22/06/2018

Press release: Annual General Meeting of the PJSC TATNEFT’s Shareholders Was Held

The annual general meeting of the PJSC TATNEFT's shareholders was held in Almetyevsk (Republic of Tatarstan) on June 23.

Nail U. Maganov, General Director of PJSC TATNEFT, presented to the audience a report on the results of PJSC TATNEFT's operations in 2017. He outlined in his speech the operations results of 2017 and perspective plans.

According to the Company’s General Director, the activities of TATNEFT focused on the implementation of the Strategy 2025, which key objective was an aggressive growth rate of the share capital value. The Company ensured high efficiency of operating and financial activities. Qualitative results were attained in all business areas.

The capitalization of PJSC TATNEFT increased to US $19.1 billion by the end of 2017. The total value of consolidated assets amounted to RUB1 trillion 107.5 billion, the consolidated revenue of the TATNEFT Group for core (non-banking) activities amounted to RUB 681.2 billion; while the net profit amounted to RUB123.1 billion.

Nail Maganov pointed out that the Company ensured timely tax payments to budgets of all levels and to the extra-budgetary funds. Charged taxes and payments transferred to the budgets of all levels amounted to RUB308.9 billion in 2017, including the amount of RUB36.6 billion transferred to the budget of the Republic of Tatarstan.

The Company financed its major investment projects without resorting to external borrowings. The total amount of the TATNEFT Group investments in 2017 amounted to RUB 89.1 billion with the share of RUB 45.9 billion accounting for investments into crude oil exploration and production.

TATNEFT Group produced 28.9 million tonnes of crude oil in 2017. The average daily production volume increased by 1.2% to 564.8 thousand barrels per day. In connection with the fulfillment of obligations under the OPEC+ Agreement, the Company held down the production growth rates achieved in previous years. At the same time, TATNEFT keeps the potential for increasing crude oil production through maintaining a high level of resources with available proven reserves amounting to 866.5 million tonnes.

The Company implements targeted programs to improve the efficiency of crude oil production at mature fields, carries out research and development of subsoil resources containing hard-to-recover reserves, which include the Domanic productive deposits. Successful development of high-viscosity oil fields continues.

As for the crude oil refining, there were 8.5 million tonnes of oil products output in the year under report. In December 2017, there was the 50 millionth tonne of crude oil refined at TANECO from the beginning of the Complex commissioning. The TANECO Complex capacity utilization rate amounted to115 percent, the processing depth was 99.24 percent, while the output of light oil products amounted to 87.5 percent. The near plans provide for the production of premium Euro 5 gasoline grades, an increase in the production of the TANECO diesel fuel and еру fuel for jet engines.

Speaking about tyre manufacturing business of TATNEFT the Company’s General Director mentioned that the sales volume reached a record value of 13 million tyres in the reporting year. The products are supplied to the domestic and export markets, covering about 50 countries. The main stake in this business segment is made on increasing profitability through assimilation of new market niches, high quality and expanding the range of products, as well as introduction of effective marketing programs.

Nail Maganov pointed out that technological leadership associated with the transition to automated digital production was the most important basis for the Company’s successful development.

Innovative technological solutions of the Company also constitute a basis for the implementation of environmental policy, ensuring industrial safety of production activities. Total investments of the Company in this area amounted to more than RUB 7 billion in 2017.

The Company applies resource-saving technologies, develops renewable energy sources, as well as recycling activities. The economy of fuel and energy resources of consumption amounted to 9.8 percent for 7 years.

Further defining prospects for the joint-stock company development, Nail Maganov announced the planned annual production for the next decade in the amount of more than 35-37 million tonnes through the application of the Company’s proprietary new technologies and approaches to the development of crude oil fields involving artificial intelligence, high-accuracy modeling and forecasting programs.

The Company also plans implementing a series of IT projects within the term up to 2021 that would allow creating a flexible "ecosystem" of aligning effective business processes directly (without intermediaries) with all customers, suppliers and consumers.

During the meeting, the shareholders present and invited persons also heard reports presented by other top managers of TATNEFT Company.

The report of Rustam Khalimov, First General Deputy Director for Oil and Gas Exploration and Production, provided the information on the main areas of developing the crude oil production and the application of modern approaches to the management of the Company's assets. For example, an important step in the development of the Company is the Company’s development strategy until 2030, aimed at the balanced sustainable growth of business and increasing the Company’s shareholder value. The main objective and priority of the updated strategy is to increase the operating profit (EBITDA) of the Company’s business areas more than twice through ensuring the Company’s annual crude oil production of more than 35 million tonnes, high-yield investment activities, strict control of expenditures, improving the efficiency of production processes, minimizing the environment impact and ensuring safe working conditions.

Rustam Khalimov outlined the main drivers of the crude oil production growth, including traditional Lower Carbonic period oil and high-viscosity oil. The Lower Carbonic Period reserves  amount to 280 million tonnes or 35 percent of the Company’s hard-to-recover reserves  (TIZ). The increase in production from terrigenous reservoirs of the Tula-Bobrik horizon will be achieved through the application of side-tracking techniques for drilling lateral and lateral horizontal wellbores. The involvement of the carbonate Turney Stage deposits in the development is expected to be carried out through the application of the deposits dense drilling grids. Total investments in this area are estimated at RUB 59 billion, while the total production might reach 21 million tonnes of crude oil by 2030.

The reserves of the Medium Carbonic Period amount to 163 million tonnes or 20 percent of the  current  recoverable reserves  (TIZ). The increase in the recovery rate of the carbonate reservoirs of the Verey-Bashkir horizon is expected to be ensured through drilling more than 2,700 wells through application of the deposits dense drilling grids. The investments will amount to more than RUB 40 billion, while the total production will reach 12 million tonnes.

The business project SVN-3200 (HVO) has been approved for the development of high-viscosity oil fields, which involves the development of 24 deposits. The plans provide for starting production at 16 more targets from 2020 to 2030 in the future in order to maintain the HVO production at the level of 3.0 million tonnes per year. In general, 40 HVO deposits are expected to be put into operation.

 The plans provide that the updated Strategy will be submitted for approval by the Company’s Board of Directors in the third quarter of the current year.

Nurislam Syubayev, Deputy General Director for Strategic Development, presented a report on the implementation of the Strategy 2025 and the main drivers of the Strategy 2030 Program growth. The main efforts of the TATNEFT Group in the next 10-12 years will be focused on the accelerated growth of profitable oil and gas production through the active introduction of innovative technological solutions with unconditional respect for the environment care principles. The plans provide that constant cost control, increasing the efficiency of production processes through the large-scale introduction of IT technologies and the achievement of the widest possible level of digitalization in all, without any exceptions, areas will be carried out.

Nurislam Syubayev emphasized, that the Company's market capitalization growth strategy is the basis for the development of the Company's human capital, the basis for the development of the economy of the Republic of Tatarstan and Russia, as well as the guarantee of ensuring high returns to the shareholders.

Rais Khisamov, Chief Geologist of the Company made a presentation on the topic "The Company's resource base, results of the assessment of the Miller and Lents International Consultant for Oil and Gas."

Vasily Mozgovoy, Assistant to General Director for Corporate Finance, informed about the analysis of the Company's value dynamics, analysts’ forecasts, benchmarking and the, dividend policy.

Ruslan Zabbarov, Director of the Engineering Center spoke about implementation of the innovation strategy.

Rustam Minnikhanov, President of the Republic of Tatarstan, delivered the closing speech. He mentioned the Company's main achievements in the area of crude oil production and refining, emphasized the high budget efficiency of TATNEFT and the dividend attractiveness of the Joint-Stock Company. Rustam Minnikhanov also mentioned the Company’s active participation  in social programs and projects of the Republic.

Results of the Shareholders Meeting

  The shareholders' meeting approved the annual report for 2017, annual financial statements, as well as the profit distribution for the financial year

  The shareholders also made a decision on the dividends payment. The dividends for 2017 will be paid taking into account the previously paid dividends for nine months: in the amount of 3,994 percent to the share face value on for preference shares and  in the amount of 3,994 percent to the share face value for ordinary shares. July 6, 2018 was fixed as the date for determining the persons entitled to receive the dividends. The deadline for payment of the dividends was determined in accordance with the applicable law.

 The Board of Directors was formed. The following persons were elected to the Board of Directors: Nail Ulfatovich  Maganov, General Director of PJSC TATNEFT; Laszlo Gerecs, Independent Director, Managing Director of G Petroconsulting Ltd; Yuri Lvovich Levin, Independent Director, Managing Partner of  BVM Capital Partners Ltd; Rene Steiner, Independent Director, Head of Private Investment Programs of FIDES Business Partner AG; Radik Raufovich Gaizatullin,  Minister of Finance of the Republic of Tatarstan; Nail Gabdulbariyevich Ibragimov, First Deputy General Director for Operations - Chief Engineer of PJSC TATNEFT; Renat Khaliullovich Muslimov,  Consultant to President of the Republic of Tatarstan on the Development of Oil and Gas Fields; Rafail Saitovich Nurmukhametov, Head of NGDU "Leninogorskneft"; Rinat Kasimovich Sabirov, Assistant to  President of the Republic of Tatarstan; Valery Yurievich Sorokin,  General Director of PJSC "Svyazinvestneftekhim"; Shafagat Fakhrazovich  Takhautdinov, Assistant to President of the Republic of Tatarstan on the Oil Industry Issues and Advisor to Chairman of the Board of Directors of PJSC TATNEFT; Rustam Khamisovich Khalimov, First Deputy General Director of PJSC TATNEFT on Crude Oil Exploration and Production; Azat Kiyamovich Khamaev, Minister of Land and Property Relations of the Republic of Tatarstan; Rais Salikhovich Khisamov,  Deputy General Director - Chief Geologist of PJSC TATNEFT.

Rustam Nurgaliyevich Minnikhanov, President of the Republic of Tatarstan, was appointed as the State representative to the PJSC TATNEFT's Board of Directors. 

The Audit Commission was formed in the following composition: Kseniya Gennadyevna Borzunova -  Head of the Economics, Privatization and Strategic Planning Office of Minzemimuschestvo (Ministry of Land Property) of the Republic of Tatarstan; Ranilya Ramilevna Gizatova, Chief of Investments Office of NGDU "Elkhovneft"; Guzal Rafisovna Gilfanova, Deputy Head of the Auditing Office of PJSC TATNEFT; Salavat Galiaskarovich Zalyayev, Senior Legal Adviser of the PJSC TATNEFT’s  Corporate Legal Department; Venera Gibadullovna Kuzmina,  used to work as an economist at the NIS of JSC TATNEFT, a veteran of labor; Liliya Rafaelovna Rahimzyanova, Head of Oil Production and Oil Refining  Office of the Ministry of Trade and Industry of the Republic of Tatarstan; Nazilya Rafisovna Farkhutdinova, Deputy Director or Finance  and Economics; of OOO "TagraS-RemServis";  Ravil Anasovich Sharifullin, Head of the Control and Audit Department of PJSC TATNEFT.

    Sariya Kashibulhakovna Yusupova, Office Deputy Head of the Ministry of Finance of the Republic of Tatarstan, was appointed to the Audit Commission as Representative of the State.

JSC "PricewaterhouseCoopers/Audit" was approved as Auditor of PJSC TATNEFT for one year's period to perform a mandatory audit of the PJSC TATNEFT's annual financial statements prepared in accordance with the Russian Accounting Rules.

Forward-looking statements: The present materials contain certain statements about future events and expectations that are forward-looking in nature. Any statement in these materials that is not a statement of a historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements expressed or implied by such forward-looking statements to differ. PJSC TATNEFT shall not assume any obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.

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