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2014 IFRS CONSOLIDATED FINANCIAL RESULTS
APRIL 29, 2015
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Alexander Ivannikov
First Deputy CFO
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DISCLAIMERS This presentation has been prepared by JSC 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. No reliance may be placed for any purposes whatsoever on the information contained in
this presentation, or any other material discussed at any presentation or on its completeness, accuracy or fairness. The information in
this presentation should not be treated as giving 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. 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.
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GAZPROM STRONG FINANCIAL POSITION
AMONG OIL & GAS MAJORS
Comparative EBITDA 10Y CAGR1 Top-5 oil and gas majors
by EBITDA, 2014
EBITDA for Gazprom is adjusted by changes in impairment provisions.
1 Median CAGR of top 10 oil & gas majors by market capitalization as of April 23, 2015
Source: Companies websites, Bloomberg as of April 23, 2015
15.0%
2.1%
0
5
10
15
20
25
GAZPROM TOP-10 OIL & GAS MAJORS
%
56.9
51.9 51.7 51.4
36.5
0
10
20
30
40
50
60
70
80USD bln
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Total net sales RR 5,590 bn in 2014 — up 6% compared to 2013
RR 1,582 bn in 4Q2014 — up 7% compared to 4Q2013
Adj. EBITDA1
RR 1,963 bn in 2014 — down 2% compared to 2013
RR 614 bn in 4Q2014 — up 19% compared to 4Q2013
Net Profit2
RR 159 bn in 2014 — down 86% compared to 2013
RR (397) bn in 4Q2014 — compared to RR 280 bn in 4Q2013
Operating cash flow
Increased by 10% to 1,916 bn RR in 2014 compared to 2013
Increased by 37% to 616 bn RR in 4Q2014 compared to 4Q2013
Continued positive free cash flow3 generation
RR 654 bn FCF in 2014 – up 90% compared to RR 345 bn in 2013
Leverage easing
Net debt increased by 48%4 to 1, 651 bn RR as of the end of 2014
Net Debt/Adj.EBITDA was 0.84x as of the end of 2014
1 EBITDA adjusted by changes in impairment provisions. 2 Profit for the period attributed to owners of OAO Gazprom. 3 Free cash flow is calculated as Net cash provided by operating activities less Capital expenditures. 4 Compared to Net debt as of December 31, 2013.
SUMMARY OF FINANCIAL RESULTS
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488.4 444.9
137.2 123.6
0
200
400
600
2013 2014 4q13 4q14
Natural gas production Crude oil production Gas condensate production
Including Russian generating companies: Mosenergo, OGK-2, TGK-1, MIPC
Calculations may diverge due to rounding.
HYDROCARBON PRODUCTION, ELECTRICITY AND HEAT
GENERATION
bcm mln ton mln ton
(9%)
(10%)
14.7 14.5
3.8 3.8
0
10
20
30
2013 2014 4q13 4q14
(1%)
0% 42.3 43.5
8.7 9.0
0
20
40
60
2013 2014 4q13 4q14
+3%
+3%
Electricity generation Heat generation
bn kWh mln Gcal
162.5 155.4
41.8 43.9
0
30
60
90
120
150
180
2013 2014 4q13 4q14
(4%)
+5% 107.4 120.1
32.3 44.4
0
30
60
90
120
2013 2014 4q13 4q14
+12%
+37%
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GAS SALES
243 232
73 75
3 265 3531 3551 3599
0
1 000
2 000
3 000
4 000
0
100
200
300
400
2013 2014 4q13 4q14
VOLUMES AVERAGE PRICE IN RUSSIA
794 821
257 268
0
400
800
1200
1600
2000
2013 2014 4q13 4q14
NET SALES TO RUSSIA
+3%
+4%
RR/1 mcm bcm
RR bn
Calculations may diverge due to rounding. 1 Net of value added tax (VAT) 2 OC - Other countries: include LNG sales 3 VAT is not charged on sales 4 Net of custom duties
1683 1752
458 525
0
400
800
1200
1600
2000
2013 2014 4q13 4q14
NET SALES TO EUROPE & OC
+4%
+15%
RR bn
174 159
48 37
381 349
375 352
0
100
200
300
400
0
100
200
300
2013 2014 4q13 4q14
VOLUMES AVERAGE PRICE IN EUROPE & OC
bcm
59 48
17 11
267 262 276
221
0
100
200
300
0
20
40
60
80
100
2013 2014 4q13 4q14
VOLUMES AVERAGE PRICE IN FSU
420 412
131 107
0
400
800
1200
1600
2000
2013 2014 4q13 4q14
NET SALES TO FSU
(2%)
(18%)
bcm USD/1 mcm USD/1 mcm
1
Russia Europe & OC2 FSU
3,4 3,4
RR bn
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OTHER SALES
350
393
200
250
300
350
400
450
500
4q2013 4q2014
Refined products
Electric and heat energy
125 135
0
30
60
90
120
150
180
4q2013 4q2014
RR bn
Calculations may diverge due to rounding. 1 Net of value added tax (VAT), excise tax and custom duties.
Net Sales1
+12 %
+8 %
1209 1352
1619
276 210
209 344
376
427
125
163
173
156
177
176
0
500
1000
1500
2000
2500
2012 2013 2014
OTHER
GAS TRANSPORTATION
ELECTRICITY AND HEAT
CRUDE OIL AND GAS CONDENSATE
REFINED PRODUCTS
RR bn
RR bn
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NET PROFIT DECREASE
Net profit attributable to owners of OAO Gazprom
RR bn
1139.3
-34,9
159.0
339.8 342.8
925.8
245.5 193.9
-500
0
500
1000
1500
Net profit 2013 Sales Operating expenses FX loss Provisions Other Net profit 2014
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109%
125%
152%
120%
173%
134%
102%
185%
80%
100%
120%
140%
160%
180%
200%
2012 2013 2014 4q13 1q14 2q14 3q14 4q14
SUSTAINABLE FREE CASH FLOW GENERATION
Free Cash Flow1
Gazprom self funding2
1 Free Cash Flow = Net Cash from operating activities – Cash CAPEX 2 Net Cash from operating activities /Cash CAPEX
123.7
344.6
653.6
73.6
289.9
75.6 4.7
283.5
0
100
200
300
400
500
600
700
800
2012 2013 2014 4q13 1q14 2q14 3q14 4q14
+ 90% 2.9x
RR bn
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0
20
40
60
80
100
120
140
160
0
500
1000
1500
2000
2500
3000
2012 2013 2014 4q13 4q14
TRANSPORT PRODUCTION OF NATURAL GAS
PRODUCTION OF CRUDE OIL AND GAS CONDENSATE REFINING
ELECTRIC AND HEAT ENERGY OTHER CAPEX
1,475 1,545
1,423
575 544
Gazprom Group’s CapEx1
RR bn %
Gas Upstream
Bovanenkovo field
Development of fields related to the Eastern Gas
Program and export to China
Gas brownfields development and support
Gas Downstream
Bovanenkovo-Ukhta pipeline
GTS Extension – Southern Corridor
Preliminary works, roll out of the Eastern Gas
Program and China export project
Oil
Novoportovskoe, Messoyakha and other greenfields
development, brownfields support and refining
modernization
Power generation
Investments in new capacity
2015 Priorities
1 CapEx volumes and breakdown as provided in Management Report
CAPITAL EXPENDITURES
(4%)
(5%)
(5%)
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6.5%
6.0%
5.1% 5.0%
4.6% 4.4% 4.2%
3.9% 3.6%
3.3%
0%
2%
4%
6%
8%
10%
DIVIDEND PAYOUT
Dividend
per share1
12M dividend yields
of major oil & gas companies2
1 Dividend payout ratio = % of parent company net income based on Russian accounting standards 2 Dividend yield is defined as approved dividends for the period divided by the share price as of April 23, 2015; Major oil and gas companies by capitalization as of
April 23, 2015 3 As proposed by the Management Committee
Source: Companies data, Bloomberg
2.66
0.36
2.39
3.85
8.97
5.99
7.20 7.20
17.5
4.9 9.1
25.0 24.1 25.5 27.1
90.2
0
10
20
30
40
50
60
70
80
90
100
0
2
4
6
8
10
12
14
2007 2008 2009 2010 2011 2012 2013 2014
DIVIDEND PAYOUT RATIO, % (RIGHT SCALE)
RUB / Share %
3
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1 028 1 071 1 113
1 651
509 429 689
1 038 0.5
0.7
0.6
0.8
0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
0,8
0,9
1
0
500
1000
1500
2000
2500
3000
3500
2011 2012 2013 2014
CASH&CASH EQUIVALENTS AND RESTRICTED CASH
NET DEBT
NET DEBT/ADJ.EBITDA
RUB bn x
KEY DEBT METRICS
Debt maturity profile1
Cost of debt financing Gazprom credit ratings
24% 22% 18% 17%
17% 19% 13% 15%
38% 33%
36% 36%
21% 26% 33% 32%
2011 2012 2013 2014
LESS THAN 1 YEAR 1-2 YEARS 2-5 YEARS MORE THAN 5 YEARS
6.2%
3.0%
5.5%
0
2
4
6
8
10
2008 2009 2010 2011 2012 2013 2014
WEIGHTED AVERAGE FIXED INTEREST RATE
WEIGHTED AVERAGE FLOATING INTEREST RATE
WEIGHTED AVERAGE INTEREST RATE
%
SOURCE: BLOOMBERG, COMPANY DATA
Moody's
A- A3 BBB+ Baa1 BBB Baa2 BBB- Baa3
BB+ Ba1 BB Ba2 BB- Ba3
B+ B1
Dagong,
S&P, Fitch
A A2
A+ A1 AA Aa
AAA Aaa
Jan
2004
Jan
2005
Jan
2006
Jan
2007
Jan
2008
Jan
2009
Jan
2010
Jan
2011
Jan
2012
Jan
2013
Jan
2014
Jan
2015
S&P MOODY'S FITCH
DAGONG INVESTMENT GRADE
Total and Net Debt
1 Excluding promissory notes
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Largest public oil&gas company in the world
122.7 bn boe proved hydrocarbon reserves
8.9 mmboepd hydrocarbon production
>100% Reserve replacement ratio
Focus on shareholders value
Solid dividend policy
Increased level of transparency
Commitment to sustainable
development
Natural gas is future of the world energy
Gazprom is a global energy major
30% share in the European gas market
Diversification of products and export
markets is key to our business continuity
Impressive profitability
Conservative CAPEX management
Efficient system of OPEX management
Strong liquidity ratios
Unparalleled
Fundamentals 1
Sound Strategy &
Strong Market Position 2
Improving Corporate
Governance 3
Conservative
Financial Policy 4
VALUE DRIVERS
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ADDITIONAL INFORMATION
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RUSSIAN NATURAL GAS BALANCE
Bcm 2013 2014 4Q2013 4Q2014
Natural gas resources 745.20 714.22 205.52 194.20
Domestic gas production 668.21 642.07 185.66 177.03
Other sources including Central Asian and Azerbaijani gas 33.25 29.33 7.62 6.93
Gas withdrawn from underground storage in Russia, Latvia and Europe 38.09 36.64 10.46 9.03
Decrease in the amount of gas within the gas transportation system 5.65 6.19 1.78 1.22
Natural gas distribution 745.20 714.22 205.52 194.20
Domestic consumption 461.28 458.38 134.74 140.36
including needs of the gas transportation system
and underground storages 40.56 33.19 11.68 9.39
Gas pumped into underground storages 44.38 41.59 4.59 4.93
Gas for LNG production 14.50 14.45 3.77 3.73
Foreign supplies 167.02 151.55 44.42 33.94
including Baltic states 4.30 3.92 1.09 1.35
FSU supplies 52.35 41.82 15.65 9.39
Increase in the amount of gas within the gas transportation system 5.66 6.44 2.35 1.85
Source: Company Operating Data
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CONTACTS FOR INVESTORS AND ANALYSTS
ANDREY BARANOV Deputy Head of Directorate
E-mail: [email protected]
IVAN KHROMUSHIN Head of Division
Phone: (007) (495) 719-3143
E-mail: [email protected]
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