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Galp Energia
Investor Presentation • Jul 13, 2022
1908_iss_2022-07-13_58e649f1-d181-4a7a-b5f2-eae158fdc735.pdf
Investor Presentation
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2Q22 Trading Update
The information below aims to provide the key macroeconomic, operational and trading conditions experienced by Galp during the second quarter of 2022. All data referred to below is currently provisional and may differ from the final figures which will be reported on July 25, 2022.
Galp's 2Q22 results will be published on July 25, before the opening of Euronext Lisbon. On that day, the Company will hold a conference call and webcast at 14:00 (Lisbon/London time). Further details can be found at the end of this release.
Consolidated earnings and financial position
- Expecting a robust operational cash flow (OCF) generation in 2Q22, partially offset by a working capital build from the higher commodities prices, although mitigated by the reduction in margin account balances (natural gas hedging positions roll-off).
- Solid cash flow performance to lead to a net debt reduction, with net debt to RCA Ebitda at the end of the period significantly below 1x.
Net income RCA in 2Q22 to include:
- Impairments related with exploration assets in Upstream (c.€90 m, or c.€40 m post-tax and minorities);
- Financial Results with mark-to-market swings on Brent and refining margin hedges (c.€-330 m, or €-230 m post-tax) related to the entire 1H22 (in 1Q22 booked as a special item).
Upstream
| 2Q21 | 1Q22 | 2Q22 | Var. YoY | Var. QoQ | |
|---|---|---|---|---|---|
| Working interest production (kboepd) | 128.4 | 131.2 | 119.6 | (7%) | (9%) |
| Oil production (kbpd) | 114.9 | 117.7 | 107.7 | (6%) | (8%) |
| Net entitlement production (kboepd) | 126.6 | 129.6 | 118.1 | (7%) | (9%) |
| Angola (kbpd) | 11.6 | 10.3 | 10.1 | (13%) | (2%) |
| Brazil (kboepd) | 115.0 | 119.3 | 108.0 | (6%) | (9%) |
- Working interest production lower QoQ, reflecting the higher concentration of maintenance activities in the period.
- As highlighted in 1Q22, oil hedges covered 1.6 mbbl during 2Q22 (c.15% of production).
- Impairments of c.€90 m related with exploration assets in Brazil, with no impact on the 2022-25 business plan production.
Commercial
| 2Q21 | 1Q22 | 2Q22 | Var. YoY | Var. QoQ | |
|---|---|---|---|---|---|
| Oil products - client sales (mton) | 1.5 | 1.7 | 1.9 | 22% | 13% |
| Natural gas sales - client sales (GWh) | 4,461 | 5,590 | 5,006 | 12% | (10%) |
| Electricity - client sales (GWh) | 1,020 | 1,139 | 1,088 | 7% | (4%) |
• Oil products sales reflecting higher B2C and B2B volumes QoQ, following seasonality and despite the higher commodity price environment.
• Natural gas and electricity sales evolution QoQ mostly following seasonality.
Industrial & Energy Management
| 2Q21 | 1Q22 | 2Q22 | Var. YoY | Var. QoQ | |
|---|---|---|---|---|---|
| Raw materials processed (mboe) | 21.0 | 21.8 | 22.9 | 9% | 5% |
| Galp refining margin (USD/boe) | 2.4 | 6.9 | 22.3 | n.m. | n.m. |
| Oil products supply1 (mton) |
3.6 | 3.7 | 4.1 | 11% | 10% |
| NG/LNG supply & trading volumes1 (TWh) |
18.1 | 14.8 | 14.0 | (23%) | (5%) |
| Trading (TWh) | 9.1 | 6.1 | 6.0 | (35%) | (2%) |
| Sales of electricity from cogeneration (GWh) | 269 | 113 | 174 | (35%) | 55% |
1 Includes volumes sold to the Commercial segment.
• Refining raw materials processed increased QoQ capturing the favourable market environment during the period.
• As highlighted in 1Q22, refining margin hedges covered 5.6 mboe during 2Q22 (c.25% of throughput), with an expected impact of c.€100 m at the Ebitda level.
• NG/LNG supply & trading volumes still limited by sourcing restrictions and the challenging European natural gas environment.
Renewables & New Businesses
| 2Q21 | 1Q22 | 2Q22 | Var. YoY | Var. QoQ | |
|---|---|---|---|---|---|
| Renewable installed capacity1 (MW) |
|||||
| Gross (100%) | 927 | 1,012 | 1,162 | 25% | 15% |
| Equity to Galp | 692 | 757 | 875 | 26% | 16% |
| Renewable generation (GWh) | |||||
| Gross (100%) | 475 | 243 | 687 | 45% | n.m. |
| Equity to Galp | 355 | 180 | 515 | 45% | n.m. |
1 Installed capacity at the end of the period.
• Renewable energy generation higher QoQ reflecting higher irradiation and plants' availability, as well as 150 MW of new operating solar capacity online.
Market Indicators
| 2Q21 | 1Q22 | 2Q22 | Var. YoY | Var. QoQ | |
|---|---|---|---|---|---|
| Exchange rate (EUR/USD) | 1.21 | 1.12 | 1.06 | (12%) | (5%) |
| Dated Brent price (USD/bbl) | 69.0 | 102.2 | 113.9 | 65% | 11% |
| Japan/Korea Marker LNG price (EUR/MWh) | 28.5 | 95.3 | 87.4 | n.m. | (8%) |
| Dutch TTF natural gas price (EUR/MWh) | 25.4 | 98.4 | 97.9 | n.m. | (0%) |
| Iberian MIBGAS natural gas price (EUR/MWh) | 25.0 | 96.9 | 87.1 | n.m. | (10%) |
| Iberian power baseload price1 (EUR/MWh) |
71.8 | 229.3 | 182.8 | n.m. | (20%) |
| Iberian solar market price2 (EUR/MWh) |
69.2 | 218.3 | 163.0 | n.m. | (25%) |
Source: Platts/MIBGAS/Bloomberg/OMIE/REE. 1 The Iberian power price is based on the Spanish power pool price published by the Iberian Energy Market Operator (OMIE)
2 The Iberian solar captured price is based on the Spanish power pool price published by the Iberian Energy Market Operator (OMIE) and on the power generation published by the Red Eléctrica Española (REE)
2Q22 Consensus | Results Presentation Details
Company collected consensus
The Company's collected consensus for quarterly earnings is scheduled to be opened for submission between July 13 and 19 and will be published by July 20.
Results presentation details
Galp's 2Q22 results, will be published on July 25, before the opening of Euronext Lisbon.
The Company will hold a conference call and webcast on July 25, at 14h00 (Lisbon/London time). The conference call and webcast details are provided below:
Webcast
• https://edge.media-server.com/mmc/p/kt8dxdgb
Conference call registration
• https://register.vevent.com/register/BId7885121f4d344ef9ebd17a711432369
To listen the Q&A session, please register dial in 10 minutes before the scheduled time to ensure your participation.
Galp Energia, SGPS, S.A. Investor Relations:
Otelo Ruivo, Director João G. Pereira Teresa Toscano Tommaso Fornaciari César Teixeira
Contacts: Tel: +351 21 724 08 66 Fax: +351 21 724 29 65
Address: Rua Tomás da Fonseca, Torre A, 1600-209 Lisbon, Portugal Website: www.galp.com/corp/en/ Email: [email protected]
Reuters: GALP.LS Bloomberg: GALP PL
This document may include forward-looking statements, including, withoutlimitation, regarding future results, namely cash flows, dividends, and shareholderreturns; liquidity; capital and operating expenditures; performance levels, operational or environmental goals, targets or commitments and project plans, timing, and outcomes; production rates; developments of Galp's markets; and impacts of the COVID-19 pandemic on Galp's businesses and results; any of which may significantly differ depending on a number of factors, including supply and demand for oil, gas, petroleum products, power and other market factors affecting them; the outcome of government policies and actions, including actions taken to address COVID-19 and to maintain the functioning of national and international economies and markets; the impacts of the COVID-19 pandemic on people and economies; the impact of Galp's actions to protect the health and safety of its employees, customers, suppliers and communities; actions of Galp's competitors and commercial counterparties; the ability to access short- and long-term debt markets on a timely and affordable basis; the actions of consumers; other legal and political factors, including changes in law and regulations and obtaining necessary permits; unexpected operating events or technical difficulties; the outcome of commercial negotiations, including negotiations with governments and private entities; and other factors discussed in Galp's Management Report & Accounts filed with the Portuguese Securities Market Commission (CMVM) for the year ended December 31, 2020 and available on our website at galp.com. All statements other than statements of historical facts are, or may be deemed to be, forward-looking statements. Forward-looking statements express future expectations that are based on management's expectations and assumptions as of the date they are disclosed and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such those statements. Galp and its respective representatives, agents, employees or advisers 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 forwardlooking statements contained in this document to reflect any change in events, conditions or circumstances. This document does not constitute investment advice nor forms part of and should not be construed as an offer to sell or issue or the solicitation of an offer to buy or otherwise acquire securities of Galp or any of its subsidiaries or affiliates in any jurisdiction or an inducement to engage in any investment activity in any jurisdiction.