TARGIN Oilfield Services June 2014 TARGIN snapshot Moscow 100% - PowerPoint PPT Presentation

TARGIN Oilfield Services June 2014

TARGIN snapshot Moscow • 100% owned by AFK “ Sistema ” • Spin-off from Bashneft in Q4’13 • Operations since 1938 • FY’13 : revenue $830M • 18 000 people • Debt-Free • $500M modernization program approved • International QHSE management introduction Management Company 138 people Drilling Workover Oilfield Equipment Transportation & 1 company 2 companies Servicing Field Logistics 2 200 people 2 500 people 2 companies 4 200 people 4 companies 9 100 people Revenue $0,2 billion Revenue $0,14 billion Revenue $0,12 billion Revenue $0,24 billion • Development drilling • Workover • Oil equipment service • Oilfield transport • Exploratory drilling • P&A • Piping polymer • People transportation coating • Sidetracking • Exploration wells • In-field Logistics • ESP and rod-pumps • Coiled tubing servicing New OFS company with good installed base, stable financial condition, and steady growth potential, both inside and outside Russia 2

TARGIN owner - AFK “Sistema” Founded in 1993, Sistema is now the largest publicly listed DIVERSIFIED PORTFOLIOS OF MARKET LEADERS diversified financial corporation in Russia & CIS by sectors (revenue) Telecom 4% Active portfolio management through value added Assets under • 11% Banking M&A and restructuring of the businesses management*: 49% Oil&Energy $44B • Strong track record of monetising investments through sales to strategic acquirers and successful Consumer 34% Market Capitalization**: IPOs 2% HighTech $13.4B Strong cash flow generation and robust credit • SHAREHOLDERS STRUCTURE quality of Assets under Management Evtushenkov V.P. 5.2% Revenue in 2012: • Consistently low leverage and conservative credit 11.6% metrics with under 2x Net Debt / OIBDA and over $34B 19.0% GDRs on LSE 4x interest coverage ratio Extensive pipeline of attractive M&A opportunities • OIBDA in 2012: Ordinary shares as well as multiple upside from existing portfolio $9B on MICEX-RTS 64.2% Net debt*: Investment portfolio structure $0.8 B Oil&Energy Telecom Consumer Other*** High Tech BASHNEFT (75%) MTS (53%) Real estate projects INTOURIST (66%) RTI (84.6%) Telecom Oil&Gas operator ~0.6 mln sq.m. Tourism High Tech Listed on NYSE ; Market cap $ 23 B Listed on MICEX-RTS; Market cap $ 13 B RZ AGRO (50%) DETSKY MIR (100%) NIS (60%) SSTL (86%) BPGC (79%) Agriculture Retail Navigation Energy Telecom SG-trans (50%) & MTS BANK (88%) TARGIN (100%) SMM (75%) Financial alliance (50%) Banking Oilfield services Media Transportation MEDSI (75%) UPC (100%) Healthcare Petrochemicals BINNOPHARM (74%) * As of Sep 2013 Bio-technology ** As of Nov 2013 3 *** Including non-consolidated

Bashneft • Vertically-integrated oil company Industry leader in refining efficiency • TREBS AND TITOV FIELDS SIGNIFICANT RESERVES One of the largest Proved oil reserves (1P) in 2012 – 2.01B bbl; (2P) – 2.54B bbl undeveloped oil fields • in Russia • R/P 18.3 years (1P) C1+C2 reserves 140,1MMt • 192 oilfields; own R&D department Nenetskiy C3 reserves 59,3MMt Avtonomniy Okrug • GROWING PRODUCTION (NAO) One of the biggest oil producers in Russia • Oil production at 307mbpd in 2012 (+2.0%YoY) • Moscow • Modern reservoir management, access to new licenses in Russia and overseas, and strong team as sources for production growth Khanty-Mansiyskiy Avtonomniy Okrug (KHMAO) Tatarstan LEADING DOWNSTREAM OPERATIONS Refining • Bashkortostan • TOP – 5 in Russia in terms of refining volume with refining facilities of total capacity of 482mbpd and leading technological complexity (Nelson index of 8.55 in 2012) Orenburg Marketing and Sales region • Total oil products and petrochemicals sales of 19.3MMt in 2012 • • Rapidly growing retail network (470 own and 261 partner filling stations as of Q1’13) OIL FIELDS IN Exploration • STRONG FINANCIAL PROFILE BASHKORTOSTAN 95,5% of total Revenue FY’12 $ 16.1B • Production production 18.5% Adj. EBITDA margin in 2012 • Refining • Low leverage (0.8x Net debt/Adj. EBITDA as of the end 2012) Sales coverage is not presented on the map • Consistently positive FCF • Financial standing evidenced by solid credit ratings: Moody`s – Ba2 (stable); Fitch – BB (positive). Sustainable production growth, and high refining capacity 4

TARGIN Long-term contract with Bashneft Price Index, Contract Framework Agreement Operational % value Segment indicators 2014 vs. 2014-2016 (2014-2016) 2013 ($ M)* Contracts 2nd level Thd.crew- Workover 2 988 7,5% 386 hours Drilling 225 Wells 18% 339 Transport 14 447 Thd. hours 10,5% 257 Transportation Drilling Workover services Oilfield equipment 15% 201 services Production tubing Mechanical equipment ESP & rod-pumps TOTAL 1 183 service maintenance service * Price 2014 • Bashneft guarantees TARGIN access to 70% of 2013 volumes. Residual is to be tendered out, where TARGIN can also participate Potential increase in the price of services ‘3 + 2’ years formula: share of fixed volumes goes from 70% of • FY’13 in 2014 – 2016 down to 40% in 2017 - 2018 40% 50,0% Potential cost of services BN-Burenie (+30% compared to 2013) 35% Potential cost of services OFS (+15% compared to 2013) 30% 40,0% 25% 30,0% 20% 15% 20,0% Cost of services BN-Burenie by long-term contract 10% 10,0% Cost of services OFS by long-term contract 5% 0,0% 0% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Long-term contract – guaranteed source for modernization financing 5

Segments: Well Construction The segment is represented by 1 business unit 42 Drilling Crews, 2 Completion Crews, 53 Drill Rigs • Activities: Drilling; Sidetracking; Deepening wells; Well casing; Well testing • Regions: Volga-Urals, West Siberia, North-West Russia Offices: Bashkortostan, W.Siberia, Timan-Pechora • Nenets Autonomous District KhMAO Bashkortostan Samara region Orenburg region Trained personnel, good experience, extensive equipment modernization program 6

Segments: Workover The segment is represented by 2 business units, both located in Bashkortostan 165 Workover Crews, 8 Coiltubing Crews • Activities: Workover; Coiled tubing operations; P&A; Workover supervising Regions: Volga-Urals, West Siberia, North-West Russia • • Offices: 3 in Bashkortostan, 1 in W. Siberia, 1 in Timan-Pechora Nenets Autonomous District Bashkortostan KhMAO One of the biggest fleet in Russia 7

Segments: Oilfield Equipment Servicing 2 Mechanical Plants 4 200 people Activities: • Manufacturing of oilfield equipment, mechanical equipment, ESP cable, production tubing, anti corrosive pipe coating, flow measuring units Servicing mechanical equipment, ESP & Rod pumps, production tubing, various oilfield and drilling equipment Regions: Volga-Urals, West Siberia, East Siberia • • Offices: Bashkortostan, KhMAO, Irkutsk KhMAO Bashkortostan Samara region Orenburg region Irkutsk region Basic operations and services along with unique equipment manufacturing 8

Segments: Transportation & In-Field Logistics The segment is represented by 4 business unit ~5 100 vehicles, ~9 100 employees • Activities: Passengers transportation; Cargo transportation; Crane services; In-Field logistics • Regions: Volga-Urals, West Siberia, North-West Russia Transportation : In-Field logistics: 916 Buses 225 Cranes 753 Passenger 1 161 Cargo trucks vehicles 1 250 specialized vehicles 662 Tractors Full range of vehicles for Oil&Gas production and Oilfield service companies 9

Key Metrics 10

Russian Oilfield Services Market Costs of services suppliers grow at a Forecast oil production in Russia in 2013-2022,MMt conservative forecast of oil prices mln, t 700 550 1,8% 1,5% 0,7% 1,3% 0,6% 0,4% 500 125 600 544 535 524 527 518 520 450 41 43 36 39 500 26 31 400 105 56 38 42 47 46 46 33 $ billion. 32 33 38 37 Min brl per day 35 350 400 108 85 109 110 111 112 112 300 300 250 65 200 200 313 306 299 296 296 298 150 45 100 100 0 25 50 2012 2013 2014 2015 2016 2017 Western Siberia Volga-Ural Timan-Pechora Eastern Siberia extraction of oil Costs for maintenance services Other+offshore Total annual growth, % Brent oil price, $ / brl Estimates of the workover market in 2013-2017 Estimates of the drilling market in 2013-2017 thd. of units 60 10 000 4,6% 8 752 4,5% +8,8% 2,6% 7 935 2,7% 2,8% 47 0,6% 50 7 327 869 45 8 000 43 42 41 845 840 6 768 40 832 6 158 758 40 806 5 497 mln. $. 714 6 000 15 778 14 693 3 143 13 13 736 666 12 2 786 12 30 2 479 596 2 181 4 000 1 806 1 601 20 2 000 3 900 3 546 30 3 302 29 3 088 28 2 908 26 27 26 2 564 10 0 2012 2013P 2014P 2015P 2016P 2017P 0 2012 2013 2014 2015 2016 2017 Directional drilling (operation) Horizontal drilling (operation) Western Siberia Volga-Ural Timan-Pechora Eastern Siberia Other regions Total annual growth, % exploratory drilling wildcat drilling Source: REnergyCo; RPI; Wall Street research, Citi Group • Oilfield services market grew by more than 2 times over the past 7 years TARGIN work in key segments – Drilling and Workover 11 •