Galp Energia

Investor Presentation • Feb 11, 2019

FY2018 RESULTS
& OUTLOOK

11 FEBRUARY 2019

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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Neither this presentation nor any copy of it, nor the information contained herein, in whole or in part, may be taken or transmitted into, or distributed, directly or indirectly in or to the United States. Any failure to comply with this restriction may constitute a violation of U.S. securities laws. This presentation does not constitute and should not be construed as an offer to sell or the solicitation of an offer to buy securities in the United States. No securities of the Company have been registered under the United States Securities Act of 1933 or the securities laws of any state of the United States, and unless so registered may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.

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 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.

$2018$ $\frac{ln a}{n}$

Successfully developing and accessing top Pre-Salt projects (Brazil)

Start of production from Kaombo (Angola)

PoD submission for Rovuma LNG mega trains (Mozambique)

Downstream

Increasing refining efficiency

Solid performance from oil and gas marketing activities

Enhancing commercial competitiveness in core regions

Increasing our high quality resources base

$2.4_bn$ boe

$2P+2C$

$+15%$

YoY

Upwards revision on the Brazil and Mozambique developments

Securing $a 20%$ stake in Carcará Accessing new high potential prospective
pre-salt blocks (Uirapuru and C-M-791)

2018 Delivering on our commitments

Strategy
execution

Developing our competitive
UPStream portfolio

Main upstream activities expected during 2019/20

galp (

Increasing potential of long-term
production growth

WI production from existing portfolio (kboepd)

72019/2020

Adjusting Lula and Iara
timeline, reflecting P67 and
P68 units' later start-up

$2020+$

Increasing contribution from existing portfolio (Brazil and Mozambique)

Note: As per usual quidance, production levels consider the expected stake adjustments from unitisation processes in Brazil. ¹Weighted E&P portfolio NPV₁₀ breakeven 2019 real terms based on 2025 producing assets.

Enhancing efficiency and flexibility of R&M activities

Refining

Marketing

"+\$1/boe" initiatives to deliver full contribution by 2020

Developing the Refinery 4.0 digitalisation programme

川

IMO: Galp system to produce
compliant low sulphur fuel oil, with expected positive margin impact by 2020

Enhancing efficiency

of operations and strengthening regional presence

Launching new services while improving fuel and non-fuel offering

CARBONES JIJ

qaip

Adapting NG/LNG
sourcing and power portfolio to market trends

Gas & Power

Low Carbon & New business solutions

Building new NG/LNG sourcing basket

Strengthening gas and electricity commercial position in Portugal and Spain

Preparing integration with renewable power generation through solar power projects in Iberia

Developing alternative mobility services, including an electric offer

10 | FY2018 Results & Outlook

THILL

Maintaining a resilient and competitive portfolio

Working on the next growth cycle (2020+)

Commitment to shareholder value creation

(Results)
& Financial)

REFERE

Ø)

Solid cash generation in 2018

despite working capital build

2018 Cash flow (€m)

galp

13 | FY2018 Results & Outlook

Organic CFFO 2018-20 CAGR of 10-15%

$CFFO$ ( $\epsilon$ m)

Upstream to benefit from production growth and reflecting lower oil taxes from lara

Downstream performance supported by
improved operations and efficiency initiatives

IMO regulation expected to positively impact upstream and downstream performance

Group Ebitda expected at €2.1-2.2 bn in 2019 and above €3 bn from 2020 onwards

Organic capex of c.€1 bn p.a.

Note: Upstream net capex for 2019-20 considers equalisations from past costs/profits adjustments related with unitisation processes in
Brazil. The estimated equalisation net position as of 31.Dec.2018 amounted to a c.€100

Organic FCF
of c.€1 bn from 2020

Free cash flow $(\epsilon m)$

Net debt to Ebitda expected below 1.0x from 2020 (under IFRS 16)

Operational cash generation and asset rotation to support portfolio optionality

Appendix

Macro assumptions
and plan sensitivity

Galp assumptions	2018 (actual)	2019E	2020E
Brent price (\$/bbl)	71	60	65
Galp refining margin (\$/boe)	5.0	$5.0 - 6.0$	$6.0 - 7.0$
EUR:USD	1.18	1.20	1.20

		Ebitda		CFFO		FCF 1
Sensitivities $(\epsilon m)$	Change	2019E	2020E	2019E	2020E	2019E	2020E
Brent price	\$5/bbl	145	180	95	85	70	65
Refining margin	\$1/boe	90	100	90	70	90	70
EUR:USD	0.05	(75)	(100)	(60)	(7O)	(25)	(35)

IFRS 16 impacts

Balance sheet

All leases on balance sheet

Leased FPSOs and subsea equipment account for c.70% of operational leases Profit & Loss | Cash Flow

Leases subject to depreciation and interest

No changes on receivables / payments $\longrightarrow$ No impact on FCF

Galp reserves
and resources

Reserves (mmboe)	2017	2018	Chg.
1P	383	389	2%
2P	748	755	$1\%$
3P	965	985	2%
Contingent resources (mmboe)	2017	2018	Chg.
1C	296	425	43%
2C	1,352	1,659	23%
3C	3,297	3,671	11%
Prospective resources (mmboe)	2017	2018	Chg.
Unrisked	3,835	4,216	10%
Risked	566	623	10%

l.

Source: All figures are based on DeGolyer and MacNaughton report as of 31.12.2018.
Reserves figures on a net entitlement basis. Contingent resources and prospective resources on a working interest basis.

2018 results

supported on strong operational performance

Profit & Loss (€m)

	2017	2018	YoY
Ebitda RCA	1,786	2,218	24%
E&P	850	1,440	69%
R&M	774	610	(21%)
G&P	132	137	4%
Ebit RCA	1,032	1,518	47%
Associates	150	137	(8%)
Financial results	(34)	(70)	n.m.
Taxes	(483)	(726)	50%
Non-controlling interests	(88)	(151)	72%
Net Income RCA	577	707	23%
Net Income IFRS	597	741	24%

Balance sheet $(\epsilon m)$

	Dec.17	Dec.18	YoY	IFRS 16 01.Jan.19
Net fixed assets	7,231	7,340	109	8,543
o.w. operating leases				1,203
Working capital	584	814	230	814
Loan to Sinopec	459	176	(283)	176
Other assets (liabilities)	(609)	(546)	63	(546)
Capital employed	7,665	7,784	118	8,987
Net debt	1,886	1,737	(149)	2,940
o.w. operating leases				1,203
Equity	5,779	6,047	268	6,047
Net Debt + Equity	7,665	7,784	118	8,987

4Q18 E&P Higher production QoQ offset by lower realisations

Main E&P data

		4Q17	3Q18	4Q18
Working interest production	kboepd	101.2	103.8	113.1
Oil production	kbpd	88.6	93.1	99.8
Net entiltlement production	kboepd	99.1	102.3	111.7
Angola	kbpd	5.2	7.4	8.9
Brazil	kbpd	93.9	94.9	102.9
Oil and gas average sale price	USD/boe	53.6	65.3	61.O
Production costs	USD/boe	8.O	9.0	7.0
DD&A	USD/boe	10.7	10.5	8.8
Ebitda RCA	€m	296	396	339
Ebit RCA	€m	213	311	260
Net Income from E&P Associates	€m	13	15	12
Capex	€m	281	188	141

Production up QoQ, benefiting from the start-up of FPSO#8 and the ramp-up of Kaombo North FPSO

Ebitda impacted by lower realisations and underliftings adjustments during a period of declining oil price

DD&A benefiting from the weaker BRL:EUR and reversion of abandonment provisions in Angola

4Q18 R&M Quarter impacted by planned maintenance in refining

Main R&M data

		4Q17	3Q18	4Q18
Galp refining margin	USD/boe	4.9	5.8	4.3
Refining cost	USD/boe	1.9	2.0	4.3
Hedging impact on Ebitda	USD/boe	O.1	O.O	O.3
Raw materials processed	mmboe	28.4	27.7	19.2
Total oil product sales	mton	4.5	4.5	3.7
Sales to direct clients	mton	2.2	2.4	2.2
Ebitda RCA	€m	144	195	118
Ebit RCA	€m	44	115	24
Net Income from R&M Associates	€m	$\overline{2}$	1	(8)
Capex	€m	75	44	149

Raw materials processed lower YoY and QoQ, due to planned partial maintenance in Sines and Matosinhos refineries

Galp refining margin impacted by weaker international refining environment and maintenance activities

Ebitda down YoY and QoQ on the back of lower contribution from refining, despite robust marketing performance

4Q18 G&P Resilient despite challenging power and trading

Main G&P data

		4Q17	3Q18	4Q18
NG/LNG total sales volumes	mm 3	1,899	2,024	1,725
Sales to direct clients	mm 3	1,109	1,201	1,181
Trading	mm 3	790	823	544
Ebitda RCA	€m	27	44	25
Ebit RCA	€m	22	39	20
Net Income from R&M Associates	€m	22	24	20
Capex	€m	1	( )	$\overline{2}$

LNG trading volumes down,
reflecting the end of long term
structured contracts in 3Q18

Ebitda impacted by a lower contribution from the power business YoY