Galp Energia

Investor Presentation • Oct 30, 2017

October 30, 2017

Cautionary Statement

By attending or reading this presentation, you acknowledge and agree to be bound by the following limitations and restrictions. This presentation has been prepared by Galp Energia, SGPS, S.A. ("Galp" or the "Company") and may be amended and supplemented, but may not be relied upon for the purposes of entering into any transaction. This presentation is strictly confidential, is being distributed to a limited range of persons solely for their own information and may not (i) be distributed to the media or disclosed to any other person in any jurisdiction, nor (ii) be reproduced in any form, in whole or in part, without the prior written consent of the Company.

Although the Company has taken reasonable care in preparing the information contained herein, no representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein or any other material discussed at the presentation. Neither the Company nor any of its affiliates, subsidiaries, shareholders, representatives, agents, employees or advisors shall have any liability whatsoever (including in negligence or otherwise) for any loss or liability howsoever arising from any use of this presentation or its contents or any other material discussed at the presentation or otherwise arising in connection with this presentation.

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Matters discussed in this presentation may constitute forward-looking statements. Forward-looking statements are statements other than in respect of historical facts. The words "believe", "expect", "anticipate", "intends", "estimate", "will", "may", "continue", "should" and similar expressions usually identify forward-looking statements. Forward-looking statements may include statements regarding: objectives, goals, strategies, outlook and growth prospects; future plans, events or performance and potential for future growth; liquidity, capital resources and capital expenditures; economic outlook and industry trends; energy demand and supply; developments of Galp's markets; the impact of regulatory initiatives; and the strength of Galp's competitors. The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in the Company's records and other data available from third parties. Although Galp believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. No assurance, however, can be given that such expectations will prove to have been correct. Important factors that may lead to significant differences between the actual results and the statements of expectations about future events or results include the Company's business strategy, industry developments, financial market conditions, uncertainty of the results of future projects and operations, plans, objectives, expectations and intentions, among others. Such risks, uncertainties, contingencies and other important factors could cause the actual results of Galp or the industry to differ materially from those results expressed or implied in this presentation by such forward-looking statements.

Actual future results, including financial and operating performance; demand growth and energy mix; Galp's production growth and mix; the amount and mix of capital expenditures; future distributions; resource additions and recoveries; project plans, timing, costs, and capacities; efficiency gains; cost savings; integration benefits; product sales and mix; production rates; and the impact of technology could differ materially due to a number of factors. These include changes in oil or gas prices or other market conditions affecting the oil, gas, and petrochemical industries; reservoir performance; timely completion of development projects; war and other political or security disturbances; changes in law or government regulation, including environmental regulations and political sanctions; the outcome of commercial negotiations; the actions of competitors and customers; unexpected technological developments; general economic conditions, including the occurrence and duration of economic recessions; unforeseen technical difficulties; and other factors.

The information, opinions and forward-looking statements contained in this presentation speak only as at the date of this presentation, and are subject to change without notice. Galp and its respective representatives, agents, employees or advisors do not intend to, and expressly disclaim any duty, undertaking or obligation to, make or disseminate any supplement, amendment, update or revision to any of the information, opinions or forward-looking statements contained in this presentation to reflect any change in events, conditions or circumstances.

Key Highlights

Operational Performance

Financial Performance

Appendix

Reinforcing Galp's position in the Carcará discovery in Brazil

BM-S-8 and Carcará North

Brazil		Carcará North
	BM-S-8	Carcará
Galp interests 1 BM-S-8:17% Carcará North: 20%	Guanxuma
Operator: Statoil
10 km

• Accessing Carcará North in the 2nd PSA bid round, and realigning BM-S-8 equity interests together with Statoil and Exxon
• Carcará North consortium (Statoil op. 40%, Exxon 40%, Galp 20%) offered PO share of 67.12%. Signature bonus of c.\$930 m (c.\$186 m to Galp)
• Acquiring a further 3% stake in BM-S-8 from Statoil for c.\$114 m, o.w. upfront payment of c.\$71 m, contingent to ongoing Statoil/QGEP deal
• At least 2 bn bbl of high quality oil expected to be recovered from the unitised areas through strong partnership

3Q17 highlights

• Ebitda of €487 m, up 27% YoY and in line QoQ, on the back of E&P production growth and a solid R&M contribution
• Lula and Iracema: planned maintenance for the year mostly completed with six FPSOs currently at normalised levels and FPSO #7 ramping-up
• R&M benefiting from higher refining margins, high conversion utilisation and increased exports of gasoline to the U.S.
• Stable G&P contribution QoQ and YoY, excluding the deconsolidation of the infrastructure business
• Pre-dividend free cash flow of €170 m supported by strong operational performance, with interim dividend of €208 m paid in September

Key Highlights

Operational Performance

Financial Performance

Appendix

Pre-salt execution driving production growth

• Production up QoQ, despite planned maintenance during the quarter
• Ramp-up of unit #7 with 2 producer wells connected, and 2 more expected this year

Brazil Angola

• Natural decline from mature blocks 14/14k
• Execution of the Kaombo project ongoing, with production to start in 2018

Robust downstream contribution

Refining & Marketing Gas & Power

• Refining benefiting from higher benchmark margins, conversion utilisation and gasoline exports to the U.S.

• Marketing contribution leveraging Iberian macro momentum

• Stable contribution from the natural gas activity supported by sales to direct clients

• LNG trading volumes based on structured contracts

Key Highlights

Operational Performance

Financial Performance

Appendix

Q3 Ebitda of €487 m, up 27% YoY and in line QoQ

Profit & Loss RCA (€m)

	3Q16	2Q17	3Q17
Turnover	3,499	3,779	3,892
Ebitda	384	473	487
E&P	127	188	215
R&M	180	233	218
G&P1	73	46	45
Ebit	211	253	302
Associates	16	41	40
Financial results	(16)	(10)	(15)
Taxes2	(83)	(120)	(135)
Non-controlling interests	(13)	(12)	(25)
Net Income	115	151	166
Net Income (IFRS)	91	99	163

• Upstream Ebitda up YoY benefiting from production growth and higher realisation prices, despite USD depreciation
• Supportive downstream results on the back of a higher refining margin, and despite exchange rate, refining hedges and pricing lag impacts
• RCA net income up 45% YoY, with IFRS net income of €163 m considering non-recurring items of €14 m and inventory effect of €11 m

¹ The regulated infrastructure business ceased to be fully consolidated at the end of October 2016.

2 Includes corporate income taxes and taxes payable on oil and gas production.

12 Adjusting FY17 capex estimate with Carcará North acquisition

Capital Expenditure (€m)

Actual Expected

• Around 88% of total investment YTD allocated to E&P, of which Brazil accounted for c.70%
• Expected FY17 capex of €1.0 1.1 bn considering bid round payments in Brazil, despite weaker USD

Third quarter 2017 results

YTD positive free cash flow, post-dividend

9M17 Change in net debt (€m)

• Operational performance supporting superior cash flow generation
• Positive post-dividends FCF during the first nine months of €35 m, despite dividend

13

1 Includes the proceeds of €22 m from the sale of the 25% indirect stake in Âncora project.

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

Strong financial position

Balance Sheet (€m)¹

	31 December, 2016	30 June, 2017	30 September, 2017
Net fixed assets	7,721	7,458	7,505
Work in progress	2 650 ,	2 460 ,	2 463 ,
Working capital	512	583	565
Loan to Sinopec	610	527	512
Other assets (liabilities)	(429)	(595)	(648)
Capital employed	8,414	7,974	7,934
Net debt2	1,870	1,856	1,967
Equity	6,543	6,118	5,968
Net Debt + Equity	8,414	7,974	7,934

• Net fixed assets slightly up QoQ with investment more than offsetting depreciation charges and FX effects during the period
• Net debt of €1.5 bn considering loan to Sinopec as cash, with implicit net debt to Ebitda of 0.9x³

¹IFRS figures.

²Not considering loan to Sinopec as cash. ³As at 30 September 2017, ratio considers net debt including loan to Sinopec as cash, plus €159 m Sinopec MLT

Shareholder Loan to Petrogal Brasil, and LTM RCA Ebitda of €1,776 m.

Key Highlights

Operational Performance

Financial Performance

Appendix

E&P: Increased production driving higher quarter results

Main E&P data

		3Q16	2Q17	3Q17
Working interest production1	kboepd	74.0	89.9	94.6
Oil production	kbpd	68.8	78.0	82.8
Net entitlement production1	kboepd	71.5	88.1	92.4
Angola	kbpd	7.3	6.2	5.6
Brazil	kboepd	64.2	81.8	86.8
Oil and gas average sale price	USD/boe	36.4	43.4	45.3
Production costs	USD/boe	7.6	9.2	7.5
DD&A2	USD/boe	13.8	14.2	12.4
Ebitda RCA	€ m	127	188	215
Ebit RCA	€ m	46	63	125
Net Income from E&P Associates	€ m	2	8	13
CAPEX	€ m	208	157	194

• Production up 5% QoQ despite planned maintenance in Brazil and natural decline in Angola
• Ebitda up QoQ benefiting from the increase in production in Brazil and higher oil price, despite USD:EUR depreciation
• Lower DD&A due to the depreciation of the Brazilian Real against the Euro

16

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: Benefitting from supportive macro conditions

Main R&M data

		3Q16	2Q17	3Q17
Galp refining margin	USD/boe	3.4	5.7	7.4
Refining cash cost1	USD/boe	1.5	1.6	1.6
Impact of hedging on refining margin2	USD/boe	0.2	(0.2)	(0.7)
Raw materials processed	mmboe	29.4	30.0	29.7
Total refined product sales	mton	4.6	4.7	4.9
Sales to direct clients	mton	2.3	2.3	2.4
Ebitda RCA	€ m	180	233	218
Ebit RCA	€ m	107	145	134
Net Income from R&M Associates	€ m	(2)	8	2
CAPEX	€ m	26	24	30

• High availability of refining system allowing to leverage supportive economic environment
• Strong spread over benchmark of \$1.8/boe benefiting from high utilisation of conversion units and gasoline exports the U.S.
• Refining margin hedging with €17 m negative impact on results
• Marketing performance impacted by lag in pricing formulas following steep increase in commodities prices

G&P: Stable contribution in line with volumes sold

Main G&P data

		3Q16	2Q17	3Q17
NG/LNG total sales volumes	mm3	1,750	1,726	1,717
Sales to direct clients	mm3	950	1,052	1,065
Trading	mm3	800	675	652
Ebitda RCA	€ m	73	46	45
Ebit RCA	€ m	55	40	36
Net Income from G&P Associates	€ m	16	25	25
CAPEX	€ m	10	2	2

• Volumes mostly in line, with higher sales to direct clients partially offsetting lower volumes sold through trading
• LNG trading volumes mostly supported by structured contracts
• Steady QoQ 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