petrom on its way to becoming a leading integrated energy player in see

Petrom on its way to becoming a leading integrated energy player in SEE

January - June 2010

2 | Petrom Group Q2/10

Disclaimer

This document does not constitute an offer or invitation, or solicitation of an offer, to subscribe for or purchase anysecurities and neither this document nor anything contained herein shall form the basis of any contract or commitmentwhatsoever. This document is being furnished to you solely for your information and may not be reproduced orredistributed to any other person. In particular, neither this document nor any copy hereof may be taken or transmittedinto the United States or to U.S. persons or distributed, directly or indirectly in the United States or to U.S. persons.

This document includes ”forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of1933 and section 21E of the U.S. Securities Exchange Act of 1934, as amended. All statements other than statementsof historical facts included in this document, including, without limitations, those regarding the company’s financialposition, business strategy, plans, and objectives of management for future operations (including development plansand objectives relating to the company’s products), are forward-looking statements. Such forward-looking statementsinvolve known and unknown risks, uncertainties and other factors which may cause the actual results, performance orachievements of the company, or industry results, to be materially different from any future results, performance orachievements expressed or implied by such forward-looking statements. Such forward-looking statements are based onnumerous assumptions regarding the company’s present and future business strategies and the environment in whichthe company will operate in the future. The company expressly disclaims any obligation or undertaking to releasepublicly any updates or revisions to any forward-looking statements contained herein to reflect any change in thecompany’s expectations with regard thereto or any change in events, conditions or circumstances on which any suchstatement is based.


Presentation outline

1. Petrom’s heritage: 150 years of Romanian oil history

2. Petrom today

3. Romanian macro economic environment

4. Our strategic directions

5. Conclusions

6. Petrom Group results for Q2/10 (consolidated, IFRS)


Peak oil: 14.7 Mn t in 1976

2009

1857 First officially reported Oil Production in Romania: 275 t

1861 First well manually drilled by means of wooden rods and gimlet type bits

1895 Mining Law – oil exploitation can only be carried out by the land owner

1906 Romania’s Geological Institute set up

1907 World Petroleum Congress in Bucharest

1913 First natural gas production

1927 First electric logging performed by Schlumberger in Romania

1936 Highest oil production between the two World Wars: 8.7 mn t

1940 First gas storage (10 mn sqm in Boldesti field)

1942 First seismic survey in Banat - Crisana

1975 First exploration drilling in the Black Sea

1987 First crude oil production offshore (Black Sea)

2004 Petrom privatization

Petrom’s heritage: 150 years of Romanian oil history [1/2]

Petrom’s heritage: 150 years of Romanian oil history [2/2]


* Through the merger of Petrom RA, Arpechim, Petrobrazi, 41 retail branches, Transpeco and Petrotrans (transport)

1960 –1964Establishment of Petrobrazi refinery

1965 –1969Establishment of Arpechim refinery

1987First offshore crude production, Lebada East field

1991Establishment of Petrom RA (E&P company only)

1997

Establishment of the vertically integrated NOC Petrom SA*

1998First field operated in Kazakhstan

2001Starts trading of Petrom shares on BSE

2004 Acquisition of 51% of Petrom’s share capital by OMV, Austria

2006Acquisition of a 74.9% stake of Ring Oil Holding & Trading Ltd (Russia)

2008Acquisition of the oil services business of Petromservice

2007Acquisition of 55.53% of Shell Gas Romania (LPG) and 60% of Trans Gas Services

2006Acquisition of 99.9% of the share capital of three OMV retail networks (Romania, Bulgaria and Serbia)

2008Agreement signed with ExxonMobil to explore hydrocarbon potential of the Neptun Block offshore deepwater portion (Romania)

2009Petrom began the construction of the Brazi gas fired power plant

2009/2010Transfer to Oltchim of Arpechim refinery’s petrochemical assets

2009Upstream acquisition in Kazakhstan –Korned LLP holding exploration license for undeveloped Kultuk oilfield

2006Take over of 30 filling stations from MOL Romania,95% stake in Aviation Petroleum, MOL Romania’s aviation business

2010Gas sales activities transferred to OMV Petrom Gas SRL

2010Partnership Petrom–Petrofac to enhance production in 9 onshore fields in Ticleni area by at least 50%, in the next 5 years




2. Petrom today



5. Conclusions


Solid shareholder structure


At a glance 2007 2008 2009

56,644,108,335 56,644,108,335

14,104

3,336

0.2920

0.1160

0.2490

0.0241

0

0

0

10,253

2,609

0.5600

0.1290

0.1810

0.0180

0

0

0

Number of shares (mn) 56,644,108,335

Mcap (RON mn)¹ 28,152

Mcap (EUR mn)¹ 8,056

Year's high (RON) 0.6200

Year's low (RON) 0.4790

Year end (RON) 0.4970

EPS (RON/share) 0.0314

Dividend/ share (RON) 0.0191

Dividend yield¹ 3.8%

Payout ratio 61%

Property Fund

20.11%Free float

6.21%

Ministry of Economy 20.64%

OMV 51.01%

EBRD 2.03%

► OMV, leading energy Group in CE/SEE, as majority shareholder

► Property Fund (60% state-owned), to be listed on BSE► State holding, but no golden share

Listed on Bucharest Stock Exchange (6.2% free float)Petrom’s governance follows the two-tier management principle

¹ Calculated based on the share price as of the last trading day of the respective year

Significant economic influence in Romania


Substantial impact on other sectors: > 8,900 suppliers and over 17,000 clients (in 2009)Secures: 99% of Romanian oil production; ~ 50% of gas production; ~10% electricity market starting 2012

Substantial impact on other sectors: > 8,900 suppliers and over 17,000 clients (in 2009)Secures: 99% of Romanian oil production; ~ 50% of gas production; ~10% electricity market starting 2012

3.3% of total economy-wide investmentsPetrom’s investments in 2009 equivalent to around 20% of Romania’s budgetary public investments in 2009

3.3% of total economy-wide investmentsPetrom’s investments in 2009 equivalent to around 20% of Romania’s budgetary public investments in 2009

EmploymentApprox. 27,500 employed by OMV Petrom SA

( 0.6% of Romania’s employment; 3-3.5 times higher if indirect effects are considered)

Approx. 27,500 employed by OMV Petrom SA( 0.6% of Romania’s employment; 3-3.5 times higher if indirect effects are considered)

Capital investments

Support of economic growth and security of supply

Petrom is the largest Romanian company by:

TurnoverNo. of employees* Contributions to the state budget Capital investmentStock market capitalization

Petrom is the largest Romanian company by:

TurnoverNo. of employees* Contributions to the state budget Capital investmentStock market capitalization

Petrom sales to GDP ratio 2.6% (2-2.5 times higher if the indirect effects are

included)

Petrom sales to GDP ratio 2.6% (2-2.5 times higher if the indirect effects are

included)

Government budgetcontributions

Around 12% in direct contributions to the state budget (RON 6.7 bn)

Around 12% in direct contributions to the state budget (RON 6.7 bn)

Output

Data as of December 31, 2009 and referring to OMV Petrom SA

* Largest private employer


Petrom today: leading oil & gas player in SEE, high degree of physical integration

Exploration and Production

Exploration and Production

Refining and Marketing

Refining and Marketing

Gas and Power

Gas and Power

4.4 mn t oil production 5.3 bcm gas production823 mn boe proved reserves in Romania

2 refineries (Petrobrazi and Arpechim) 5.2 mn t crude oil processed;thereof imported: 0.8 mn t814 filling stations at Petrom Group level4.7 mn t Petrom Group marketing salesRetail market share 40% in Romania

4.8 bcm Group gas salesStrong position on the Romanian gas market, covering all gas market segmentsFirst power projects operational in 2011 (power plant Brazi and wind park Dorobantu)

All figures as of December 2009; figures refer to OMV Petrom S.A. unless otherwise specified

Upstream and downstream activities

Upstream activities

Downstream activities


Leading player in Exploration and ProductionSole crude oil producer in Romania2nd gas producer in Romania

Oil & Gas resources:Romania: exploration licenses for 15 onshore and 2 offshore blocks; 256 production licenses oil and gas fields Exploration and production rights in Kazakhstan (Komsomolskoe, Kultuk, TOC fields); exploration rights in RussiaOperating ~ 9,100 oil & gas producing wells and 7 offshore production platforms in Black SeaCurrent recovery factor in oil resources: 25%; in gas resources: 49%

Unlocking our potential:Field re-developmentExpand existing EOR and IOR programsDrill deep onshore and offshore wells

Significantly improved HSE performance Motivated and dedicated teams

Exploration and Production (E&P) today: substantial potential in mature assets

EBIT (EUR mn)

791972

806 796

582

0

300

600

900

1200

2005 2006 2007 2008 2009

OPEX (USD/boe)

13.1 13.8717.03 18.27

15.06

0

5

10

15

20

2005 2006 2007 2008 2009

Total Production (mn boe)79.07 74.64 71.96 71.08 68.29

0

20

40

60

80

2005 2006 2007 2008 2009

Graphs present Petrom Group figures


Refining and Marketing (R&M) today

-208

-338-274

-489

-146

-600

-500

-400

-300

-200

-100

0

2005 2006 2007 2008 2009

EBIT (EUR mn) – including petrochemicals

4996 4725 4347 4290

1404 21381570 1831

4346

815

0

2000

4000

6000

2005 2006 2007 2008 2009

Equity import

Crude input (kt)

Retail market share (%) in Romania

2428

3236

40

0

10

20

30

40

50

2005 2006 2007 2008 2009

All fuels produced to EU specifications

Terminal modernization in progress (Jilavaterminal was finalized, Brazi currently reached 90% completion)

~80% of total Petrobrazi site surface cleaned

Number one downstream operator in Romania: 40% retail market share in 2009

Operating app. 814 filling stations in Romania and in neighboring countries

Leading supplier of aviation fuel services

Number one player on the local LPG market

All filling stations in Romania operating under full agency system

Annual throughput per filling station at 4.9 mn l in 2009


Gas and Power (G&P) today

Strong position on the Romanian gas market, covering all gas market segments

Leading gas wholesale company in Romania

Optimized business model for the gas sales activity

Developing power portfolio: building a 860 MW gas fired power plant, entering renewable energy business – wind

Combined cycle gas fired power plant project in Brazi

Capacity: 860 MW net = 2 x 280 MW gas turbines + 1 x 300 MW steam turbine

57% efficiency (compared to ~30% mean in Romania)

First brick ceremony at Brazi: June 3rd, 2009

Wind park “Dorobantu” from Dobrogea with designated capacity of 45 MW

4449

30

17

0

10

20

30

40

50

60

2006 2007 2008 2009

Consolidated EBIT Gas & Power (EUR mn)

5.615.24

5.55 5.34.85

0

2

4

6

2005 2006 2007 2008 2009

Gas sales Petrom Group (bcm)

* As of 2008, Doljchim included

Brazi CCPP: construction works


Restructuring and modernization in the last 5 years consolidated Petrom’s position (1/2)

Consolidation of the E&P businessNatural decline of oil fields largely mitigatedRRR increased to 70% in 2009 from 11% in 2004Well modernization finalized (over 5,000 wells) Extended rich drilling and multi-stage fracturing new technologies successfully applied offshoreLarge scale 3D seismic to characterize our exploration and development targets (Torcesti, Mamu -onshore, Delta-offshore)Exxon Mobil JV for deepwater offshore explorationExpansion of international activities Successful integration of E&P services

Major steps in the restructuring of R&MSignificantly improved HSE performanceImprovement of yield structure, own crude consumption; products meet EU specifications Refineries turnaround cycle improved to 1 every 4 years from 1 per yearSales of petrochemical activities in Arpechim to Oltchim and fully exit petrochemicals sectorGroup filling stations of 814 in 2009 from 682Significant increase of throughput/filling station and non-oil business turnover

Oil and condensate production (mn t)

5.21 4.78 4.54 4.54 4.39

0123456

2005 2006 2007 2008 2009

Annual throughput/fs in Romania (mn l)*

1.92.3

3.6

4.6 4.9

0.0

1.02.0

3.04.0

5.0

2005 2006 2007 2008 2009

Reserve replacement rate in Romania

110

13

38

71 70

0

20

40

60

80

2004 2005 2006 2007 2008 2009

*As of 2007, includes OMV retail network in Romania


Restructuring and modernization in the last 5 years consolidated Petrom’s position (2/2)

Exit non-core, non viable business: (petro)chemicals, real estate incl. motels, off-shore mobile drilling unitsAcquired Petromservice oilfield services business activities to optimize E&P servicesExpand the gas value chain by entering into the power market

Business restructuring & diversification

Business restructuring & diversification

RestructuringRestructuring

Best practicecompany in

Romania

Best practicecompany in

Romania

Important role in securing the energy supply – the largest investor in the energy sector (app. EUR 1 bn p.a. since 2005)European standards and principles of corporate governanceModernized organization, focus on talent management and performance cultureCSR and dialogue with stakeholders

Productivity increased due to major restructuring and efficiency improvements performed since 2005 in all business segmentsLabor litigations on track to be resolved, no additional provisions built


Key financial indicators (consolidated, IFRS, 2005-2009)

in EUR mn 2005 2006 2007 2008 2009

4,473EBIT 563 719 569 327 382

Payout ratio 52% 44% 61% 0 0

1,015461459934

5,020 1,8202,494

Shareholders' equity 3,667 4,411 4,345 4,012 3,829

Dividend per share (gross, EUR equiv.) 0.0049 0.0051 0.0057 0 0

EPS (EUR) 0.0101 0.0104 0.0081 0.0047

5,469

0.0036

1,053

3,795

969196203643

6,135 1,085

243266

11685,852 1,4043,244 3,391

4,332

1,056587587794

4,471 2,1862,245

Sales 3,011

EBITD 848Net income 488Net income after minorities 487Operating Cash Flow n.a.Fixed assets 3,646 Current assets 1,981Total liabilities 1,960

ROACE (%)*

22 21

16

79

0

5

10

15

20

25

2005 2006 2007 2008 2009

*Key ratios calculated in RON terms

Indebtness ratio (%)*

0.32 0.18 0.22

11.09

19.99

0

5

10

15

20

2005 2006 2007 2008 2009

0

500

1000

1500

2000

2005 2006 2007 2008 2009

E&P R&M G&P (incl Doljchim) Corporate and Other

Investments by business segments (EUR mn)

340

925

1,339

1,837

995

Solid financial performance since privatization


Consolidated profitability from a loss making business prior to privatization to strong returns even in challenging years

Resumed dividend allocation, except for years with outstanding negative environment

Total dividends allocated in 2005 exceeded cumulated dividends allocated within previous 7 years

Strengthened capacity of cash flow generation

Solid balance sheet, maximum indebtness ratio in past five years topped 20%

Pursue investments needed to support long term sustainable development

2009: swift management decisions to mitigate the economic crisis effects


Optimized cash flow management

Secure external financing and hedging instruments

Medium and long term financing (EUR 1.6 bn) from financial markets to support investment needs; gearing ratio maintained below 30%

Cash impact of oil price hedging in 2009 of RON 524 mn (shown in financial result)

Cost reduction and business restructuring

Adjust refining capacity to 4.2 mn t/y to process 100% of Romanian crude production; Refining CAPEX for 2010-2014 at EUR 750 mn

Exit chemicals business by end of 2010

Sale of petrochemicals activity within Arpechim

Results of cost reduction visible in all business segments, especially in E&P

Re-evaluation and prioritization of projects RAS, Petrom SA figures




2. Petrom today



5. Conclusions


Romanian macro environment


Wages, Inflation (Annual Growth Rates) and the NBR Reference Rate

-5

0

5

10

15

20

25

30

Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10

%

Nominal Net Wage CPI Inflation NBR Rate

Deep recession in 2009. Contraction to continue in 2010, growth expected after 2011

Romania is likely to see a double dip: -3% vs+2% in CEE4* (2010), followed by a weaker than expected growth in 2011

Industry has been the only upward driver in terms of GDP, supported by foreign demand; the domestic counterpart has been sluggish

State expenditures restricted in the medium term by the need to bring down the budget deficit from 7.3% in 2009 to a newly agreed target of 6.8% in 2010 (previous target: 5.9%)Investments likely to recover more slowly after recent move to hike VAT to 24%

Domestic private investment still hampered by higher bank ratesFDI halved in 2009 to EUR 4.7 bn

Banking system relatively sound but still vulnerable to ‘sudden stops’RON remains highly sensitive to investors’ risk perception on Romania, leading to additional pressures on inflation and banks’ loan portfolios

Source: NBR, EC and INSSE data

Source: NBR, EC and INSSE data

R omania and E U ‐27 Output Development

‐8

‐6

‐4

‐2

0

2

4

6

8

2005 2006 2007 2008 2009 2010* 2011*

%

50

80

110

140

170Bn. EUR

GDP , Bn. E UR (RHS ) E U‐27 Romania

*CEE4: Czech Republic, Hungary, Poland, Slovakia

Energy sector regulatory framework


Oil and electricity market - liberalized and competitive; implementation process shows room for improvement

Oil, gas and electricity regulatory framework aligned with EU; room for further refinements

Gas market – convergence of the domestic price with the import gas price neededThe gas market still faces structural and social obstacles and the adjustment between domestically produced and import gas prices will probably proceed only gradually

Gas basket price defined by the market regulator (ANRE)Weighted average of domestic gas and import gas using import quota

Environmental regulations to be enforced starting 2013 are tough to meet given current electricity production capacity configuration

Renewable regime - clarification of renewable regulatory framework & medium-long term strategy for the development of renewable needed

Market challenges:Role and status of the two state energy companies needs to be clarified Re-launch privatization in the energetic sectorHigh level of investments required to meet envisaged EU quality and environmental standards


Major players on the Romanian oil market (up- and downstream)

Petrobrazi Arpechim

ROMPETROL(Petromidia, Vega)

LUKOIL(Petrotel)

RAFO

Downstream (distribution)

Refineries (combined capacity ~18 mn tpa)

IMPORTS: various PRODUCTION

TRANSPORTATION: Conpet

FUELS IMPORTS:

various

, , Rompetrol, Lukoil, Mol, Others (Rafo, Agip, independent retailers)


Major players on the Romanian gas market

PRODUCTION: , RomgazPRODUCTION: , Romgaz

TRANSPORTATION: TransgazTRANSPORTATION: Transgaz STORAGE:Romgaz,…STORAGE:Romgaz,…

DISTRIBUTION: E.ON Gaz Romania, GDF Suez Romania,…DISTRIBUTION: E.ON Gaz Romania, GDF Suez Romania,…

SUPPLY: , Romgaz, GDF Suez Romania, E.ON Gaz Romania,…SUPPLY: , Romgaz, GDF Suez Romania, E.ON Gaz Romania,…

POWER POWER INDUSTRYINDUSTRY RESIDENTIALSECTOR

RESIDENTIALSECTOR

IMPORTS: variousIMPORTS: various




2. Petrom today



5. Conclusions



E&P 2015: unlock potential and offset natural declineFinalize redevelopment of 6-8 major fieldsFollowing first deepwater exploration drilling in 2012, complete the deepwater offshore appraisal and start developmentFurther develop partnershipsGas booster compressors installed and gas systems de-bottleneckingComplete modernization of facilities in selected major fieldsStart production of Kultuk oilfield in KazakhstanComplete integration of E&P Services into E&P by 2012Continued HSEQ improvements, people development, operational & energy efficiency increase and strict cost management, streamlined organization

E&P: key investment projects in Romania


Q1 2010

Concept Pre-feasibility Feasibility Execution

LEBADA EAST FIELD RE-DEVELOPMENT

►Design phase & execution of two sidetracks

►Final investment decision in 2010

Q1 2010

OPRISENESTI FIELD RE-DEVELOPMENT


►Final investment decision in Q1 2011

MORENI FIELD RE-DEVELOPMENT

►Design phase &appraisal programstarted


GAS COMPRESSOR STATION AT HUREZANI

►First gas delivery achieved on 29th of May 2010

2010


2010

MAMU FIELD RE-DEVELOPMENT

►Madulari plant upgraded

►Two wells drilled►New plant decision

depending on well tests

Concept Pre-feasibility Feasibility\ Execution

Q1 2010

Q1 2010

SUPLAC FIELD RE-DEVELOPMENT

►Revamping of existing facilities ongoing

►3 horizontal pilot wells to be drilled in 2010



Further increase network efficiency and increase throughput / filling station (Romania: 4.91 5.2 mnl)

Continue two brand strategy (OMV & Petrom): rebranding of Petrom premium stations (PetromV) into OMV by YE 2010 started

Optimize organization by harmonization of organizational structures and processes (OMV & Petrom)

First two EuroTruck - Commercial Road Transport dedicated stations are on stream near to A1 and A2 motorways

Premium bitumen production started in RO and launched on the market

Petrobrazi Refinery operated as upstream integrated refinery

Maximize Petrobrazi integration value by conversion of 100% Romanian crudeImprovements in efficiency and yield structure (EUR 750 mn until 2014, out of which EUR 400 mn into modernization by end of 2013)

Energy loss: 142 10%MD: 302 ~45 % HFO: 15%2 ~ 7%

Divestment/closure Arpechim by 2012

Modernize storage infrastructure: close old storages and build up modern terminals

R&M: maximize integration value and strengthen position on fuels market

Ref

inin

gM

arke

tin

g

Grow premium brand and quality leadership with focus on profitability

1 Basis 2009 2 Basis 2004

Gas and Power: market leader on Romanian gas marketand important power generation supplier


GasStabilize equity gas volumesEnlarge supply portfolio with import and domestic

contractsEvaluate potential sites for storage business also

to support Nabucco projectGet access to cross border transmissionGrow gas sales volume in Romania; increase

customer baseExpand gas marketing into neighboring countriesDomestic gas price convergence to import gas

prices

PowerOperational start up: Brazi CCGT by end 2011, wind park Dorobantu by mid 2011Achieve a market share in Romania of up to 10%Use “Early Mover Position” (first modern CCGT in Romania) as competitive advantage in a growing electricity market with over-aged asset structureDevelop renewables

OMV Petrom S.A.Gas

OMV Petrom Gas SRL 99.99% owned by OMV Petrom S.A.

Petrom internal customers

Large distribution companies

Power plants &large municipalities

Industrial customers

OMV Petrom S.A

E&P

Trading

Petrom Distributie Gaze SRL

99.99% owned by OMV PetromS.A.

Households

Commercial Customers

Import gas

& additional

volumes

Petrom Group strategic directions for 2015


Targets 2015 Strategic directions

E&P Unlock E&P potential and aim to largely offset the natural decline

Caspian Region to become core market

Re-develop key fields with different recovery schemes

Explore deepwater offshore

Optimize and ensure long-term production, including partnerships

De-bottleneck gas system

Increase energy efficiency of operations

Modernize production facilities and infrastructure in selected fields

Fully integrate Exploration & Production Services into Petrom Exploration & Production

Develop upstream activities in the Caspian Region

R&M Process 100% domestic crude

Crude oil consumption for energy and loss: 141 10%

Middle distillates: 301 ~45 %

HFO: 15%1 ~ 7%

Divest/close Arpechim by 2012

Increase throughput / filling station in Romania (4.9 mn l in 2009 / 5.2 mn l in 2015)

Petrobrazi Refinery: Maximized value of Romanian upstream integrated refinery

Improve yield structure and improve energy efficiency

Finalize restructuring

Maintain strong market position with a two-brand strategy in marketing

G&P Grow gas sales volume in Romania and neighboring countries

~10% market share on Romanian power market

Establish an electricity sales and trade concept within Petrom

Evaluate gas storage business opportunities

Develop a power generation portfolio (Brazi and wind power plants); commercial operations to start in 2011

Corporate

Sustainability

Increase sustainability rating to Prime mid range

► Sustainable development through financial discipline

► Sound corporate governance principle and sustainable business practices

► High standards of corporate social responsibility

► Industry ‘best practice’ health and safety business practices

► Modern Human resources practices to support the modernization process and enhance employees performance and satisfaction

1) As of 2004




2. Petrom today



5. Conclusions


Business sustainability and growth potential to be supported by sizeable investments


2010 onwards

High investment still needed for next years: > EUR 1 bn/year

2005 - 2009 vs. 2010 investments

63%50%

26%

18%

4%

25%

7% 7%

0%

20%

40%

60%

80%

100%

120%

2005-2009 2010

%

E&P R&MG&P (including Doljchim) Corporate & Other

Pursue up to EUR 600 mn capital increase

Strict cost management and optimization initiatives

Gas price convergence

Financial & capital markets

Ensure business sustainability and growth potential


Petrom stays committed to its strategic directions and sustainable development

Becoming a leading integrated energy player in Southeastern Europe

Sustainable business practices and people performanceSustainable business practices and people performance

Consolidate and grow the

hydrocarbon business

Consolidate and grow the

hydrocarbon business

Diversify business portfolio by

developing power generation

Diversify business portfolio by

developing power generation

Realize full efficiency potential and maximize the

integration value

Realize full efficiency potential and maximize the

integration value

Macro environment and market challengesBusiness outlook 2010


Macro environment: main challengesSevere decrease of private consumptionDecrease of public sector consumption, due to austerity measuresJustice reformFlexible labor legislationLack of a frame to stimulate private and public investmentsBalancing immediate needs with a credible economic program on medium termsFiscal stability and predictability

Petrom: main market driversCrude price, downstream margins and FX to remain volatile Market demand under pressure

Our focusE&P: gas de-bottlenecking project in Hurezani, identification, planning and execution of field re-development projects, organizational streamliningR&M: modernization of the crude distillation unit and one month turnaround (Petrobrazi), operations’ optimization in Marketing and two completed terminals by year’s endG&P: continue construction of Brazi power plant; gas price convergence to be a priority topic in the dialogue with the Romanian authorities

Conclusions


Petrom is well positioned to cope with the challenges and capture opportunities in the current marketPetrom is well positioned to cope with the challenges and capture opportunities in the current market

Strong shareholder structure, supported by strategic partnership with OMV further consolidates Petrom’s position

Significant improvements made in the last 5 years laid solid foundation for future development

Strong value drivers to ensure value creation for shareholders

Continue to consolidate hydrocarbon business and tap market opportunities to expand into power generation




2. Petrom today



5. Conclusions



Solid results in a favorable crude price environment underpinned by effective management measures

Solid results in Q2/10 and

6m/10

Favorable oil price environment

Urals crude price rose by 32% over Q2/09 Optimized refinery utilization, with Arpechim operated on as needed basis and optimized supply

Cost efficiency measures

Management measures:

Fuels market demand in 6m/2010 within operating region decreased by 13% (Romania down by 12%)

Gas market demand in Romania increased by 10% in 6m/2010 (mainly driven by fertilizers)

Marketing affected by weak demand


Financial IFRS results for Q2/10

Figures in this and the following tables may not add up due to rounding differences.1Adjusted for exceptional, non-recurring items; clean CCS figures exclude special items and inventory holding effects (CCS effects) resulting from the fuels refineries

Q1/10 Q2/10 Q2/09 ∆% in RON mn 6m/10 6m/09 ∆%

947 728 209 249 EBIT 1,675 539 211

14 133 (159) n.m. Financial result 147 (80) n.m.

(154) (142) (44) 223 Taxes on income (296) (128) 131

807 719 6 n.m. Net income 1,526 331 360

803 718 10 n.m. Net income after minorities 1,521 347 338

0.0142 0.0127 0.0002 n.m. EPS (RON) 0.0268 0.0061 339

913 680 65 n.m. Clean CCS EBIT1 1,593 464 243

775 677 (112) n.m. Clean CCS Net income after minorities

1,452 282 415

0.0137 0.0120 (0.002) n.m. Clean CCS EPS (RON) 1 0.0256 0.0050 412


Cash flow

Q1/10 Q2/10 Q2/09 % 6m/10 6m/09

1,822 460

1,002

(639)

823

554

(2,103)

1,611

709

1,068

(469)

2,421

2,213

(2,207)

530

935

961

514

(197)

1,277

924

(689)

321

939

50

%

n.m.861 296

7

27

194

299

5

(67)

32

554 512 8Depreciation and amortisation including write-ups

(272)

1,143

1,289

(1,518)

(112)

209

450

935

143

154

203

63

426

(929)

614 (66)

32709

in RON mn

Profit before taxation

Other adjustments

Sources of funds

Net cash from operating activities

Net cash used in investing activities

Net cash from financing activities

Cash and cash equivalents at end of period


CAPEX and EBITD

835

228

862

62

360

28 0

1,986

2,7482,566

-205

-500

0

500

1000

1500

2000

2500

3000

E&P R&M G&P Co&O Consolidation Total

Capex: 6m/10 EBITD: 6m/10

RO

N m

n


Economic environment

World demand: increased in 6m/10 by 2.4%, compared to 6m/09, to 86.1 mn bbl/d

Global production: up by 3% to 86.5 mn bbl/d

Urals price 6m/10 [USD 76.12/bbl ], 49% higher compared to 6m/09

Q1/10 GDP contracted by 2.6% driven by 17% drop in construction and fall across the board in the service sector

Industrial production rose at an annualized rate of 5.8% in May

Inflation stood at 4.4% at the end of June; VAT rise to push end-year inflation to around 8%

Q1/10 Q2/10 Q2/09 ∆% NBR FX rates 6m/10 6m/09 ∆% 2009

4.115 4.178 4.192 0 Average EUR/RON FX rate 4.146 4.230 (2) 4.238

2.974 3.283 3.081 7 Average USD/RON FX rate 3.129 3.180 (2) 3.047

4.073 4.352 4.218 3 Closing EUR/RON FX rate 4.352 4.218 3 4.228

3.023 3.570 3.009 19 Closing USD/RON FX rate 3.570 3.009 19 2.936


E&P: Favorable oil price led to a significant increase of the EBIT

Significantly higher oil prices & stronger USD led to an 87% increase in EBIT vsQ2/09Total oil and gas production was 2% lower compared to Q2/09

production in Romania decreased due to natural decline not fully compensated by new wells drilled and the workover program

Start-up of Hurezani gas delivery system which optimizes the delivery of gas into the national transportation network

1 Excluding intersegmental profit elimination2 Realized price includes hedge result3 Starting with 2010, the calculation of production cost per boe is based on net production available for sale (i.e.

exclusive of own consumption/fuel production). In Q2/10, the impact of this change led to an increase of around USD 1.30 /boe for Petrom Group

Q1/10 Q2/10 Q2/09 6m/10 6m/09

890 887 475 EBIT (RON mn) 1 1,777 906

890 887 475 Clean EBIT (RON mn) 1 1,777 906

185 182 185 Total hydrocarbon production (1,000 boe/d) 184 188

75.40 76.86 58.36 Average Urals price (USD/bbl) 76.12 50.99

69.85 66.76 48.50 Average realized crude price (USD/bbl) 2 68.31 47.46

16.65 16.89 14.49 OPEX (USD/boe) 3 16.77 14.60

Petrom Group production volumes (1,000 boe/d)

9194 91

100 94 91

Q2/08 Q2/09 Q2/10

Oil and NGL Gas


R&M – Flexible refinery operations & cost improvements compensated lower marketing results

Marketing sales volumes (kt)

1,1411,032

1,148

Q2/08 Q2/09 Q2/10

Positive R&M result due to optimized refinery operation and costimprovements following restructuring efforts

Arpechim in stop and go modeOptimized supplySales of Petrochemicals

Petrom Marketing affected by declining sales volumes as an effect of economic crises (Retail sales volumes Romania: (5)%)

Q1/10 Q2/10 Q2/09 6m/10 6m/09

143 (294)

(383)1.42

672.57

3.07

829

600.92

511.88

2.54

804

16

(18)0.85

520.95

1.17

811

126 (14) EBIT (RON mn)78 (167) Clean CCS EBIT (RON mn)

0.99 0.14 Indicator refining margin (USD/bbl)51 67 Utilization rate refineries (%)

0.93 1.18 Refining output (mn t)

1.37 1.49 Total refined product sales (mn t)804 829 Marketing retail stations


R&M – Petrobrazi refinery operated as upstream integrated refinery

Maximize Petrobrazi integration value by conversion of the Romanian crude oil

Petrobrazi modernization

Streamline refining nameplate capacity to process around 4 mn t/y domestic crude

Install thermal cracker and bitumen plant

Investment 2010 – 2014: EUR 750 mn

Modernization: EUR 400 mn by YE 2013

Compliance, safety , tankfarm: approx.EUR 350 mn

Adaption of the refinery yield

Fuels & losses: 141 10%

Middle distillates: 301 45 %, HFO: 15%1 7%

Divestment/closure of Arpechim by 2012

Divestment of petrochemicals business in Q1/10

Refinery currently operated in “stop&go” mode1 Basis 2004


G&P – EBIT affected by economic crisis; new steps to become an important power generation supplier

Average gas price for domestic producers in USD/1,000 cbm

161150

212

0

20

40

60

80

100

120

140

160

180

200

220

Q2/08 Q2/09 Q2/10

EBIT impacted by payment behavior of certain end consumers and negative result in DoljchimConsolidated gas sales slightly increased by 5% to 2.48 bn cbm, while the market increased by 10%Recommended gas price unchanged

currently represents only approx. 40% of the import priceSignificant progress in the construction of Brazi power plantAcquisition of Dorobantu wind power park

Q1/10 Q2/10 Q2/09 6m/10 6m/09

72 (47) (6) EBIT (RON mn) 25 91

73 (47) 1 Clean EBIT (RON mn) 26 103

1,549 937 884 Consolidated gas sales (mn bcm) 2,485 2,364

166 150 161Average gas price for domestic producers in Romania (USD/1,000 cbm)

158 156

334 363 370Import gas price (USD/1,000 cbm)1,2 346 425

1In 2010, ANRE, the Romanian National Authority for Energy Regulation, ceased to publish the domestic and import prices representing the basis for the regulated end user/basket gas price calculation. The gas prices for domestic producers for 2010 in the table above are the latest published by ANRE for Q4/09

2 Due to above mentioned considerations, the average import gas prices for 2010 were (re) stated taking into account the actual import gas prices published retroactively by ANRE on a monthly basis. As of the date of this report, the latest available data is for May 2010. Consequently, Q2/10 and 6m/10 figures are estimates


Contact Investor Relations

Petrom Investor Relations TeamTel.: +40 372 868930 E-mail: [email protected]

Homepage: www.petrom.com

mailto:[email protected]

http://www.petrom.com/


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