to 2016
3 % 9 bln RUB 55 %
International standards
Integration into strategy, investment
decision making process and
incentive program
Control at the Board of Directors
level
Participation in international
initiatives
9
Free cash flow per barrel
$/boe
Russian
peersInternational
peers
International peers: BP, Chevron, ConocoPhillips, Eni, ExxonMobil, Shell, Total
Russian peers: Gazprom neft, Novatek, Rosneft
-3.0
-1.0
1.0
3.0
5.0
7.0
9.0
11.0
13.0
15.0
2015 2016 2017 2018 2019
Positive free cash
flow in any price
environment
10
Upstream
Hydrocarbon production growth
Growth of share of high-margin barrels
Development of technologies
Costs optimization
Azat Shamsuarov
Senior Vice President,
LUKOIL
11
Strategic objectives
4 Profitable involvement into
production of existing gas reserves
in Russia
3 Efficient delivery of new projects (at
minimum cost, in minimum time)
2 Accelerated involvement of hard-to-
recover reserves into production
(technology scale-up and
development, unit cost reduction)
1 Improving efficiency at mature fields
in order to accelerate involvement of
reserves into production, improve
recovery factor, maximize FCF
Share of high-margin barrels
Upstream
strategy:Sustainable organic
production growth
with focus on
creating value and
unlocking the
potential of the
existing resource
base
2017 2018 2019
21% 26 % 32%
2.24
+3.7%
Hydrocarbon production
Mboepd
2.32 2.35
+1.4%
12
West Siberia
2019 results
▪ Deceleration in production decline
rate
▪ Growing share of horizontal drilling
▪ Adoption of optimized horizontal
wells with three-string design
▪ Testing neural networks to control
reservoir pressure maintenance
system
Advantages
▪ Stable region for reinvestment
▪ Lowest cost per meter drilled
among the Group companies
▪ Proven track record
▪ Drilling volumes growth potential
supported by vast reserve base
902
815751
718 700
2015 2016 2017 2018 2019
Liquid hydrocarbon productionKbpd
-4.3%
GreenfieldsMature fields
-2.5%
-7.9%
Greenfields: Pyakyakhinskoye, Imilorskoye, Vinogradov, Yuzhno-Messoyakhskoye
-9.6%
13
Increasing
efficiency
via technology
development and
scale-up
Reduction of cost per well
compared to a standard
well
Reduction of electricity
cost
Reduction of cost per well
compared to a standard
well
THREE-STRING
DESIGN WELLS
ENERGY-EFFICIENT
PUMPS
SMALL DIAMETER
WELLS
50 %
▪ Increasing drilling
speed
▪ 104 horizontal wells with
three-string design were
completed in 2018-2019,
including 21 multilateral
wells
▪ Using drilling rigs with
lower capacity
▪ Lower metals usage in
well construction
▪ 119 wells were completed
in 2018-2019
▪ Reduction of energy cost
due to transition to
downhole permanent
magnet engines and
introduction of energy-
efficient pumps at oil
pump stations
20% 10-15 %
Lighter well construction, batch
drilling
Implementation of intellectual
systems of well completion
Mature fields development
management with neural networks
Scaling of the “intellectual field”
technology
14
Drilling costs
Growth below inflation
(reduction in real terms)
Cost reductionahead of targets Targets
2020 / 2017
Results
2019 / 2017
Construction costs
Growth below inflation
(reduction in real terms)
Lifting costs
Growth below inflation
(reduction in real terms)
Optimization of work with
contractors
Transition to day-rate oilfield
service contracts
Optimization of well stock with high
watercut
Reducing repairs time
Optimization of wellwork program
Targets 2020 / 2017,
updated in 2018
Keeping flat in
nominal terms
Keeping flat in
nominal terms
Keeping flat in
nominal terms -4%
-8%
0%
15
Tax on
additional
income (TAI)
40%55%
Standard taxregime
Under TAI
Liquid hydrocarbon
production in 2019
▪ Group 1: 40 Kbpd
▪ Group 3: 58 Kbpd
▪ Group 4: 1 Kbpd
Net price in 2020
TAI
Net oil price for TAI’s Group 3 under $50/bbl, RUB
60/USD. TAI taxation under maximum cost limit.
Net
price
MET
Export duty
0
50
100
150
200
250
2018 2019 2022 2027
Estimated effect of TAI on LUKOIL liquid hydrocarbon
production at TAI license areas
Production, Kbpd
+145 mln bbl
of oil in 2019-2027
Standard tax regime
Group 4: 2 license areas with
new fields in West Siberia (the
Khanty-Mansi Autonomous
District)
Group 3: 8 license areas with
mature fields in West Siberia
(the Khanty-Mansi
Autonomous District)
Group 1: 19 license areas with
new fields in West Siberia (the
Yamal-Nenets Autonomous
District, incl. Pyakyakhinskoye)
and Timan-Pechora (the
Nenets Autonomous District)
16
North Caspian
2019 results
▪ Filanovsky: launch of the third stage, 5
production wells commissioned
Korchagin: four production wells
commissioned
▪ Grayfer: development of documentation,
signed contracts for the supply of
equipment and materials, construction of
platforms at shipyards
Plans for 2020
▪ Filanovsky and Korchagin: drilling
program
▪ Grayfer: infrastructure development40%
84% 85%
Standard taxregime
Korchagin Filanovsky
Net price in 2020Under $50/bbl, RUB 60/USD
37
69
133
167177
2015 2016 2017 2018 2019
Hydrocarbon production Kboepd
Net
price
MET
Export
duty
Advantages
▪ High-margin barrels
▪ Short transportation leg, low lifting
costs, high oil quality
17
Hard-to-recover
reservesOil productionKbpd
40%57%
97%
Standardtax regime
ImilorskoyeVinogradov
Yaregskoye
Imilorskoye,
Vinogradov,
Sredne-Nazymskoye
Yaregskoye,
Usinskoye
5156
62
77
88
1318
20
26
38
6574
82
103
127
2015 2016 2017 2018 2019
Low permeability reservoirs
2020 plans:
commissioning of 200 production wells
Heavy and extra heavy crude oil
2020 plans:
commissioning steam generation facilities
commissioning facilities to maintain
reservoir pressure
increasing oil treatment and transportation
capacity
drilling costs optimization
Advantages
▪ High-margin barrels
▪ Substantial production growth potential
Usinskoye: Permian deposit
Imilorskoye: MET benefit for
reservoirs with low permeability
Net
price
MET
Export
duty
Net price in 2020Under $50/bbl, RUB 60/USD
18
Gas projects in
Uzbekistan
GissarKandym
Hydrocarbon production (LUKOIL share)Kboepd
2019 results
▪ Achieved designed production level
2020 plans
▪ Maintaining designed production level
▪ Evaluation of opportunities at
investment blocks in the North of
Uzbekistan
Advantages
▪ Proven track record in the region
▪ International prices (export to China)
61 6677
148
171
25 26
59
7971
86 92
136
226242
2015 2016 2017 2018 2019
19
▪ Transaction value $214 mln
▪ LUKOIL share – 5%
▪ Other participants:
▪ ADNOC – 55%
▪ Eni – 25%
▪ Wintershall – 10%
▪ OMV – 5%
▪ Offshore project, possible launch in 2022
▪ Water depth – up to 24 m
▪ Transaction value $768 mln
▪ LUKOIL share – 25%
▪ Other participants:
▪ Eni – 65%
▪ SNPC – 10%
▪ Producing offshore project
▪ Water depth – 20-90 m
▪ Current production – 40 Kboepd
▪ Implementation of the second phase of
development
▪ Preparation of the third phase of
development
Acquisition of
new international
projectsin accordance with the
Strategy
THE REPUBLIC
OF CONGO
Pointe-Noire
Abu Dhabi
UAE
UAE
GHASHA CONCESSION
THE REPUBLIC OF CONGO
MARINE XII
Regions of presence
Discovered reserves
Suitability to technological
competencies
Significant production growth
potential
Experienced partners
Marine XII block borders Fields of the concession
20
Downstream
Higher refinery throughput with quality
improvements in product slate
Better operating efficiency
Higher sales volumes via premium sales
channels
Vadim Vorobyev
First Vice President,
LUKOIL
21
Refining
Strategy
Refineries in
Russia
Refineries in
Europe
Throughput volumes at own refineriesKbpd
Light product yield
incl. Russia
866 867 887
485 485 494
1,350 1,352 1,381
2017 2018 2019
Fuel oil
Mid-distillates
71% 71% 73%
69% 69% 70%
12% 11% 10%
46% 47% 47%
Continuous enhancement of
operating efficiency of refineries and
optimization of maintenance CAPEX
(maximizing FCF)
▪ Feedstock and product slate
optimization
▪ Inter-plant feedstock optimization
▪ Improving operational availability and
energy efficiency
Selective projects at Russian
refineries to improve products slate
Mid-distillates include diesel fuel, jet fuel, bunker fuel.
2.1%
Up 2.2% mainly owing
to higher utilization rate
at Nizhny Novgorod
refinery
Up 1.9% owing to
maintenance works at
the refinery in Bulgaria
in 2018
+2 p.p. to 2018
+1 p.p.
-1 p.p.
–
Implementation of growth projects
in petrochemistry
22
Efficiency
improvement
program at
refineries
Cost reduction, labor productivity improvement
▪ Additives norming
▪ Tender procedures improvement
▪ Logistics optimization
▪ Staff training and rotation, headcount control
Energy efficiency
▪ Heat integration
▪ Furnace efficiency upgrade
▪ Maximization of gas utilization
Reliability and availability
▪ Reduction of unscheduled shutdowns
▪ Reduction of repair time and increase of timespan between
repairs
▪ Operation risk-based planning of repairs
▪ Distributed unit maintenance
Capacity optimization
▪ Optimization of units’ running mode
▪ Higher flexibility of feedstock usage
▪ Lower irrecoverable losses
to segment’s
EBITDA in 2018-
2019
+61RUB blnRoadmaps with
over 500
initiatives
in 2018-2019
23
Selective projects
at Russian
refineries
Completion rate and progressProjects
Isomerization unit
Bitumen production
60%Delayed coker
Nizhny Novgorod
Deasphaltizing unit
Volgograd
Works begun on the installation of on-site
pipelines and technological equipment
strapping; more than 70% of the equipment
delivered
Installation of equipment and metal structures
Received positive conclusion from the state
environmental review of the polymer-bitumen
binder production unit, the main state examination
launched, equipment delivery started
Reinforcing of existing and installation of new
loading racks, the assembly of cooling towers
and flare collector completed, more than 40 units
of equipment installed, technological equipment
strapping started
60%
40%
6%Delayed coker construction
Deasphaltizing unit construction
24
Product slate improvement amid MARPOL Middle distillates yield, %High-sulfur fuel oil yield, %
21 %
2019 2020 2022
10%
2019 2020 2022
47%
<8%
<4%
47%50 %
Processes
optimization
Launch of delayed
coker at Nizhny
Novgorod refinery
Potential to improve refined products slate at Russian and
international Group refineries
Record low fuel oil production
Further reduction potential
Mid-distillates include diesel fuel, jet fuel, bunker fuel.
25
Growth projects in
petrochemistry
▪ Polypropylene production
– 500 th. t / propylene / FEED
▪ Pyrolysis
– 2.5 mln t / LPG and naphta / pre-FEED
Site Project (feedstock capacity / feedstock in use / status)
Burgas refinery
Nizhny Novgorod
refinery
Perm refinery
▪ Polypropylene production
– 300 th. t / propylene / FEED
Projects at existing refining sites
Available low-cost petrochemical
feedstock
Technological competencies
26
Results 2019 / 2017
Filling stations
Standardizing and upgrading the
Russian network
Strategy
▪ Average daily sales of refined products per station
+2%
▪ Non-fuel gross profit +18%
▪ 138 filling stations upgraded
▪ 11 filling stations constructed, 9 filling stations
acquired
▪ Non-fuel gross profit +30%
▪ OPEX coverage by non-fuel gross profit 42% (+9
p.p.)
▪ ECTO fuels sales volumes +7%
Russia: improving efficiency, focus on
lowering unit OPEX and increasing non-
fuel sales and services
Outside Russia: improving efficiency of
filling stations network with optimal
investments
27
Refined products
logistics
optimization
Growth of pipeline
transportation of refined
products owing to completion of
new projects by Transneft
Reducing transportation costs
for diesel fuel and motor gasoline
Diesel fuel:
Project South
Gasoline: Nizhny
Novgorod – Moscow
▪ Diesel fuel transportation from
Volgograd refinery to the port
of Novorossiysk
▪ Gasoline transportation from
Nizhny Novgorod refinery to
Novoselki oil tank farm
Diesel fuel volumes
transported in 2019
4.8 mln t
Gasoline volumes
transported in 2019
1.1mln t
28
Maintaining market share in Russia
and improving efficiency
▪ Launch of refueling complex in
Sheremetyevo (2018) – the largest
airport in Russia
▪ Maximizing synergy with existing oil
tank facilities
Maintaining market share in Russia
through existing advantages
▪ High-quality fuel (low sulfur)
▪ All-in service for the customer and
option to tank with several types of fuel
Strategy
Aircraft
fueling
Marine
bunkering
Results 2019 / 2017
Aircraft fueling and
marine bunkering
▪ Start of production of low-sulfur
fuel oil meeting requirements of
MARPOL convention
▪ High margin retail sales channel
+11%
▪ Maintained market share in Russia
▪ Launch of refueling complex in
Sheremetyevo
▪ Start of operations at the airports of
Kaliningrad, Rostov-on-Don and
Krasnodar
▪ High margin “into-plane” sales
+16%
▪ Maintained market share in Russia
29
Growth in branded lubricants segment
▪ Expansion of cooperation with the cars and
equipment manufacturers
▪ Development of digital sales channels
▪ Investments into development of new
products
▪ Market expansion in South America and
Asia
Growth in high-margin polymer bitumen
segment
▪ Upgrade of the existing production lines and
expansion of the product range
▪ Launch of the full cycle service for the end-
users
▪ R&D center setup
▪ Securing the value through export during off-
season periods in Russia
Strategy
Lubricants
Bitumen
Lubricants and
bitumenResults 2019 / 2017
▪ +21% sales volumes growth in advanced
lubricants product line
▪ Lubricants plant launch in Kazakhstan
▪ Joint product development with the key
cars and equipment manufacturers
▪ Start of online sales in Russia,
Kazakhstan, Turkey and China
▪ Production of bitumen meeting new
standard
▪ Start of polymer bitumen production
▪ R&D center in Nizhny Novgorod region
set up
▪ End-user sales growth
30
Alexander Matytsyn
Chief Financial Officer,
LUKOIL
Finance
Record results
31
53.1
69.8 63.9
2017 2018 2019
Macro
environmentUrals$ per bbl
1.29 1.56 1.52
3.10
4.37 4.14
2017 2018 2019
Price and net price of Urals thousand RUB per bbl
Benchmark refining margin in
Europe, $/bbl
7.87.0
5.5
2017 2018 2019
Lower oil price, high volatility
Positive effects from weaker
ruble and export duty time lag
One of the weakest refining
margins over the past 10 years
Benchmark refining margin in
Russia, $/bbl
4.53.2
2.2
2017 2018 2019
-31.3%
-22.1%
-8.4%
-2.8%
32
Leadership in
efficiency
Russian O&G: Gazprom neft, Novatek,Rosneft
International O&G: BP, Chevron, ConocoPhillips, Eni, ExxonMobil, Shell, Total
▪ High-quality production portfolio in
upstream
▪ High refining coverage
▪ High quality of refining fleet
▪ Access to premium markets and
sales channels
▪ High investment discipline
International O&GRussian O&G
23
EBITDA per boe (2019)
$ per boe
12
Free cash flow per boe (2019)
$ per boe
33
5,937
8,036
7,841
1
175
30
40
(26)
(157)
(44)(53)
(161)
Volume factor Price and structure factor
RUB bln
2017 2019Refined products
(Russia)OtherRefined products
(International)
Oil
(Russia)
Oil
(International)
Revenue2019 / 2018
Lower oil prices and
weaker ruble
Lower sales volumes of
refined products outside
Russia due to lower
trading volumes
Higher oil production and
trading volumes
Higher gas production2018
-2.4%
to 2018
34
Cost
control
Lifting costs in Russia
RUB per boe
248 244 237
2017 2018 2019
-2.7%
Planning in accordance with
cost reduction targets
Budget execution control
Incentive program and KPIs
focused on cost reduction
and cost programs
implementation
Controllable expenses
RUB per boe
677 668 643
2017 2018 2019
-3.8%
to 2018
193 196 194
87105
97
9787
90
158162
156
534551 537
2017 2018 2019
Controllable expensesRUB bln
Production
OPEX
SG&A
Controllable expenses include operating expenses (excluding extraction expenses at the West Qurna-2 field, refining expenses at third-party refineries and
expenses for crude oil transportation to refineries) and SG&A (excluding share-based compensation and expenses on allowance for expected credit losses).
-4.4%
Refining
Other
-5.0%
35
EBITDA2019 / 2018
832
1,115
1,236
1212
69
2012(4)
2017 2019
+ Inventory release
2018
+ Higher production
+ Bigger share of high-
margin barrels
+ Lower expenses
+ Tax on additional income
+ Tax lag
+ Weaker ruble
– Lower oil prices
– Additions to MET
+ Higher refining
throughput and better
product slate
+ Stronger results in
retail
+ Higher trading
margin
– Lower benchmark
refining margin
Downstream
Russia / International
Corporate and other
/ Eliminations
Upstream
Russia / International
RUB bln
36
Profit2019 / 2018
419
619 640121.4
3.7 0.8
(72.0)
(32.8)
2017 2018 EBITDA DD&A FX Financeincome / costs
and other
Income tax 2019
RUB bln
37
CAPEX2019 / 2018
12.2
3.1
3.6
6.0 0.2
(11.6)
(3.0) (9.3) (2.6)(0.2)
511
452 450
2017 2018 Caspian West Siberia TimanPechora
Other WQ-2 Uzbekistan Other Russia OutsideRussia
Corporateand other
2019
Russia International
DownstreamUpstream
RUB bln
38
758
511
1,007
452
OCF1,152
CAPEX450
139158
Dividends
181
60
Share repurchases
244108
337
Net debtand other
277
Sources Uses Sources Uses Sources Uses
2018
Free cash
flow
702
555
2017
RUB blnSources and
uses of cash
2019
247Higher operating cash flow
High investment
discipline
Higher shareholder
distributions
39
High resilience
to volatile macro
environment
Natural hedge factors:
▪ Vertically integrated business
model
▪ Costs mainly in RUB
▪ Progressive taxation
Uralsth. RUB per barrel
0
1
2
3
4
5
6
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Lowest level since
Jan2016
Progress since 2016 Quantitative Qualitative
Production 2.35 mb/d, +8%Share of high margin barrels
32%, +17 p.p.
Refining 69 mln t, +4%Light product yield
73%, +6 p.p.
Costs Lower in real termsPer unit costs in RUB terms
at 2016 level
Financial strength Lower net debtNet debt / EBITDA
0.0 (0.6 in 2016)
40
FCF and EBITDA
sensitivity to oil
price and RUB/$
exchange rate
Similar FCF sensitivity to oil
price and FX
High share of RUB-
denominated OPEX and CAPEX
Oil price
+$1/bbl Brent
RUB/$
+1 RUB/USD
EBITDA
FCF
+$220 mln
+$175 mln
+$90 mln
+$170 mln
41
Financial
position(as at 31.12.2019)
516381
10222 48 106
1390
154
172
2020 2021 2022 2023 2024 2025 andfurther
Credit
lines*
Cash and cash
equivalents
Leases
Total debt
RUB 553 bln
* Stand-by revolving committed credit lines
Debt structure (excluding leases)
65%
65%
85%
96%
35%
35%
15%
4%1%
Eurobonds (all in $) /Other debt
Fixed /Variable rate
Unsecured /secured debt
USD / EUR /Other debt
Moody’s Baa2
S&P BBB
Fitch BBB+
Credit ratings
USD / EUR / Other
Unsecured / secured
Fixed / variable
Eurobonds ($) / other
RUB bln
Debt maturity schedule
Net debt / EBITDA:
0.0
42
Conclusion
Pavel Zhdanov
Vice President
LUKOIL
43
2020
Outlook
▪ Production growth by up to 1% (ex. WQ-2) depending on market environment
▪ Implementation of cost optimization programs
▪ Caspian: drilling program on production projects, works on Grayfer field
development
▪ Baltics: final investment decision on D33 project
▪ Iraq: works on the 2nd development stage at West Qurna-2,
drilling of evaluation wells on Block 10
▪ Exploration drilling in Egypt, Mexico, Norway
Upstream
▪ Refinery throughput growth by up to 3% depending on market environment
▪ Reduction of fuel oil output to 8% of refinery throughput
▪ Works on construction of delayed coker unit and isomerization unit at Nizhny Novgorod
refinery
▪ Further work on petrochemical projects
Downstream
▪ CAPEX of up to RUB 550 bln (ex. WQ-2) with possible optimization
– Upstream / Downstream – 80% / 20%
– Russia / International – 85% / 15%
Finance
44
LUKOIL –
a unique
investment
proposition in
Oil&Gas
Focus on delivering long-term shareholder value through growing FCF and
distributions
▪ Distribution of
at least 100% of
adjusted free
cash flow
▪ Embedded oil price
downside protection
▪ Well-positioned for
higher oil price
scenario
▪ Combination of
business and free
cash flow growth
even in conservative
macro scenario
▪ Highly competitive
industry position
▪ Solid financial
standing
▪ Disciplined
investment
approach
▪ Clear focus on
efficiencies and
increasing returns
Excellence in corporate
governance
Adhering to
sustainability principles