Galp Energia

Investor Presentation • Oct 22, 2019

3Q19 Results & Strategy Update

October 22, 2019

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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.

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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 reflect the information available as at the date of this presentation and Galp's view on the matters referred herein, 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.

3Q19 Key Highlights

Corporate

Upstream

Downstream

• Robust cash flow generation despite weak contribution from refining
• 9M19 FCF of €694 m, covering FY dividends paid to shareholders
• Galp reconfirmed as an industry leader in the Dow Jones Sustainability Indices (#1 in Europe)
• Upstream contribution benefiting from production ramp-up
• Lula unit #8 reached plateau 10 months after first oil
• Refining impacted by planned maintenance and operational restrictions
• Implementation of "+\$1/boe" initiatives underway
• Solid marketing and G&P contribution

3Q19 Operational performance

Downstream contribution

impacted by weak refining performance

Upstream performance

supported on ramp-up progression

3Q Overview

WI Production of 126 kboepd, benefiting from the ramp-up in Brazil and Angola, with Lula unit #8 reaching plateau

Unitisation agreements for the Atapu and Sépia accumulations approved by ANP

Awarded EPC contracts for the Rovuma LNG project, subject to FID expected in 2020. Targeting first gas in 2025.

4Q19 production to continue benefiting from units' ramp-up, with

Outlook

no relevant planned maintenance expected

First unit to develop Iara fields at final location (Berbigão/Sururu)

Uirapuru well expected to be spud by YE2019

3Q19 Financial performance

Operational results driven by upstream

despite lower contribution from downstream

Profit & Loss (€m)

	3Q18 w/o IFRS 16	2Q19 IFRS 16	3Q19 IFRS 16	3Q19 w/o IFRS 16
RCA Ebitda	642	615	619	571
E&P	396	408	469	434
R&M	195	142	104	92
G&P	44	57	37	37
Ebit RCA	470	386	370	356
Associates	39	47	31	31
Financial results	(34)	(10)	(89)	(13)
Taxes1	(221)	(190)	(180)	(200)
Non-controlling interests	(43)	(34)	(31)	(43)
RCA Net Income	212	200	101	131
IFRS Net Income	235	231	60

Upstream performance supported on higher production from Brazil and Angola, more than offsetting lower oil prices

Downstream impacted by lower refining and G&P, despite supportive commercial contribution

Financial results including negative MTM from derivatives and reflecting BRL depreciation

Solid cash generation 9M19 FCF of c.€0.7 bn

FCF 9M19 (€m)

9 | 3Q19 Results & Strategy Update

¹All lease-related payments (IFRS 16) captured within FCF.

9M19 FCF of €694 m, covering full year dividends paid to shareholders

3Q19 CFFO of €435 m, up €92 m YoY, reflecting higher upstream contribution offsetting refining maintenance

3Q19 net capex of €189 m during the period, including investments related to refining maintenance and "+\$1/boe" initiatives

Strategy update

Capital allocation guidelines

Balanced investments supporting long-term value creation

11 | 3Q19 Results & Strategy Update

¹ NPV¹⁰ Brent breakeven. ²Equity IRR from already identified projects, non-exhaustive. ³DPS growth target based on 2018 dividend of €0.6325/sh.

resilience and long-term growth Strengthening portfolio for

Sources and Uses 2020-22 (€bn)

Note: Current portfolio CFFO assumes \$65/bbl Brent in 2020 and \$70/bbl onwards, refining margin averaging \$5.5 – 6.0/boe in 2020-22 and EUR:USD stable at 1.15 during the period. Expected net investment includes both organic and additional projects equity needs.

Attractive Returns Selective growth Unique asset base

Increase portfolio resilience and competitiveness

Investment for growth along the energy value chain

Focus on project returns and financial discipline

Balance net investments with competitive shareholder returns

Capture opportunities from the energy transition while reducing carbon intensity

Positioning Galp for the next growth cycle and for the future of energy

Appendix

3Q19 E&P Higher production offsetting lower oil price environment

Main E&P data

		3Q18 w/o IFRS 16	2Q19 IFRS 16	3Q19 IFRS 16	3Q19 w/o IFRS 16
Working interest production	kboepd	103.8	111.8	125.5
Oil production	kbpd	93.1	99.5	111.0
Net entitlement production	kboepd	102.3	109.8	124.0
Angola	kbpd	7.4	12.2	12.7
Brazil	kboepd	94.9	97.6	111.3
Oil and gas realisations - Dif. to Brent	USD/boe	(9.8)	(7.8)	(7.3)
Production costs	USD/boe	9.0	4.6	3.3	6.7
DD&A	USD/boe	10.5	14.5	14.2	12.0
RCA Ebitda	€ m	396	408	469	434
RCA Ebit	€ m	311	278	324	311
Net Income from E&P Associates	€ m	15	17	3	3
Capex	€ m	188	177	106

Production up QoQ, with Brazil and Angola ramp-up

Continuing reduction of unit technical costs (opex + DD&A) from high quality project ramp-up

RCA Ebitda up QoQ and YoY, with higher production more than offsetting lower oil prices

3Q19 R&M Performance impacted by refining operations

Main R&M data

		3Q18 w/o IFRS 16	2Q19 IFRS 16	3Q19 IFRS 16	3Q19 w/o IFRS 16
refining Galp margin	USD/boe	5 8	3 0	3 9
Refining cost	USD/boe	1 9	2 3	3 0
Hedging on Ebitda impact	USD/boe	0 0	0 1	(0 4)
materials processed Raw	mmboe	28 0	26 1	20 6
Total oil product sales	mton	4 5	4 4	3 9
Sales direct clients to	mton	2 3	2 3	2 3
RCA Ebitda	€ m	195	142	104	92
Ebit RCA	€ m	115	48	7	5
from Net Income R&M Associates	€ m	1	6	3	3
Capex	€ m	44	54	80

Maintenance and operational restrictions impacting throughput and oil products sales

Refining margin of \$3.9/boe resulting from operational restrictions

RCA Ebitda lower QoQ and YoY given the lower contribution from refining, with solid marketing performance

3Q19 G&P Normalised contribution from G&P activities

Main G&P data

Main G&P data
		3Q18 w/o IFRS 16	2Q19 IFRS 16	3Q19 IFRS 16	3Q19 w/o IFRS 16
NG/LNG total sales volumes	m3 m	2,024	1,887	1,803
Sales to direct clients	3 mm	1,201	1,205	1,131
Trading	mm3	823	682	673
Sales of electricity to direct clients	GWh	931	788	762
Sales of electricity to the grid	GWh	328	328	304
RCA Ebitda	€ m	4 4	57	3 7	3 7
RCA Ebit	€ m	39	53	32	32
Net Income from G&P Associates	€ m	24	24	24	24
Capex	€ m	0	2	1

Lower NG/LNG sales to electrical and own consumptions

RCA Ebitda down YoY due to the end of LNG structured contracts and fewer sourcing opportunities

Keeping a solid financial position

Balance sheet (€m)

	Dec 31 2018	30 Jun ., 2019	30 Sep ., 2019
assets1 fixed Net	7 340 ,	7 424 ,	7 437 ,
of use (IFRS 16) Rights	-	240 1 ,	202 1 ,
Working capital	814	782	837
Sinopec Loan to	176	-	-
assets/liabilities1 Other	(546)	(779)	(879)
Capital employed	7 784 ,	8 666 ,	8 597 ,
debt Net	1 737 ,	1 598 ,	1 645 ,
(IFRS 16) leases Operating	-	1 252 ,	1 274 ,
Equity	047 6 ,	817 5 ,	678 5 ,
debt and op. leases Equity , net	784 7 ,	8 666 ,	8 597 ,

Cash generation during the first nine months leads to net debt reduction of €92 m to €1,645 m

Net debt to Ebitda RCA of 0.8x 2