Galp Energia

Earnings Release • Jul 31, 2017

Results Second quarter 2017

July 31, 2017

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2Q17 highlights

• Ebitda of €473 m, up 40% YoY and 13% QoQ, driven by upstream production growth and downstream performance
• Lula and Iracema projects with seven units in operation, of which six at plateau level
• R&M benefiting from high refining system availability and higher refining margins
• Normalised G&P contribution, despite fewer trading opportunities and lower contribution from gas marketing activities in Iberia
• Cash flow benefitting from strong operational results and working capital normalisation

Agenda

Execution Update

Financial Overview

Appendix

Pre-salt execution driving production growth

Lula South FPSO BBLT platform

• Six FPSOs currently producing at plateau level, with Q2 production impacted by maintenance activities
• Start-up of the first replicant unit (FPSO #7) at Lula South, now producing over 25 kbpd from one producer

Brazil Angola

• WI production from blocks 14/14k declining as expected
• Execution of Kaombo project proceeding, with production to start during 2018

Mozambique: Coral South FID

Coral South FLNG

• Significant milestone for the development of Mozambique as a LNG province
• FLNG with 3.4 mtpa capacity and offtake agreement for 100% of production
• First gas expected by 2022
• Working on Mamba first stage of development

Downstream contribution supported by strong R&M

Refining & Marketing Gas & Power

• High availability of the refining system, with realised margin of \$5.7/boe

• Marketing performance driven by Iberian economic momentum and seasonal demand

• Contribution normalised after gas sourcing constraints during 1Q17

• Trading activities supported by LNG structured contracts

Execution and environment driving 2017 performance

Brent (\$/bbl)	50.0	51.7
Benchmark refining margin (\$/bbl)	2.5	3.9
WI production (kboepd)	90 – 95	88.9
Ebitda (€ bn)	1.5 – 1.6	0.9
Capex (€ bn)	1.0 – 1.2	0.4

• 2017 plan 2017 Galp plan 1H17 2017 Group Ebitda now expected above initial guidance
• Group capex estimated at c.€1.0 bn
• Maintaining production guidance

Agenda

Execution Update

Financial Overview

Appendix

Q2 Ebitda of €473 m, up 40% YoY and 13% QoQ

Profit & Loss RCA (€m)

	2Q16	1Q17	2Q17
Turnover	3,267	3,844	3,779
Ebitda	337	419	473
E&P	86	204	188
R&M	143	187	233
G&P1	97	22	46
Ebit	185	220	253
Associates	24	32	41
Financial results	15	(12)	(10)
Taxes2	(79)	(123)	(120)
Non-controlling interests	(12)	(18)	(12)
Net Income	133	99	151
Net Income (IFRS)	66	134	99

• Upstream Ebitda supported by production growth, but impacted by lower oil prices QoQ
• Downstream benefiting from supportive refining environment, marketing performance and normalisation of gas contribution
• Ebit impacted by €22 m exploration impairment
• RCA net income up 14% YoY, with IFRS net income of €99 m impacted by non-recurring items of €17 m and negative inventory effect of €35 m

¹ The regulated infrastructure business ceased to be fully consolidated as of the end of October 2016. 2 Includes corporate income taxes and taxes payable on oil and gas production.

Upstream development as main capex driver

Capital Expenditure (€m)

• Lower capex YoY due to the reduction of drilling intensity in Brazil
• Around 89% of total investment allocated to E&P, of which Brazil accounted for c.75%
• 2H17 to include first significant capex from the Coral South project

12 Strong CF generation supported by operational performance…

1H17 Change in net debt (€m)

• Cash flow supported by upstream production growth and downstream environment
• Normalisation of inventories in 2Q17
• Net debt reduction during H1 despite dividend payment of €215 m in 2Q17

1 Includes mainly Sinopec loan partial reimbursement and CTAs (Cumulative Translation Adjustment).

… and maintaining robust financial position

Balance Sheet (€m)¹

	31 December, 2016	31 March, 2017	30 June, 2017
Net fixed assets	7,721	7,901	7,458
Work in progress	2 650 ,	2 687 ,	2 460 ,
Working capital	512	742	583
Loan to Sinopec	610	561	527
Other assets (liabilities)	(429)	(635)	(595)
Capital employed	8,414	8,569	7,974
Net debt2	1,870	1,895	1,856
Equity	6,543	6,674	6,118
Net Debt + Equity	8,414	8,569	7,974

• Net fixed assets and equity down QoQ impacted by US Dollar and Brazilian Real depreciation against the Euro
• Net debt of €1.3 bn considering loan to Sinopec as cash, with implicit net debt to Ebitda of 0.90x³

¹IFRS figures.

²Not considering loan to Sinopec as cash.

³As at 30 June 2017, ratio considers net debt including loan to Sinopec as cash, plus €165 m Sinopec MLT Shareholder Loan to Petrogal Brasil, and LTM RCA Ebitda of €1,673 m.

Agenda

Execution Update

Financial Overview

Appendix

E&P: Resilient results despite decline in oil prices QoQ

Main E&P data

		2Q16	1Q17	2Q17
Working interest production1	kboepd	54.7	88.0	89.9
Oil production	kbpd	51.7	76.9	78.0
Net entitlement production1	kboepd	52.2	86.2	88.1
Angola	kbpd	7.1	6.9	6.2
Brazil	kboepd	45.0	79.3	81.8
Oil and gas average sale price	USD/boe	38.3	45.4	43.4
Production costs	USD/boe	9.8	8.0	9.2
DD&A2	USD/boe	14.8	13.4	14.2
Ebitda RCA	€ m	86	204	188
Ebit RCA	€ m	24	106	63
Net Income from E&P Associates	€ m	8	9	8
CAPEX	€ m	245	209	157

• Production up 2% QoQ despite Brazil units maintenance and Angola natural decline
• Ebitda affected by lower Brent price and higher unit costs due to maintenance stoppages and start-up of FPSO #7
• Ebit impacted by a €22 m exploration impairment in Portugal

Note: Unit figures based on net entitlement production.

¹Includes natural gas exported, excludes natural gas used or reinjected.

²Non-cash costs related to operating activities, includes abandonment provisions and excludes exploration expenses written-off.

R&M: Capturing favourable environment

Main R&M data

		2Q16	1Q17	2Q17
Galp refining margin	USD/boe	4.6	5.1	5.7
Refining cash cost1	USD/boe	1.7	1.7	1.6
Impact of hedging on refining margin2	USD/boe	(0.0)	(0.0)	(0.2)
Raw materials processed	mmboe	26.3	26.1	30.0
Total refined product sales	mton	4.5	4.4	4.7
Sales to direct clients	mton	2.3	2.1	2.3
Ebitda RCA	€ m	143	187	233
Ebit RCA	€ m	71	94	145
Net Income from R&M Associates	€ m	(0)	(2)	8
CAPEX	€ m	35	16	24

• Maximising realised refining margin through sourcing optimisation and arbitrage opportunities
• Refining contribution also supported by higher throughput
• Positive marketing performance, leveraging economic momentum in Iberia

Note: Unit figures based on total raw materials processed. ¹Excluding impact of refining margin hedging operations. ²Impact on Ebitda.

G&P: Contribution reflecting lower trading opportunities

Main G&P data

		2Q16	1Q17	2Q17
NG/LNG total sales volumes	mm3	1,593	2,006	1,726
Sales to direct clients	mm3	881	1,149	1,052
Trading	mm3	712	857	675
Ebitda RCA	€ m	97	22	46
Ebit RCA	€ m	81	15	40
Net Income from G&P Associates	€ m	17	25	25
CAPEX	€ m	7	2	2

• Results normalised after Q1 sourcing restrictions
• Volumes up YoY due to higher sales to direct clients and despite lower LNG trading opportunities
• Steady contribution from Associates, now including gas infrastructure business

Investor Relations team

Pedro Dias, Head Otelo Ruivo, IRO Cátia Lopes João G. Pereira João P. Pereira Teresa Rodrigues

+351 21 724 08 66 investor.relations@galp.com Results and presentation weblink :

www.galpenergia.com/en/investidor/Relatorios-eresultados/resultados-trimestrais

For further information on Galp, please go to: www.galp.com