Financial Results 2Q09 Financial Results 4Q10

February 22, 2011

Full year 2010

Highlights
Upstream production 16.0 mbbl (16.0 mbbl in 2009) and downstream volumes 23.7 mbbl (21.8 mbbl in 2009) Proved and probable reserves increased to 638 mbbl Total reserves increased to 979 mbbl 804 per cent of reserve replacement ratio Retail network expanded to 266 sites Revenue of MUSD 2,196 (MUSD 1,726 in 2009) EBITDA of MUSD 438 (MUSD 388 in 2009) Net profit of MUSD 226 (MUSD 205* in 2009) Long-term project financing agreement of 760 MUSD with Vnesheconombank
Notes: Excluding impairment reversal of MUSD 140 net of tax in 2009

Fourth Quarter 2010

Highlights
4.1 mbbl of oil produced (4.3 mbbl in 3Q10 and 3.9 mbbl in 4Q09) 5.6 mbbl of oil refined (6.5 mbbl in 3Q10 and 5.6 mbbl in 4Q09) Revenue of MUSD 582 (MUSD 581 in 3Q10 and MUSD 545 in 4Q09) EBITDA of MUSD 119 (MUSD 130 in 3Q10 and MUSD 90 in 4Q09) Net profit of MUSD 61 (MUSD 85 in 3Q10 and MUSD 188 in 4Q09) Higher Upstream and Downstream segment results on lower volumes

Upstream Operations
Assets
Timano-Pechora YE10 2P reserves: 395 mbbl (62%) 2010 production: 5.0 mbbl (31%)

Alliance Oil Company Total YE10 2P reserves: 638 mbbl 2010 crude oil production: 16.0 mbbl

Tomsk Volga-Urals and Kazakhstan YE10 2P reserves: 187 mbbl (29%) 2010 production: 8.0 mbbl (50%) YE10 2P reserves:56 mbbl (9%) 2010 production: 3.0 mbbl (19%)

Upstream Operations
Production
Crude Oil Production Q-by-Q, mbbl
6
Volga-Urals and Kazakhstan Timano-Pechora Tomsk

4,8 4,3 3,9

3,6 3,8

3,8

4,1

2,0 1,9 2,4

2,0

2,0

2,0

1,2

1,1

1,1

1,1

1,5

1,3

0,8 0 4Q09

0,7 1Q10

0,7 2Q10

0,8 3Q10

0,8 4Q10

Second consecutive quarter crude production above 4 mbbl Timano-Pechora is a major contributor of growth
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Upstream Operations
Sales
Crude Oil Sales Q-by-Q, mbbl
6
Intra-group Domestic CIS Export

4,8 4,2 3,8 3,6 0,7

1,5

4,1

3,8

3,7 0,9 2,0 1,3

2,4

1,0 1,0 0,8 1,0 0,1 1,3 1,2 1,4 0,4 0,9 0,1 1,2 0,5 1,1 1,2

1,2

0 4Q09 1Q10 2Q10 3Q10 4Q10

Increased CIS and domestic sales Decreased intra-group shipments

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Upstream Operations
Netbacks
Netback Prices, USD/bbl
45 42

42 40 38
36 35 33

38

32 30
28

34

34

30

32

31
29

31
CIS Export Domestic

25

20 4Q09 1Q10 2Q10 3Q10 4Q10

Higher international oil prices Improved netbacks in all markets

Notes: The netback prices are calculated by deducting VAT, railway and pipeline transportation costs (for Russian domestic sales) or transportation, export duty, brokers commission and certain other costs (for export sales) or transportation, brokers commission and certain other costs (for CIS countries export) from the gross price.

Upstream Operations
Drilling
Drilling Activity, Q-by-Q
35,0 Wells in progress Wells put into operation 28,0 17 18

21,0 7 18

12

14,0 21 7,0 16 9
,0

16

14

4Q09

1Q10

2Q10

3Q10

4Q10

Active drilling programme in all regions 5 wells were drilled at Kolvinskoye oil field in 2010
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Reserve base
PMRS 2008 2010 dynamics
Reserves dynamics, mbbl
1 000 900 978,8

2P reserves, mbbl
650
128

638

Possible Probable Proved

757,4 619,3 132,0

800
700 600 500 400 300 200 100 0 261,0 226,2

340,6

600

231,5

550 55
351,8

526

16

500

487

250,7

16

450
275,2 286,4

400

2008

2009

2010

Total reserves increased by 29.2% to 979 mbbl 804 per cent of reserve replacement ratio
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Downstream Operations
Assets
Far East (Amur, Primorsk, Khabarovsk and Jewish Autonomous Regions) Railcar fleet of over 1,400 units 259 retail gas stations and 16 oil product terminals

The Republic of Buryatia 7 retail gas stations

Khabarovsk Oil Refinery Refining capacity: 70,000 bopd Nelson complexity index: 3.4 2010 throughput: 23.7 mbbl

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Downstream Operations
Refinery Throughput
Oil Refining at the Khabarovsk Refinery, mbbl
7,5 80,0

mbbl 6

kbpd (rsc)

70,8

60,6

62,4

65,9
60,7
64,0

4,5

48,0

5,6

5,6

6,0

6,5 5,6

32,0

1,5

16,0

0 4Q09 1Q10 2Q10 3Q10 4Q10

,0

Sustained high capacity utilization

Production increased from 21.8 mbbl (2009) to 23.7 mbbl (2010)
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Downstream Operations
Sales
Oil Products Sales, mbbl
7,5
Retail Wholesale Export

6,7 5,7
0,9

5,7
0,9

6,1
0,9

1,0

5,8
1,0

4,5

2,3 2,7 3 2,7

3,6 2,8

1,5 2,1 0 4Q09 1Q10 2,2

2,9
2,1

2,0

2Q10

3Q10

4Q10

Lower sales due to seasonality

The most profitable retail sales maintained at high level
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Downstream Operations
Prices
Oil Products Net Prices, USD/bbl
150
Retail Wholesale Export

120

112
107

109

109

109

90 71
60

73

73

79 72

61 54 30 55 53 51

0 4Q09 1Q10 2Q10 3Q10 4Q10

Positive dynamics in wholesale and export prices Stable returns in retail market
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Financials
MUSD Revenue Operating Income Operating Margin EBITDA EBITDA Margin Net Profit Net Margin Basic EPS, $ 4Q09 545 234 43% 90 17% 188 35% 1,09 FY09 1 726 454 26% 388 22% 345 20% 2,06 1Q10 501 70 14% 101 20% 45 9% 0,26 2Q10 532 60 11% 89 17% 34 6% 0,19 3Q10 581 96 17% 130 22% 85 15% 0,49 4Q10 582 82 14% 119 20% 61 11% 0,35 FY10 2 196 307 14% 438 20% 226 10% 1,30

FY2010 strong revenue growth Stable margins despite market volatility and seasonal factors

Notes: FY 2009 Net Profit includes impairment reversal of MUSD 140 net of tax

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Financials
Segment Performance
Revenue Breakdown, MUSD
600,0
Oil products Crude oil

EBITDA Distribution, MUSD

75
Upstream Downstream

60
450,0

300,0

410 406

418

478

453

45 66 68 40 67 71

30 49 47
150,0 125 ,0 4Q09 1Q10 2Q10 3Q10 4Q10 102 120

61 50

48

15
87 89

0 4Q09 1Q10 2Q10 3Q10 4Q10

Increased upstream revenue on lower volumes Increased EBITDA for both segments
Notes: (1) Segment Revenue exclude other income. Segment revenue is adjusted at consolidation for effect of intra-group transactions. Segment EBITDA do not include result of management companies of MUSD (18.0) for 4Q10, MUSD (3.0) for 3Q10, MUSD (3.0) for 2Q10, MUSD (4.9) for 1Q10 and MUSD (13.9) for 2009 (2) Total upstream and downstream EBITDA is adjusted at consolidation for effect of intra-group transactions of MUSD (2.0) for 4Q10, MUSD (2.0) for 3Q10, MUSD 3.8 for 2Q10, MUSD (5.6) for 1Q10 and MUSD (0.3) for 2009 (3) EBITDA for Upstream and Downstream segments is based on IFRS financial information

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Financials
Segment Performance
EBITDA, USD/bbl
18
Upstream 15 Downstream

12

9 15,7 16,5

12,7 8,1

13,2
10,6

12,9 10,1 6,6

12,2

0 4Q09 1Q10 2Q10 3Q10 4Q10

Improved upstream and downstream margins

Notes: Segment EBITDA is based on total sold volumes including external and intra-group and presented excluding operating result of management companies

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Financials
Upstream Economics
Upstream Economics 4Q10, USD/bbl
48

40

0,04

6,30
32

6,30

12,74 24
40,49

4,88

16

16,53

Revenue

Cost of purchased Production Costs oil

Production and Other Taxes

SG&A and Other

EBITDA

Notes: (1) Based on total upstream sold volume including external and intra-group; (2) Selling, administrative and other income/expenses, include transportation tariffs and other selling expenses, administrative expenses and other operating income/expenses

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Financials
Downstream Economics
Downstream Economics 4Q10, USD/bbl
90

75

1,97
16,11

60

45 77,96 30

29,71

2,86 7,49

15

7,60 12,22

0 Revenue Refining Crude Oil Cost of Crude Transportation Oil Excise and Other Taxes Oil Products Purchased SG&A and Other EBITDA

Notes: (1) Based on total sold volume including external and intra-group; (2) Selling, administrative and other income/expenses include transportation cost for oil products and other selling expenses, administrative expenses and other operating income/expenses

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Financials
Debt
Debt Maturity Profile (1), MUSD
1050 900 750 600 450 300 150 96 0 Within one year One to two years Over two years 97 25 32 945 968
247 24%

Total Debt by Currency as of 31 December, 2010 (MUSD)

RUB nominated bonds USD nominated bonds and bank loans USD nominated convertible bonds EUR nominated bank loans

As of September 30, 2010 As of 31 December 2010

29 3%

178 17%

586 56%

Total debt (net of issue costs and equity component of convertibles) of MUSD 1,040
Net debt of MUSD 862, cash on balance MUSD 178(2) Improved maturity profile
Notes: (1) Future cash flows for the repayment of loan principal; (2) Including restricted cash of MUSD 79.3

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Management Outlook

Higher oil prices and solid demand with higher cost inflation Changing tax environment, further fiscal initiatives expected Upstream
Production target to exceed 20 mbbl in 2011 Capital expenditures are budgeted around 460 MUSD

The Kolvinskoye oil field to be launched in 3Q11

Downstream

Volumes target to exceed 23 mbbl in 2011 Capital expenditures are budgeted around 510 MUSD Modernization of the Khabarovsk refinery intact for 2012

Selective M&A in both segments, including joint ventures Upstream & Downstream capacity at 90,000 bopd in 2012 New reserves and new long term production outlook above and

beyond the 2012 target of 90,000 bopd

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Premium Brand and Market Leadership

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