GAZPROM: 3Q2019 IFRS RESULTS NOVEMBER 29, 2019 1 3Q2019 IFRS - - PowerPoint PPT Presentation

1

3Q2019 IFRS RESULTS

GAZPROM: 3Q2019 IFRS RESULTS

NOVEMBER 29, 2019

2

3Q2019 IFRS RESULTS

Alexey y Finik ikov

Deput uty Head of

• f Depar

artme tment nt

3

3Q2019 IFRS RESULTS

DISCLAIMER

This presentation has been prepared by PJSC Gazprom (the “Company”), and comprises the slides for a presentation to investors concerning the Company. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares or other securities representing shares in the Company, nor shall it or any part of it nor the fact of its presentation or distribution form the basis of, or be relied on in connection with, any contract or investment decision. Any viewer of this presentation considering a purchase of such securities is hereby reminded that any such purchase should be made solely on the basis of the information contained in the prospectus or other offering document prepared in relation thereto and will be subject to the selling restrictions set out therein. The information in this presentation should not be treated as investment advice. Care has been taken to ensure that the facts stated in this presentation are accurate, and that the opinions expressed are fair and

• reasonable. However, the contents of this presentation have not been verified by the Company. Accordingly, no representation or

warranty, express or implied, is made or given by or on behalf of the Company or any of its members, directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in or discussed at this

• presentation. None of the Company or any of their respective members, directors, officers or employees nor any other person accepts

any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith. The information in this presentation includes forward-looking statements, such statements may also occur during the Q&A session. These forward-looking statements include all matters that are not historical facts, statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, prospects, growth, strategies, and the industry in which the Company operates. By their nature, forward-looking statements involve risks and uncertainties, including, without limitation, the risks and uncertainties to be set forth in the prospectus, because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forward- looking statements contained in this presentation. In addition, even if the Company’s results of operations, financial condition and liquidity and the development of the industry in which the Company operates are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in future periods. The information and opinions contained in this presentation are provided as at the date of this presentation and are subject to change without notice. No person is under any obligation to update or keep current the information contained herein. By attending the presentation you agree to be bound by the foregoing limitations.

4

3Q2019 IFRS RESULTS

3Q2019 MARKET ENVIRONMENT

+2.1%

HIGHLIG LIGHTS

• GAZPROM PRICES IN EUROPE IN 3Q19 WERE HIGHER THAN GAS SPOT PRICES
• AFTER HITTING THE BOTTOM IN 3Q19 GAS SPOT PRICES REBOUNDED.

IN 4Q19 SPOT PRICES INCREASED BY 90% UP-TO-DATE AVERA ERAGE E GAS S PRICES

USD/mcm

65.53 64.56 60 62 64 66 3Q2018 3Q2019

• 1.5%

END OF PERIOD OD EUR/RUB EXCHAN HANGE E RATE WEATHE HER R INDEX EX IN EURO ROPE

71.8 70.3 70 71 72 Jun 30, 2019 Sept 30, 2019

• 2.1%

AVERA ERAGE E USD/RUB EXCHAN HANGE E RATE

• RUBLE

STRENGTHENING BY 1.5% Y-O-Y WAS NOT FAVORABLE FOR EBITDA MARGIN

• DURING 3Q2019 RUBLE

STRENGTHENED VS EURO BY 2.1% WHICH RESULTED IN FX GAIN

100 200 300

Ряд1

TTF 1 Month Ahead

5

3Q2019 IFRS RESULTS

1,622 371 371 212 212 436 436 270 270

• 166

166 2,467

• 500

500 1,000 1,500 2,000 2,500

Sales EBITDA Net profit CAPEX Operating CF adj. FCF adj. Net debt adj.

1 2 3 4

3Q2019 KEY FINANCIALS

1 EBITDA adjusted for changes in impairment provisions 2 Profit attributable to PJSC Gazprom’s shareholders for the period 3 Cash capital expenditures 4 Compared to Net debt as of June 30, 2019

3Q2018 vs 3Q2019

Adjusted for analytical purposes*

*In order to reflect the effects of the changes in bank deposits (reported as part of Other current assets and Other non-current assets)

• 16%

RUB bn

• 44%
• 45%

+9%

• 33%

+19%

6

3Q2019 IFRS RESULTS

33 77 84 42 37 3,831 4,140 4,141 4,020 4,051 1,000 2,000 3,000 4,000 25 50 75 100 3Q18 4Q18 1Q19 2Q19 3Q19 VOLUMES AVERAGE PRICE IN RUSSIA 69 113 117 62 71 50 100 3Q18 4Q18 1Q19 2Q19 3Q19 NET SALES TO FSU 729 811 837 596 450 200 400 600 800 3Q18 4Q18 1Q19 2Q19 3Q19 NET SALES TO EUROPE & OC

GAS BUSINESS

RUB/mcm bcm RUB bn

Calculations may differ due to rounding. 1 Net of value added tax (VAT) 2 OC - other countries, including LNG sales 3 VAT is not charged on export sales 4 Net of custom duties and excise tax on gas exports

bcm USD/mcm

1 3,4

Russia ia Europe

• pe & OC 2

FSU

USD/mcm bcm RUB bn RUB bn

3,4

128 318 349 169 148 100 200 300 400 3Q18 4Q18 1Q19 2Q19 3Q19 NET SALES TO RUSSIA +15% +15% 57 58 62 56 54 251 274 259 208 170 50 100 150 200 250 300 20 40 60 80 100 3Q18 4Q18 1Q19 2Q19 3Q19 VOLUMES AVERAGE PRICE IN EUROPE & OC (38%) 7 11 12 7 8 181 176 167 155 150 50 100 150 200 5 10 15 3Q18 4Q18 1Q19 2Q19 3Q19 VOLUMES AVERAGE PRICE IN FSU +3% +3%

7

3Q2019 IFRS RESULTS

41% 54% 5%

800 800 778 778 697 697 729 729 739 739 200 400 600 800 3Q18 4Q18 1Q19 2Q19 3Q19

46% 49% 6%

CRUDE OIL AND GAS CONDENSATE; REFINED PRODUCTS GAS BUSINESS, TRANSPORTATION AND OTHER REVENUES ELECTRICITY AND HEAT

Crude e oil and gas conden ensat ate; e; refined ined product ucts sales

OIL AND ENERGY BUSINESS

Calculations may differ due to rounding. 1 Net of value added tax (VAT), excise tax and custom duties.

Total tal sales es1 break eakdown

RUB bn

3Q 3Q20 2018 18 3Q 3Q20 2019 19

Electr tric icit ity and heat t sales

(8%) (8%)

88 88 160 160 173 173 104 104 95 95 100 200 3Q18 4Q18 1Q19 2Q19 3Q19

+9% +9%

RUB bn

8

3Q2019 IFRS RESULTS

401 401 448 448 441 441 347 347 436 436 200 300 400 500 3Q18 4Q18 1Q19 2Q19 3Q19

CAPITAL EXPENDITURES

Cash sh CAPEX EX (RU RUR R bn bn)

 CONSTANT COST CONTROL AND CAPEX

EX OPTIMIZA MIZATIO ION

 MOST PART

RT OF CAPE PEX X NOMIN INATED ED IN RU RUBLES ES

+9% +9%

26.7 26.3 25.3 24.9 25.6 15 20 25 30 3Q18 4Q18 1Q19 2Q19 3Q19

LTM Cash sh CAPEX EX (USD bn bn) +3%

9

3Q2019 IFRS RESULTS

 Changes in working capital (a part of Operating cash flows)

include changes in ST bank deposits

 Operating cash flows and Free cash flow need to be adjusted

for changes in ST bank deposits for analytical purposes

IMPACT OF BANK DEPOSITS

Impact of bank deposits on Net debt:

 Bank deposits are NOT included in Сash and cash

equivalents

 Net Debt and Net Debt/EBITDA need to be adjusted for

bank deposits for analytical purposes

ST and LT bank deposits volumes Applying of LT and ST bank deposits is aimed at improving the efficiency of liquidity management

328 328 796 796 766 766 487 487 391 391 2 1 1 200 400 600 800

2017 2018 1Q2019 2Q2019 3Q2019

ST DEPOSITS LT DEPOSITS

330 330 798 798

243 243 510 510

• 30

30

• 279

279

• 96

96

• 300

300 600

2017 2018 1Q2019 2Q2019 3Q2019

RUB bn RUB bn  Early withdrawal clause  Deposit term of over 3 months

Key features of bank deposits2: ST bank deposits changes Impact of changes in ST bank deposits on Cash flows:

1 Source: Gazprom 3Q2019 IFRS report, note 13 2 Reported as a part of Other current assets and Other non-current assets

767 767 487 487 391 391

10

3Q2019 IFRS RESULTS

1,526 1,526 1,623 1,218

1,641 115 115 405 405 308 308 1,623 405 405 1,218 1,225

• 7
• 100

100 300 500 700 900 1,100 1,300 1,500 1,700 1,900 2,100

REPORTED AS A PART OF CHANGES IN WORKING CAPITAL

9M2019 ADJUSTED FREE CASH FLOW BREAKDOWN

RUB bn

CHANGES IN BANK DEPOSITS

NEUTRAL FCF ADJUSTED FOR CHANGES IN ST DEPOSITS IN 9M2019

OCF before working capital changes Changes in working capital excl. changes in ST deposits Changes in ST deposits Tax paid OCF reported Adjustments for the decrease of ST deposits OCF adj. CAPEX FCF adj.

11

3Q2019 IFRS RESULTS

59.3 14.9 44.4 6.1 0.00 38.3 1.3 1.1 0.0 0.5 1.0 1.5 20 40 60 Total Debt Cash & equivalents Net Debt reported ST deposits LT deposits Net Debt adjusted Net Debt/EBITDA

KEY DEBT METRICS

3Q2019 adjus usted ed Net Debt structu ture re1 Tot

• tal

al Debt t breakdo kdown by curren ency Cash, , cash equiv uivalents alents, , bank k deposit its breakdo kdown n by curren ency

1 Net Debt adjusted for the bank deposits reported as a part of Other current assets and Other non-current assets (see Slide 9 for details). Based on calculations in USD.

RUB 23% USD 22% EUR 47% Other 8%

Tot

• tal

al Debt t maturit rity profile, ile, 3Q2019 Net t Debt adjus usted ed for bank k deposit its1

RUB 55% USD 17% EUR 25% Other 3%

USD bn USD bn

14% 16% 46% 24% 2Q2019 Less than 1 year 1-2 years 2-5 years More than 5 years 28.8 35.9 31.9 38.3 17.9 20.8 23.7 21.0 1.5 1.4 0.8 1.1 0.0 0.5 1.0 1.5 20 40 60 80 100 2016 2017 2018 3Q2019 Net Debt adj. Cash & equivalents (incl. deposits) Net Debt adj./EBITDA

12

3Q2019 IFRS RESULTS

0.36 2.39 3.85 8.97 5.99 7.2 7.2 7.89 8.0397 8.04 16.61

2 4 6 8 10 12 14 16 18 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

NEW DIVIDEND POLICY

1% 1% 7% 7% 9% 9% 16% 16% 12% 12% 15% 15% 107% 7% 24% 24% 20% 20% 27% 27% 27% 27%

% Payout ratio

RUB / share

1 Dividends based on the results of the respective year

1

50% of IFRS Net income (adj.) in 2022

Target payout level:

• Management Committee on dividend policy is

planned on 5th December, 2019

• Meeting of the Board of Directors in

December, 2019

• Net income adjustments for

non – cash items

• Dividends are not to be linked to DPS of

the previous year

• ENHANCIN

NCING OF TRANSP ANSPARENCY NCY AND PREDICT ICTABI BILIT LITY

• SHAREHO

HOLDE LDERS S RETURNS URNS GROWTH TH

In 2020 dividend payment is to be based on the new policy

13

3Q2019 IFRS RESULTS

UNIQUE QUE FUND NDAMENT ENTALS ALS BUSINESS INESS GROWTH TH STRONG ONGER ER FINAN ANCIAL CIAL OUTL TLOO OOK

CONSERVATIVE FINANCIAL POLICY, COSTS CONTROL IMPROVING FCF PROFILE DIVIDEND GROWTH POTENTIAL STRATEGIC TRANSFORM RMATIVE PROJECTS (CAPEX PEAK IN 2018 - 2019) BUSINESS GROWTH IN GAS AND OIL SEGMENTS; FURTHER GROWTH POTENTIAL PRODUCTION AND EXPORT GROWTH. OUTSTANDING RESOURCE BASE AND INFRASTRUCTURE HIGH COMPETITIVENESS OF GAZPROM’S GAS. RECORD HIGH EXPORTS, LOW COST BASE WORLD LARGEST PRODUCER R AND EXPORTER OF NATURAL GAS – THE CLEANEST FOSSIL FUEL

INVESTMENT CASE

FROM PEAK INVESTMENTS TO HIGHER FCF

14

3Q2019 IFRS RESULTS

ADDITIONAL INFORMATION

15

3Q2019 IFRS RESULTS

111.7 133.5 137.0 122.3 109.4 50 100 150 3Q18 4Q18 1Q19 2Q19 3Q19 9.9 45.4 51.4 18.6 11.6 20 40 60 3Q18 4Q18 1Q19 2Q19 3Q19 12.7 12.0 11.6 12.2 12.5 5 10 15 3Q18 4Q18 1Q19 2Q19 3Q19 3.7 4.4 4.4 4.1 3.7 2 4 3Q18 4Q18 1Q19 2Q19 3Q19

Crude oil Gas condensate

Gazprom Group’s volumes produced in Russia Calculations may differ due to rounding.

mt mt 1% 1% (2%)

PRODUCTION

31.0 41.2 44.1 34.6 30.4 20 40 3Q18 4Q18 1Q19 2Q19 3Q19

Electricity Heat

bn kWh mn Gcal (2%) 17%

Natural gas

bcm (2%)

16

3Q2019 IFRS RESULTS

RUSSIAN NATURAL GAS BALANCE

16

Bcm 201 2017 2018 2018 3Q2018 18 3Q2019 19 Natura tural l gas s reso sources rces 770.2 .29 810.64 64 175.33 33 176.39 39 Domestic gas production 691.19 725.41 166.96 166.85 Other sources including Central Asian and Azerbaijani gas 25.33 23.49 6.00 7.19 Gas withdrawn from underground storage in Russia, Latvia and Europe 50.45 59.33 1.59 1.66 Decrease in the amount of gas within the gas transportation system 3.31 2.42 0.78 0.69 Natura tural l gas s distrib stribution tion 770.2 .29 810.64 64 175.33 33 176.39 39 Domestic consumption 468.01 493.18 90.58 88.52 including needs of the gas transportation system and underground storages 37.81 40.55 9.36 8.30 Gas pumped into underground storages 53.02 56.17 25.35 22.71 Gas for LNG production 15.46 20.94 3.04 10.65 Foreign supplies 197.40 200.29 49.17 46.48 FSU supplies 32.88 36.70 6.56 7.27 Increase in the amount of gas within the gas transportation system 3.52 3.07 0.62 0.77

Source: Company Operating Data

17

3Q2019 IFRS RESULTS

THANK YOU!