Investors visit to Tatneft

Institutional investors visited Tatneft

4 October 2016

Institutional investors visited production facilities of Tatneft Group and met with the company's management

On 3 October 2016 a group of investors representing investment funds Prosperity Capital, TKB Investment Partners, East Capital, Sberbank AM, Franklin Templeton and Verno Capital as well as analysts and managers of Renaissance Capital visited the TANECO refinery complex where they were briefed about the operations of key production facilities, including the delayed coking unit, which following its launch in the summer of this year allowed TANECO to cease production of fuel oil, increase the depth of refining to record 99% and output of light products to 87%.

Also the investors had a chance to observe the progress of works on construction of units designed to enhance the quality of output (hydrotreaters, reforming and others) as well as the CDU-VDU-6 and other facilities of the project to expand highly effective refining capability of the Company.

At the Company's headquarters in Almetyevsk the investors met with the management team of Tatneft led by the General Director. In his introduction Nail Maganov stressed the role of investors in creating value of the Company and the importance of understanding by the market of the Company's strategic goals and priorities.

Deputy General Director for Strategic Development Nurislam Syubaev presented the core aspects of the Company Strategy until 2025, which was approved by the Board of Directors of Tatneft in early August 2016 (the presentation has been published on external web-site of the Company in "Presentation to Investors" sub-section of "Information Disclosure" section of "For Shareholders" segment). The strategy was calculated using three main macro scenarios, it assumes organic growth of oil production, expansion and increased contribution of refining segment into the Company's value, decrease of per unit costs and other measures, which in aggregate in the base case lead to doubling of Tatneft's value by 2025 in US Dollar terms.

Following the presentation there was a discussion on broad range of issues relating to the Company's activities, its plans, including the risks of changes in the oil markets, debated measures in the area of taxation of the industry upon completion of so-called big tax maneuver, the impact of alternative energy generation and storage, ability to optimize the crude oil extraction expenses and others.

The investors appreciated the achievements of Tatneft and its ambitious plans, supporting the initiatives aimed at increasing the value through the implementation of economically effective projects, while mentioning the desire for better quality of utilizing the shareholders' free cash flow which is not paid out as dividends, as well as realizing opportunities via business diversification, including in petrochemical segment. One of the questions discussed was the potential for increasing the Company's value through synergies upon acquiring existing entities, including a possible participation in the privatization of PJSOC Bashneft. Tatneft confirmed to investors its interest to such opportunities, but subject to comprehensive valuation of respective assets and prospective for additional value creation.

In the course of their two-day trip, on 4 October 2016 the investors visited the highly viscous oil (HVO) production facilities at Ashalchinskoye field, developed by Nurlatneft crude oil and gas producing division of the Company. Currently the production of HVO exceeds 2 300 tonnes per day, in 2016 the total production is projected to exceed 500 thousand tinnes, and in 2017 the goal is to reach annual production level of over 1 million tonnes. The development of HVO fields is one of the sources of growth for crude oil production by Tatneft where the most progressive technologies and methods are implemented, many of which are the product of the Company's innovation activity.

Tatneft is committed to supporting a high level of transparency and collaboration with all shareholders and investors. In the near future a number of events are planned at which the Company will present its Strategy until 2025 to a wider group of investors.

This press release contains inside information.

Forward-looking statements: These materials contain statements about future events and expectations that are forward-looking in nature. Any statement in these materials that is not a statement of 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 assumes no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.