Galp Energia. SGPS, S.A.

Galp Energia. SGPS, S.A. : Capital Markets Day...

Galp Energia. SGPS, S.A. : Capital Markets Day 2012

Galp Energia's Capital Markets Day 2012
"Solid foundations to deliver sustainable value"

Galp Energia presents today, at its Capital Markets Day 2012 in London, the Company's strategy overview and financial outlook, as well as key information on its upstream portfolio.

In the upstream business, Galp Energia will intensify the exploration activities, de-risking its portfolio, and will keep developing high-rewarding projects. The balanced funding that arises from Galp Energia strong capital structure and from the sound downstream business, which is centered in Iberia and comprises the Refining & Marketing and Gas & Power businesses, will provide the Company with additional flexibility to further expand its activities, particularly in the upstream.

Galp Energia plans to further expand its exploration portfolio potential by leveraging on its distinctive capabilities. The upstream footprint will be enlarged, although remaining focused on core strategic areas, like the resource-rich Atlantic basin, comprising Brazil and Angola, and Eastern Africa, particularly Mozambique. Exploratory focus will be centered on geographies, and respective geologies, to which Galp Energia is already quite acquainted with. Access to new acreage will also take into account the political context on which it is involved. Galp Energia plans to keep addressing countries with a Portuguese connection, easing its access to those geographies.

The Company will continue leveraging on its early mover profile by entering in the early stages of exploration, so continuing capturing the most value creation potential. It will also continue leveraging on its successfully established strategic partnerships with world-renowned operators.

In 2012, Galp Energia will proceed with the de-risk of its current exploration portfolio through an intensive drilling activity, comprising over 20 exploration and appraisal wells to be drilled in the year. These wells include the key Júpiter NE appraisal well and the intensive exploration and appraisal campaign in Mozambique.

Galp Energia reiterates its ambition to produce more than 300 kboepd by 2020, a 15-fold increase considering working interest production of 21 kboepd in 2011. The production growth will be mainly supported by the outstanding growth in Brazil, particularly the production ramp-up in Lula and Cernambi fields, in Angola, namely the new projects in block 14 and 32, coming on stream in the following years, and Mozambique.

In fact, Galp Energia continued in 2011 the development of Lula and Cernambi project, which is running ahead of the initial expectations. The FPSO Cidade de Angra dos Reis, the first permanent production unit in Santos basin, will be producing at full speed a year after it started operations, which is remarkable. However, the development of Galp Energia's current portfolio is extended well beyond the development of Lula and Cernambi fields. The Company is working to accelerate several other world class projects development, like Júpiter and Iara in the pre-salt Santos basin, and the outstanding project of Area 4, offshore Mozambique.

Galp Energia is at the beginning of a very interesting era of upstream growth, supported by a very exciting exploration portfolio on one hand, and, on the other, by the continuous delivery of world-class projects.

One of the foundations that supports Galp Energia's financial outlook is the capital increase at Petrogal Brasil, the Brazilian unit for the upstream business, announced in late 2011. This transaction enables a solid capital structure and allows the development of Galp Energia's growth projects with no major constraints.

Furthermore, the projects where the Company has been investing in the last few years are expected to increase their impact in earnings very soon, namely the upgrade project and the Lula project. In particular, the latter will be key towards its earnings diversification, significantly reducing Galp Energia exposure to the downstream activities, mainly in an adverse Iberian setting.

This positive cash generation will enable the reward of Galp Energia's shareholders through a new dividend policy, which will increase dividend consistently throughout the years, taking into account earnings and cash flow generation, as well as the long-term underlying growth. This change on the dividend policy demonstrates the strength of Galp Energia's future.

Galp Energia is committed to a strong financial position, having sound financials in place to control and build its future.

To conclude, Galp Energia considers that there is more to sustained value creation than simply delivering profitable growth. To truly create value means delivering growth, while ensuring that this is responsibly and sustainably generated. Galp Energia ensures that sustainability is fully integrated into its strategic decision making process. This responsible approach enables higher engagement with local communities, and substantially mitigates risks, particularly in terms of safety and environment.

Key information on Galp Energia's upstream portfolio:

Key information on Galp Energia's financial outlook:


Exploration resources and contingent resources on a working interest bases. Reserves figures on a net entitlement basis. All figures based on DeGoyler and MacNaughton report at 31.12.2011.

RCA figures except otherwise noted.

Matters presented in this announcement 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 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; developments of Galp Energia's markets; the impact of regulatory initiatives; and the strength of Galp Energia's competitors. The forward-looking statements in this announcement 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 Galp Energia's records and other data available from third parties. Although Galp Energia 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. Such risks, uncertainties, contingencies and other important factors could cause the actual results of Galp Energia or the industry to differ materially from those results expressed or implied in this announcement by such forward-looking statements.

The information, opinions and forward-looking statements contained in this announcement speak only as at the date of its release, and are subject to change without notice. Galp Energia does 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 announcement to reflect any change in events, conditions or circumstances.

Galp Energia. SGPS, S.A., Public Company
Investor Relations and Corporate Communication Division

Rua Tomás da Fonseca, Torre A
1600-209 Lisbon, Portugal
Tel: +351 217 240 866
Fax: +351 217 242 965
Email: [email protected]

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Source: Galp Energia. SGPS, S.A. via Thomson Reuters ONE