An%20African%20energy%20company

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An African energy company
PRESENTATION TO THE PORTFOLIO COMMITTEE ON
MINERALS AND ENERGY
Presented by Dr Popo Molefe and Mr Sipho
Mkhize None - Executive Chairman and President
CEO, PetroSA
The Petroleum Oil and Gas Corporation of South
Africa (Pty) Ltd Reg. No. 1970/008130/07
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Agenda

• Introduction
• Shareholder Objectives
• Salient Predetermined Objectives
• Major Challenges
• Way Forward
• Financial Performance

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Introduction to PetroSA

• National upstream and downstream petroleum
  corporation
• International player with African focus
• Established 2002 through merger of State oil EP
  company (Soekor) 1969 and GTL company (Mossgas)
  1987
• Current business
• Exploration, oil and gas production
• GTL manufacturing - SA
• Oil and chemicals trading

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Shareholder Objectives

• The business strategy for PetroSA is based on
  achieving and contributing to the following
  shareholder (Government) objectives
• PetroSA to achieve sustained commercial viability
  
• PetroSA to achieve transformation on a continuous
  basis.
• Operating PetroSA in line with best international
  practices with regard to Safety, Health,
  Environment, Quality.
• To contribute to the macro-economic objectives of
  the country.

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Salient Predetermined Objectives

• Financial viability and sustainability
• SHEQ
• Employment Equity
• Black Economic Empowerment
• Corporate Social Investment

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Salient Predetermined Objectives
Operational Environment

• Favourable operating environment
• Steady plant performance
• Sable field performing above expectations
• Oribi / Oryx producing beyond original estimates
• Macro economic environment
• Higher international oil prices
• Rand strengthening against the Dollar
• Declining interest rates

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Salient Predetermined Objectives
Financial Viability

• Financial results
• Revenue growth 19 increase
• Operating Margin 20 increase
• Profit before tax 80 increase
• Cost containment
• Lower Gearing
• Strong liquidity

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Salient Predetermined objectives

• Financial viability
• SHEQ
• Employment Equity
• Black Economic Empowerment
• Corporate Social Investment

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Salient Predetermined objectives
SHEQ

• Retained all ISO accreditations
• Obtain a NOSCAR platinum award for the seventh
  time
• Orca achieves 2 756 days without disabling injury
• FA platform wins Excellence in Mining and
  Environmental Management award for the second
  year
• ZERO fatalities and Environmental spills
• HIV/Aids programme roll out

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Salient Predetermined objectives

• Financial viability
• SHEQ
• Employment Equity
• Black Economic Empowerment
• Corporate Social Investment

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Salient Predetermined objectives
Employment Equity

• 1 263 employees
• Achieved 6931 employment equity against a target
  of 6040
• 19 comprise women and aggressive target of 35
  set for 2005/6
• First female shift supervisor appointed at the
  refinery
• Appointed female Process Controller at the
  offshore platform

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Salient Predetermined objectives

• Financial viability
• SHEQ
• Employment Equity
• Black Economic Empowerment
• Corporate Social Investment

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Salient Predetermined objectives
Black Economic Empowerment

• R804 million comprising 34 (Target of 50 not
  achieved)
• R14 million allocated for supplier development
• Five companies included in the pilot phase
  creating 98 jobs
• Centre of Excellence produced over 300 graduates
  in various trades such as electricians, welders,
  riggers, fitters etc.

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Salient Predetermined objectives

• Financial viability
• SHEQ
• Employment Equity
• Black Economic Empowerment
• Corporate Social Investment

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Salient Predetermined objectives
Corporate Social Investment

• PetroSA Development Trust capitalised by R55
  million to focus ongt Education and Traininggt
  Health gt Empowerment of women
• Flagship Projects assisted by the Trust are
• Protec
• Limpopo Online Project
• Computer Laboratories in Limpopo and KwaNonqaba
• Construction of schools in Mossel Bay and Limpopo

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Major Challenges

• Major cash flow stream of PetroSA under threat as
  FA/EM gas supply to Manufacturing plant depleted
  by 2007
• Secure long-term feedstock supply to
  Manufacturing plant on a commercial viable basis
• Uncertainty exists as to total investment
  required to secure feedstock for Manufacturing
  plant
• Expand E P asset base aggressively

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Major Challenges

• Financing of projects by utilising strength of
  balance sheet limited due to short period of
  secured cash flow generation from current
  operations
• Streamlining of internal business processes
• Supply agreements and retail markets
• Supply agreement/MOU with other petroleum
  companies is limited to 3 years.
• PetroSA has no access to the retail market and is
  therefore always dependent on, and sometimes held
  to ransom by, the competition in terms of its
  supply agreements.

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Way Forward

• Finalise evaluations as to optimal feedstock
  solution for Manufacturing plant and associated
  investment required as matter of urgency
• Pursue aggressive growth in E P asset base,
  organically and non-organically

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• FINANCIAL PERFORMANCE
• 31 MARCH 2005

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Economic Indicators
2004/5 2003/4 2002/3
Average crude oil price 42.10/bbl 28.97/bbl 27.58/bbl
Average R/ exchange rate 6.28 7.20 9.82
Impact on profit 1 change in price R124m R92m R164m
R1 change in exchange rate ? R436m R33m R382m
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(No Transcript)
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Abridged Income Statement
Volume variance 1 614 Oil Price variance
1 648 Exchange rate var (650) Subsidiary
sales 361 Total Sales Variance 2 973
Increased Revenue 2 973 Condensate
(116) Provisions
(514) Shutdown
270 Other Expenses
(262) Subsidiary expenses
(240) Operating Profit Change 2 111
2004
Rm
Gross Revenue 3 473
Operating Profit/(Loss) (396)
Net Investment Income 636
Taxation (1)
Profit after taxation 239

2005
Rm
6 446
1 715
137
(115)
1 737

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Abridged Balance Sheet
2005 2004 2003
Rm Rm Rm
Assets
Non-current assets 4 445 5 385 5 791
Amounts held by holding company 1 594 1 594 1 594
Current Assets 1 584 2 291 1 366
Cash and cash equivalents 5573 2 637 2 973
13 196 11 907 11 724
Equity and liabilities
Capital and reserves 9 233 7 503 7 359
Long-term loans-shareholder 312 958 1 481
Non-current provisions 2 847 2 461 2 142
Current liabilities 804 985 742
13 196 11 907 11 724
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Abridged Cash Flow
2005 2004 2003
Rm Rm Rm
Cash generated by operating activities 4 053 271 801
Cash utilised in investing activities (288) (382) 67
Loans repaid (830) (224) (2 006)
Increase in cash and cash equivalents 2 935 (335) (1 138)
Cash and cash equivalents at beginning of year 2 638 2 973 4 111
Cash and cash equivalents at end of year 5 573 2 638 2 973
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• Discussion