Empresa Nacional del Petróleo FY 2016 Investor Presentation

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1 Empresa Nacional del Petróleo FY 2016 Investor Presentation Santiago, March 2017

2 Disclaimer Forward-looking statements are based on the beliefs and assumptions of ENAP s management and on information currently available to the Company. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of ENAP and could cause results to differ materially from those expressed in such forward-looking statements. This presentation contains certain performance measures that do not represent Chilean GAAP and IFRS definitions, such as EBITDA and Net financial debt. These measures cannot be compared with the same previously used by ENAP and the same used by other companies. 3

3 Table of Contents 1. ENAP Overview 1.1 ENAP in a Nutshell 1.2 Refining & Marketing 1.3 Gas & Energy 1.4 Exploration & Production 2. Investment Highlights 3. Relevant Financial Metrics 4

4 ENAP in a Nutshell CHILE direct ownership ENAP Aa3 (Stable) AA- (Negative) A+ (Negative) Support, control & supervision (100% ownership) Fully owned by the Chilean State, ENAP has a strategic role in fuel supply in Chile (~ 60% Market Share in Refined Products) Solid credit ratings Baa3 (Stable) BBB- (Stable) A (Negative) Empresa Nacional del Petróleo (ENAP) Profile Business highlights Created by law by the Chilean state in 1950 Only refiner in the country More than 3,500 employees 3 refineries, marine terminals, storage facilities for crude and refined products, pipelines, and partial ownership of the southern hemisphere first LNG terminal Refining and Marketing (R&M) Total aggregate refining capacity of ~ 230,000 bbl/day Exploration and Production (E&P) (1) Proved Oil & Gas Reserves: 139 MM boe (2) Oil production: ~ 34,000 bbl (3) per day Gas production: ~ 22,000 boe per day Gas and Energy (G&E) Created in Aug-14 to drive the development of the LNG business and power energy projects. (1) O&G Production as of Dec 31, 2016 / Developed and undeveloped reserves as of Dec 31, (2) boe: Barrel of oil equivalent (3) bbl: Oil barrel (US barrel) FY 2016 EBITDA by Business Unit FY 2016 Revenue by Business Unit Downstream Upstream 72% 31% 85% 11% 4% Refining and Marketing (R&M) Exploration and Production (E&P) Dec-16 EBITDA FY 2016 US$ MM -2% R&M E&P G&E Dec-16 R&M E&P G&E Revenues FY 2016 US$ 5,217.1 MM Gas and Energy (G&E) 5

5 ENAP in a Nutshell Government support evidenced by Relationship with the owner Capital injections US$ 250 MM capital increase in In May, 2014 President Bachelet announced an Energy Agenda for the country that considered a capital increase of US$ 400 MM for ENAP. This capital injection will be made in conjunction with a Corporate Governance law for the company. This law is currently under discussion in Congress. Corporate Governance Integration A new Corporate Governance law is in development, in order to give more stability to the company in terms of long-term plans, following best practice of private sector. Chilean government and and its regulatory its regulatory bodies bodies closely closely supervise supervise operations. operations Capitalization of retained earnings (Subsidiaries) Capitalization of retained earnings at ENAP s Capitalization of retained earnings at ENAP s subsidiary subsidiary level. Capitalization level. Capitalization is approved on a is yearly approved basis. on a yearly basis Board The Chairman of of the the Board Board is the is Minister the Minister of Energy of Energy (Mr. Andrés (Mr. Rebolledo). Máximo Pacheco) Dividends The State government has waived has its waived right to receive its right any to dividends receive any for the dividends past seven for years, the past strengthening six years, strengthening ENAP s capital ENAP s base. capital base Finance Budget and and debt debt issuance issuance approved approved by the Ministry by the of Ministry Finance. of Finance Gas Sales Subsidy in Magallanes Compensation for subsidized natural gas sales to the Magallanes region which was granted and increased for 2017, from CLP 64,759 MM (approx. US$ 90 MM) in 2016 to CLP 66,701 MM (approx. US$ 95 MM) in Subsidy started in 2013 and it is approved on a yearly basis as part of the Chilean General Budget Law. Management Professional and experienced management team. team 6

6 Table of Contents 1. ENAP Overview 1.1 ENAP in a Nutshell 1.2 Refining & Marketing 1.3 Gas & Energy 1.4 Exploration & Production 2. Investment Highlights 3. Relevant Financial Metrics 7

7 Refining & Marketing Leading position based on refining capacity and extensive oil and gas wholesale distribution network in Chile which delivers natural gas and refined products to key energy centers Unmatched asset base of critical importance to Chile Three refineries, crude oil storage facilities, refined products storage facilities, marine terminals, gas pipelines, among others The three refineries owned by ENAP are the only refining facilities in Chile ENAP s refineries produce a full range of refined petroleum products including LPG, olefins, gasoline, jet fuel, diesel fuel, fuel oil, and pitch, among others ENAP distributes and markets most of these products domestically ENAP s refineries process crude oil, substantially all of which is purchased from foreign third parties ENAP s Refining Rates (%) FY Sales by client (m 3 ) FY Sales by refined product (m 3 ) 633 km 1 2 Concón: Aconcagua Refinery Santiago: ENAP Headquarters Linares: Terminal Hualpén: Bío Bío Refinery Main Locations 4,270 km 3 Santiago: ENAP Sipetrol S.A. (HQ) Maipú: Fuel Storage Terminal San Fernando: Terminal Chillán: Pumping Station Punta Arenas: Gregorio Refinery 1 Refining capacity Aconcagua Refinery 43% 2 Products Gregorio Refinery 7% Gasoline Fuel Oil Natural Gas Diesel Kerosene Others Biobío Refinery 50% Refining capacity: ~ 230,000 bbl / day 76% 75% 74% 75% 74% 16% 17% 44% 8% 3% 3% 8% 38% 3 Storage Refineries, facilities and oil and gas pipelines 71% 4 Main customers 23% 40% Copec Enex Petrobras Others Gasoline Diesel Fuel Oil Kerosene LPG Others 8

8 Undisputed Leadership in the Chilean Market Key strategic asset for Chile ENAP has a dominant position in the domestic refining market, representing up to approximately 30% of Chile s energy matrix and nearly 60% of Chilean demand for refined oil products. ENAP utilizes a pricing policy based on an import parity formula: Sets the benchmark for the implied cost of importing refined petroleum products The consistent use of import parity pricing has reinforced ENAP s ability to effectively compete with international competitors. Relevant participation in Chile s energy matrix ENAP s share (Oil + Gas) 12% 15% 15% 15% 19% 15% 13% 13% 12% 14% 13% 16% 17% 19% 18% 13% 13% 12% 11% 9% 38% 33% 32% 31% 30% 46% 43% 43% 43% 40% Crude Oil Natural Gas Coal Electricity Firewood and others Refined oil products market share 100% 100% 100% 99% 45% 44% 67% 71% 65% 76% 59% 59% 16% 15% Diesel Gasoline LPG Fuel Oil Kerosene Other Average Dec-15 Dec-16 9

9 US$/bbl US$/bbl Supply and Production Crude Oil Supply by Country (Mm3) Crude Oil Volume Processed (Mm 3 ) Colombia 1% Argentina 1% Brazil Ecuador Angola 1% 35% 62% 5,591 4,917 3,856 3,879 1,072 1,456 1, Light Medium Heavy Other gross inputs Total Crude Oil Purchases: 63,234,250 bbl (FY YTD) / 15 different suppliers Dec-15 Dec-16 ENAP s Refining Margin ( Margen Primo ) (1) Refined Products Production (Mm 3 ) ,609 3,900 3,949 3,460 1,253 1,284 1, , Diesel Gasoline LPG Fuel Oil Kerosene Others ENAP's Refining Margin ENAP's Product Prices Dec-15 Dec-16 ENAP's Oil Cost Brent (1) It represents the difference between ENAP s product prices and their direct cost (Oil), excluding others like energy and G&A costs 10

10 Table of Contents 1. ENAP Overview 1.1 ENAP in a Nutshell 1.2 Refining & Marketing 1.3 Gas & Energy 1.4 Exploration & Production 2. Investment Highlights 3. Relevant Financial Metrics 11

535 km Gas & Energy Strategy In 2014 ENAP created a third business unit, called Gas & Energy (G&E) The two main goals of the G&E division are: Increase the use of Natural Gas ( NG ) in power

generation market, in order to increase competition Important presence in LNG and NG Significant interest in LNG terminal and pipeline Physical pipeline: The LNG that ENAP receives from GNL Quintero

market in Chile through the marketing of LNG or NG volumes to customers in the industrial, thermoelectric and distribution markets FY 2016 Revenues by client 28% 25% Power Promote and participate in

11 535 km Gas & Energy Strategy In 2014 ENAP created a third business unit, called Gas & Energy (G&E) The two main goals of the G&E division are: Increase the use of Natural Gas ( NG ) in power generation, industrial and domestic use Maintaining a conservative approach ENAP expects to promote the development of power generation projects, bringing new projects and actors into the power generation market, in order to increase competition Important presence in LNG and NG Significant interest in LNG terminal and pipeline Physical pipeline: The LNG that ENAP receives from GNL Quintero (which has regasification capacity of 15MM m3/day ) is injected as NG to the Electrogas gas pipeline and transported to the Aconcagua Refinery and to other customers Gas & Energy Gas Develop the NG market in Chile through the marketing of LNG or NG volumes to customers in the industrial, thermoelectric and distribution markets FY 2016 Revenues by client 28% 25% Power Promote and participate in new electricity generation projects; and to support the other two business units on their energy requirements 47% Unique virtual pipeline Virtual pipeline (trucks): 25 trucks fleet, with a capacity of 21 tons each, ENAP can transport daily LNG from Concón to Pemuco (535 kms) Important LNG supplier for the south of Chile Satellite Regasification Plant in Pemuco (VIII Region): where the LNG (transported using trucks) is regasified and then distributed mainly to the Biobío Refinery and also to other customers in the area through the gas pipeline Gasoducto del Pacífico Power Generators Distributors Others 12

12 Table of Contents 1. ENAP Overview 1.1 ENAP in a Nutshell 1.2 Refining & Marketing 1.3 Gas & Energy 1.4 Exploration & Production 2. Investment Highlights 3. Relevant Financial Metrics 13

13 Exploration & Production Operations Geography ENAP s E&P operations have allowed the Company to develop field expertise and deepen relationships with E&P partners and crude oil suppliers from different parts of the world The Company s operations are focused on Latin America & North Africa with fields in Chile, Argentina, Ecuador and Egypt, producing crude oil and natural gas ENAP s main goal for its E&P operations is to increase oil and gas reserves both in Chile and abroad, and manage its E&P portfolio through sales and acquisitions In average during the last years, approximately 2% of the crude oil used by ENAP s refineries has been produced in Magallanes Investments totaled US$ MM as of December 31 st 2016 Crude oil production from E&P division represents approximately 15% of the total crude oil required by ENAP s refineries Ecuador PBH (100%) MDC (100%) PBHI (100%) Block 28 (42%) Chile Magallanes Chile (100%) Egypt East Ras Qattara (50.5%) Argentina Área Magallanes (50%) CAM 2/A Sur (50%) E2 (33%) * Camp. Central (50%) * Pampa del Castillo (100%) (%) Ownership * Blocks where ENAP is not an operator Oil and gas production Proved oil & gas reserves (1) (in 000 barrels per day) Oil Gas % 37% Argentina Ecuador Egypt Chile Argentina Chile 9% 19% Argentina Ecuador Egypt Chile Dec-16: 138,6 MM boe (1) Developed and Undeveloped reserves 14

14 Table of Contents 1. ENAP Overview 1.1 ENAP in a Nutshell 1.2 Refining & Marketing 1.3 Gas & Energy 1.4 Exploration & Production 2. Investment Highlights 3. Relevant Financial Metrics 15

E&P G&E R&M World Class Operator with Unmatched Asset Base Refineries Midstream assets LNG Terminal Three refineries with a total aggregate refining capacity of ~230,000 bbl/day Aconcagua: Capacity:

2 Gregorio : Capacity: ~ 20,000 bpd / 1 vacuum topping Crude oil storage facilities with an aggregate storage capacity of 1.

15 E&P G&E R&M World Class Operator with Unmatched Asset Base Refineries Midstream assets LNG Terminal Three refineries with a total aggregate refining capacity of ~230,000 bbl/day Aconcagua: Capacity: ~ 97,000 bpd / Refinery complexity factor Solomon: 12.1 Biobío : Capacity: ~ 111,000 bpd / Refinery complexity factor - Solomon: 10.2 Gregorio : Capacity: ~ 20,000 bpd / 1 vacuum topping Crude oil storage facilities with an aggregate storage capacity of 1.1 MMm3 Refined products storage facilities with a total capacity of approximately 1.5 MMm3 Marine terminals with capacity to receive 100% of the refineries requirements Gas pipelines in the Magallanes region First Liquefied Natural Gas (LNG) regasification terminal of the region: GNL Quintero (GNLQ) ENAP s Ownership: GNLQ (20% of stake) / GNL Chile (33.3% of stake) GNLQ s Regasification capacity: 15 MM m3/day / Trucks Loading Facility (TLF) of 2,500 m3/day. During 2014, GNLQ developed an expansion project adding a 50% of extra regasification capacity and doubled the TLF capacity in comparison with the original design of both installations. Investments of US$ MM during the period January-December 2016 Oil reserves of 5.2MMbbl and gas reserves of 6,917 MMm3 as of Dec-16 3 blocks in exploitation / development and 5 blocks under exploration Exploration of new gas reserves in unconventional reservoirs as well as conventional oil and gas reserves Investments of US$ MM during the period January-December 2016 Oil reserves of 26.0 MMbbl and gas reserves of 5,285 MMm3 as of Dec-16 3 blocks in development, 2 blocks in exploration phase Investments of US$ 32.1 MM during the period January-December 2016 Oil reserves of 25.4 MMbbl as of Dec-16 Operates under Service Contracts 2 blocks under development and 2 under exploration phase Investments of US$ 7.6 MM during the period January-December 2016 Oil reserves of 10.2 MMbbl as of Dec 16 1 block under exploration / development 16

16 US$/bbl US$/bbl US$/bbl International Market Prices Basket 6:2:3:1 vs. ICE Brent (US$/bbl) Basket 6:2:3:1 (US$/bbl) ICE Brent (US$/bbl) ENAP is making better use of its refineries given refining margins in the current market and the estimated demand of the contracts in place with our clients. Despite oil price volatility, several factors have helped ENAP s efficiency and operations: Advanced and capable refineries Import parity pricing mechanism Active Hedging policy Dominant market share in Chile High-value and quality products ULSD USGC(US$/bbl) vs. ICE Brent (US$/bbl) Unl87 USGC (US$/bbl) vs. ICE Brent (US$/bbl) F.O N 6 3% S. USGC (US$/bbl) vs. ICE Brent (US$/bbl) 17

17 Table of Contents 1. ENAP Overview 1.1 ENAP in a Nutshell 1.2 Refining & Marketing 1.3 Gas & Energy 1.4 Exploration & Production 2. Investment Highlights 3. Relevant Financial Metrics 18

18 Financial Summary Income Statement Period ended in Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Summary Income Statement (US$ million) Sales 10,835 11,612 11,211 9,837 6,351 5,217 % growth 32% 7% (3%) (12%) (35%) (18%) COGS (10,663) (11,778) (10,638) (9,358) (5,708) (4,670) Gross profit 172 (166) % margin 2% (1%) 5% 5% 10% 10% SG&A and Distribution cost (85) (88) (270) (247) (292) (307) Other income (expense) (53) (44) (34) (3) (77) (39) Operational Result 34 (298) % margin 0% (3%) 2% 2% 4% 4% D&A Others* EBITDA % margin 3% 0% 6% 6% 12% 13% EBITDA (LTM) Interest expense (171) (195) (192) (172) (185) (180) Net income (67) (319) *Dry exploration and abandonment wells, Exploration Costs, Geological Studies and others. 19

19 Financial Summary Balance Sheet Period ended in Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Summary Balance Sheet (US$ million) Total current assets 2,919 2,778 2,832 1,924 1,525 1,664 Cash & equivalents Accounts Receivables Inventories 1,487 1,498 1, Total non-current assets 3,284 3,534 3,442 3,733 3,929 4,179 Net PP&E 2,672 2,648 2,637 2,753 2,798 3,138 Total assets 6,203 6,312 6,274 5,657 5,454 5,843 Total current liabilities 2,516 2,906 2,239 1,392 1,095 1,603 Short-term debt 1,052 1, Total non-current liabilities 3,306 3,324 3,804 3,719 3,658 3,432 Long-term debt 2,985 3,013 3,416 3,372 3,310 3,140 Total liabilities 5,822 6,230 6,043 5,112 4,753 5,036 Shareholders' equity Minority interest Total equity Total liabilities + SHE 6,203 6,312 6,274 5,657 5,454 5,843 20

20 Financial Summary Key Financial Ratios Key Financial Ratios (US$ MM) Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Total debt 4,037 4,155 3,902 3,831 3,802 4,007 Total net debt 3,753 3,974 3,433 3,678 3,688 3,941 EBITDA (LTM) Interest expense (net) Income before Taxes Taxes Net Profit Total net debt / EBITDA (LTM) 10.1x 69.6x 5.1x 5.9x 5.0x 5,8x Total net debt / Equity 9.9x 48.1x 14.9x 6.7x 5.3x 4,9x EBITDA / Interest expense 2.2x 0.3x 3.5x 3.6x 4.0x 3,8x Total net debt / EBITDA (LTM) Total net debt / Equity EBITDA / Interest expense 69.7 x 48.1 x 3.5 x 3.6 x 4.0 x 3.8 x 2.2 x 10.1 x 5.1 x 5.9 x 5.0 x 5.8 x 9.9 x 14.9 x 6.7 x 5.3 x 4.9 x 0.3 x Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16

21 Financial Summary Debt Profile Financial Debt and Supplier Credit (US$ in million) Supplier's Credit Total Financial Debt 4, , , ,802 4, ,155 3,902 3,832 3,802 4,007 Maturity profile Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 (US$ in million) Projects International Bonds Local Bonds ST Bank Debt LT Bank Debt % % Bank Bond

22 Relevant Financial Metrics EBITDA and EBITDA margin (US$ in million) % 13.0% % 6.0% 3.4% % EBITDA EBITDA margin Capital Expenditure (1) (US$ in million) Capex - New projects Capex - Initiatives (1) Initiatives includes Maintenance CAPEX. Total assets (US$ in million) Equity (US$ in million) 6,203 6,312 6,274 5,657 5,843 5,

23 Highlights 100% State owned, the second largest Chilean state-owned company (in terms of revenues) FY 2016 Revenues and EBITDA of US$ 5,217.1 MM and US$ MM, respectively A key strategic asset for Chile and the only refiner in the country Relevant participation in Chile s energy matrix Satisfies approximately 60% of Chilean demand for refined oil products World class operator with state of the art facilities and an extensive logistics network in Chile 3 refineries, marine terminals, storage facilities for crude and refined products, pipelines, and partial ownership on the southern hemisphere first LNG terminal (GNL Quintero S.A.) Stable & long-term relationships with a diverse base of suppliers & buyers Proven access to multiple sources of financing Experienced and professional management Investment grade ratings since 2002 in the international market (Baa3/BBB-/A ) and the local market (AAA/AA-) 24

24 Contact us at 25

Empresa Nacional del Petróleo Q Investor Presentation

Empresa Nacional del Petróleo Q2 2017 Investor Presentation Santiago, August 2017 Disclaimer Forward-looking statements are based on the beliefs and assumptions of ENAP s management and on information