INVESTOR PRESENTATION Q1 2015 29 May 2015 DISCLAIMER This - - PowerPoint PPT Presentation

INVESTOR PRESENTATION Q1 2015

29 May 2015

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DISCLAIMER

This presentation (hereinafter – the “Presentation”) of the Alliance Oil Company (hereinafter – the “AOC”) was prepared exclusively for the information purposes in order to improve the transparency of disclosure of relevant information and materials

• f AOC and establish a continuous dialogue with investors.

The data contained in this Presentation constitute the confidential information of the AOC group of companies and shall not be disclosed or transmitted to any third parties without the prior written consent of the disclosing party. The information contained in this Presentation was prepared and provided by the AOC structural departments. These data can be changed with the course of time and are subject to regular update and amendment. This presentation is not an offer or solicitation of an offer and does not cause creation of any rights or obligations from the AOC and/or potential partners to carry out transactions or to enter into negotiations on cooperation. The information provided in this Presentation is not an offer or proposition to conclude an agreement. AOC makes no warranty in respect of the accuracy or reliability of the information contained in the Presentation and accepts no liability for any losses suffered by third parties arising from inaccuracy or unreliability of such information as well as for other negative effects.

HIGHLIGHTS FOR Q1 2015 AND Q1 2014

Revenue of MUSD 498 (MUSD 861 in Q1 2014) EBITDA of MUSD 86 (MUSD 137 in Q1 2014) Loss of MUSD 23 affected by FX loss of MUSD 20 (loss of MUSD 24 in Q1 2014) MUSD 350 Eurobonds partial repayment and prolongation till March 2019 MRUB 11,500 short-term bank loan prolongation till September 2015 4.8 mboe produced in Q1 2015 (5.1 mboe in 1Q 2014) 7.9 mbbl of oil refined in Q1 2015 (8.0 mbbl in 1Q 2014)

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Financial Results Operational Results Strategic Highlights

1Q 15 production:

1.3 mboe (27%)1

1Q 14 production:

1.4 mboe (28%) Timano-Pechora

1Q 15 production:

1.2 mboe (26%)

1Q 14 production:

1.4 mboe (28%) Tomsk

UPSTREAM OPERATIONS Crude oil and gas reserves and production

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1Q 15 production:

0.7 mboe

1Q 14 production:

0.6 mboe Khanty-Mansiysk and Yamalo-Nenetsk2

Notes: (1) Percentage in consolidated Alliance Oil Company production. (2) Through the Group’s operations with AROG (Alliance Repsol Oil & Gas), a joint venture with Repsol, which is accounted for under the equity method. (3) As per DeGolyer & MacNaughton as of 31 December 2014.

2P oil reserves: 614.4 mboe3 2P gas reserves: 47.5 mboe 1Q 15 production: 4.8 mboe (average daily: 53,295 boepd) 1Q 14 production: 5.1 mboe (average daily: 56,129 boepd) Alliance Oil Company, consolidated

1Q 15 production:

2.3 mboe (47%)

1Q 14 production:

2.2 mboe (44%) Volga-Urals and Kazakhstan

UPSTREAM OPERATIONS Crude Oil Sales and Netbacks

Crude Oil Sales, mbbl

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Increased overall sales due to reallocation of December volumes to 1Q in order to obtain higher prices Preferential shipment to export due to weak domestic demand (effect of tax maneuver)

1,0 1,4 0,9 0,8 2,3 2,4

0,0 2,0 4,0 6,0

1Q14 1Q15

Export CIS Domestic Intra-group

4,4 4,6 0,2

No shipments to CIS market due to weak demand

53 19 47 28

10 20 30 40 50 60 Export Domestic

Q1 2014 Q1 2015

Crude Netback Prices, USD/bbl

Decreased netbacks in all destinations due to lower oil prices Reduced revenues from crude oil sales due to earlier prepaid shipments to offtakers at fixed FX rate

Notes: The netback prices are calculated by deducting VAT, railway and pipeline transportation costs (for Russian domestic sales) or transportation, export duty, brokers’ commission and certain other costs (for export sales) or transportation, brokers’ commission and certain other costs (for CIS countries sales) from the gross price.

Gas Sales and Prices

Notes: The net prices are calculated by deducting VAT (for Russian domestic sales).

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UPSTREAM OPERATIONS Gas Sales and Price

Gas and gas liquids economics negatively affected by increase in RUB/USD exchange rate Decreased sales volumes due to revised field development scheme

Gas Gas liquids Gas Gas liquids

Sold volume, boe

573 593 118 341 558 613 95 246

Gross price, USD/boe

14,9 54,5 8,4 32,6

Net price, USD/boe

12,6 46,2 7,1 27,6 1Q14 1Q15

UPSTREAM OPERATIONS Crude Oil and Gas Sales

Revenue from sales of crude oil, gas and gas liquids, MUSD

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Two factors contributed to the decrease in revenue from sales of crude oil: decreased netbacks in all destinations due to lower oil prices and reduced revenues from crude oil sales due to earlier prepaid shipments to offtakers at fixed FX rate

61 33 8 60 31 114 71

50 100 150 200 250 300

1Q14 1Q15

Export CIS Domestic Intra-group

135 242

Retail gas stations: 260 Oil depots: 20 Marine terminals: 2 Railway tankers: 1 440

Far East: Amur, Primorsk and Khabarovsk regions

Retail gas stations:

13 The Republic of Buryatia Refining volumes: 1Q 15: 87,342 bopd (1Q 14: 89,029 bopd) Throughput: 1Q 15: 7.66 mbbl (1Q 14: 7.74 mbbl) Khabarovsk Oil Refinery

DOWNSTREAM OPERATIONS Assets and refining volumes

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Retail gas stations: 18 Marine terminals: 2 Jet fuel depot: 1

Kamchatka region

Retail gas stations: 291 Oil depots: 20 Marine terminals: 4 Jet fuel depot: 1 Railway tankers: 1 440

TOTAL

Oil Products Sales, mbbl

DOWNSTREAM OPERATIONS Oil products sales and Prices

Preferential shipments to export (effect of decrease in export duty due to tax maneuver and decrease in crude oil price) and the domestic market due to higher margins at the expense of bunkering volumes

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2,0 2,9 2,4 1,1 2,2 2,5 1,2 1,3

0,0 1,0 2,0 3,0 4,0 5,0 6,0 7,0 8,0 9,0 10,0

1Q14 1Q15

Export Bunkering Wholesale Retail

7,8 7,8

Oil Products Net Prices, USD/bbl

Net USD prices decreased primarily due to RUB depreciation (average RUB\USD exchange rate increased Q1 2015 vs Q1 2014 by 78%)

Q1 2014 Q1 2015

74 43 76 38 100 58 136 85

20 40 60 80 100 120 140 160 Export Bunkering Wholesale Retail

DOWNSTREAM OPERATIONS Oil products sales

Revenue from sales of oil products, MUSD

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Despite flat volumes and increased RUB-nominated prices in the domestic market, total amount

• f revenue nominated in USD decreased due to dramatic increase in RUB/USD exchange rate

145 126 185 42 224 145 165 114

100 200 300 400 500 600 700 800

1Q14 1Q15

Export Bunkering Wholesale Retail

426 719

FINANCIALS

Stable EBITDA margin

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Group’s financials negatively affected by RUB depreciation (RUB-denominated assets and results presented in USD) and dramatic decrease in crude oil prices Operating income was negatively affected by earlier prepaid shipments to offtakers at fixed FX rate

Q1 2014 Q1 2015

RUB/USD exchange rate, average 34,96 62,19 Urals, average 110,51 52,63 Revenue 861 498 Operating income 67 42 EBITDA 137 86 EBITDA Margin 16% 17% FX loss

• 51
• 20

Loss for the period

• 24
• 23

Total assets 5 740 3 537 Cash and cash equivalents 407 217 Total debt 2 242 2 151 Total cash flow from operating activities 361 13 Total cash flow used for investments

• 253
• 45

Total cash flow from/(used in) financing activities 31

• 57

Macro Profit or loss, MUSD Statement of financial position, MUSD Cash flow, MUSD

Revenue Breakdown, MUSD

FINANCIALS Segment Performance

Upstream segment revenue decreased primarily due to decreased USD-nominated oil prices in all destinations and earlier prepaid shipments to offtakers at fixed FX rate Downstream segment revenue decreased primarily due to RUB depreciation

Notes: Segment revenue is based on total sold volumes including external and intra-group. Segment revenue excludes other income.

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242 135 719 426

• 100

200 300 400 500 600 700 800 900 1 000

1Q14 1Q15

Upstream Downstream

FINANCIALS Segment Performance

EBITDA Distribution, MUSD

Upstream segment EBITDA decreased primarily due to decreased USD-nominated oil prices and earlier prepaid shipments to offtakers at fixed FX rate Despite RUB depreciation, Downstream segment EBITDA increased primarily due to higher RUB-nominated prices and lower crude oil component in the cost of oil products

Notes: EBITDA for Upstream and Downstream segments is based on IFRS financial information. Segment EBITDA is based on total sold volumes including external and intra-group.

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EBITDA, USD/bbl

113 42 48 63

• 20

40 60 80 100 120

1Q14 1Q15

Upstream Downstream 22,4 8,1 6,1 8,0

0,0 5,0 10,0 15,0 20,0 25,0

1Q14 1Q15

Upstream Downstream

FINANCIALS Upstream Economics

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Gas and gas liquids economics negatively affected by increase in RUB/USD exchange rate EBITDA decreased primarily due to RUB depreciation and earlier prepaid shipments to

• fftakers at fixed FX rate

Notes: (1) Based on total upstream sold volume including external and intra-group; (2) Selling, administrative and other income/expenses, include transportation tariffs and other selling expenses, administrative expenses and other operating income/expense.

Crude Oil Economics, USD/bbl1 1Q14 1Q15 Revenue

52,73 28,14

Production Costs

7,70 4,80

Production and Other Taxes

14,68 10,18

SG&A and Other2

6,45 4,76

EBITDA

23,90 8,40 Gas and Gas Liquids Economics, USD/boe 1Q14 1Q15 Revenue

18,34 10,11

Production Costs

1,49 1,18

Production and Other Taxes

3,07 2,39

SG&A and Other

0,73 0,00

EBITDA

13,05 6,54

FINANCIALS Downstream Economics

Despite RUB depreciation, Downstream segment EBITDA increased primarily due to higher RUB-nominated prices and lower crude oil component in the cost of oil products

Notes: (1) Based on total downstream sold volume including external and intra-group; (2) Selling, administrative and other income/expenses, include transportation tariffs and other selling expenses, administrative expenses and other operating income/expense.

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Downstream Economics, USD/bbl1 1Q14 1Q15 Revenue 91,44 54,21 Refining 3,85 3,18 Crude Oil Transportation 16,94 8,84 Cost of Crude Oil 43,99 22,64 Excise and Other Taxes 4,08 2,95 Oil Products Purchased for Resale 7,27 4,25 SG&A and Other2 9,22 4,34 EBITDA 6,09 8,01

FINANCIALS Debt Portfolio

Debt Maturity Profile1, MUSD Cash on balance MUSD 217

Notes: (1) Future cash flows for the repayment of loan principal. (2) Including interest accrued and net of unamortized issue costs.

Total Debt by currencyas of 31 March 2015, MUSD2

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Total debt of MUSD 2,1512 Net debt of MUSD 1,934

MUSD 350 Eurobonds MUSD 500 Eurobonds 595 280 304 1047 262 278 600 1018 200 400 600 800 1000 1200 Within one year Within second year Within years three and four Five years and more As of 31 December 2014 As of 31 March 2015 500 500 299 350 657 31% 693 32% 802 37% RUB bonds and bank loans USD bank loans USD Eurobonds