Galp Energia SGPS S A : Report and Accounts - 3Q - 2023

3rd QUARTER AND NINE MONTHS 2023

30 October, 2023

Unaudited

Cautionary Statement

This document may include forward-looking statements. All statements other than statements of historical facts are, or may be deemed to be, forward-looking statements. Forward-looking statements express future expectations that are based on management's expectations and assumptions as of the date they are disclosed and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such those statements. Accordingly, neither Galp nor any other person can assure that its future results, performance or events will meet those expectations, nor assume any responsibility for the accuracy and completeness of the forward-looking statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Galp to market risks and statements expressing management's expectations, beliefs, estimates, forecasts, projections, and assumptions. These forward-looking statements may generally be identified by the use of the future, gerund or conditional tense or the use of terms and phrases such as "aim", "ambition", "anticipate", "believe", "consider", "could", "develop", "envision", "estimate", "expect", "goals", "intend", "may'', "objectives", "outlook", "plan", "potential", "probably", "project", "pursue", "risks", "schedule", "seek", "should", "target", "think", "will" or the negative of these terms and similar terminology.

Financial information by business segment is reported in accordance with the Galp management reporting policies and shows internal segment information that is used to manage and measure the Group's performance. In addition to IFRS measures, certain alternative performance measures are presented, such as performance measures adjusted for special items (adjusted operational cash flow, adjusted earnings before interest, taxes, depreciation and amortisation, adjusted earnings before interest and taxes, and adjusted net income), return on equity (ROE), return on average capital employed (ROACE), investment return rate (IRR), equity investment return rate (eIRR), gearing ratio, cash flow from operations and free cash flow. These indicators are meant to

facilitate the analysis of the financial performance of Galp and comparison of results and cash flow among periods. In addition, the results are also measured in accordance with the replacement cost method, adjusted for special items. This method is used to assess the performance of each business segment and facilitate the comparability of the segments' performance with those of its competitors.

This document may include data and information provided by third parties, which are not publicly available. Such data and information should not be interpreted as advice and you should not rely on it for any purpose. You may not copy or use this data and information except as expressly permitted by those third parties in writing. To the fullest extent permitted by law, those third parties accept no responsibility for your use of such data and information except as specified in a written agreement you may have entered into with those third parties for the provision of such data and information.

Galp and its respective representatives, agents, employees or advisers do 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 document to reflect any change in events, conditions or circumstances.

This document does not constitute investment advice nor forms part of and should not be construed as an offer to sell or issue or the solicitation of an offer to buy or otherwise acquire securities of Galp or any of its subsidiaries or affiliates in any jurisdiction or an inducement to engage in any investment activity in any jurisdiction.

Table of Contents
1.	Results Highlights	4
2.	Upstream	9
3.	Renewables & New Businesses	12
4.	Industrial & Midstream	15
5.	Commercial	18
6.	Financial Data	21
6.1	Income Statement	22
6.2	Capital Expenditure	24
6.3	Cash Flow	25
6.4	Financial Position	26
6.5	Financial Debt	27
6.6	Reconciliation of IFRS and RCA Figures	28
6.7	Special Items	29
6.8	IFRS Consolidated Income Statement	30
6.9	Consolidated Financial Position	31
7.	Basis of Reporting	32
8.	Interim Consolidated Financial Statements	37
8.	Definitions	67

RESULTS HIGHLIGHTS

3rd QUARTER AND NINE MONTHS 2023

October 2023

1. RESULTS HIGHLIGHTS

Third quarter 2023

Galp delivered a robust set of results supported on a strong operating performance and disciplined capital allocation during 3Q23, allowing to further strengthen its financial position.

RCA Ebitda reached €1,057 m:

• Upstream: RCA Ebitda was €594 m, down YoY, reflecting the de-recognition of the Angolan upstream assets' disposal and a less favourable oil and gas prices environment.
  On a comparable basis, excluding Angolan assets, current portfolio working interest (WI) production was up 8% YoY, supported by the ramp-up of Coral Sul FLNG in Mozambique and stable production in Brazil.
• Renewables & New Businesses: RCA Ebitda was €43 m, on a seasonally high generation quarter, with the increased generation from added operating capacity more than offsetting the lower market price environment YoY.
• Industrial & Midstream: RCA Ebitda was €342 m, reflecting a strong performance of the industrial activities, with the system's high utilisation capturing the international cracks environment. The contribution from the midstream businesses continued robust, benefiting from improved supply and trading activities across oil, gas and power.
• Commercial: RCA Ebitda was €111 m, up YoY, following improved performance on the Iberian retail and convenience, and despite the pressured environment on some B2B segments.

Group RCA Ebit was €741 m, mostly following RCA Ebitda.

Taxation was up YoY, including €76 m of extraordinary taxes in Iberia, leading to an implicit 63% tax rate (the rate would be 52% if excluding these extraordinary effects). RCA net income was €210 m.

Galp's adjusted operating cash flow (OCF) was robust at €716 m, reflecting the sound operating performance. Cash flow from operations (CFFO), including working capital and inventory effects, reached €686 m.

Net capex totalled €161 m, mostly directed towards Upstream projects under execution and development in the Brazilian pre-salt, as well as the preparation of the upcoming exploration activities in Namibia and including interim inflow of €132 m related with the Angolan upstream assets' disposal.

FCF amounted to €497 m, with Net Debt reduced by €152 m during the period.

Nine months of 2023

Galp's RCA Ebitda was €2,838 m, while OCF was €1,781 m, reflecting a robust operating performance across all business units during the period.

Net capex totalled €476 m, mostly directed towards Upstream's developments, and considering €209 m of inflows from the Angolan upstream assets' disposal.

FCF amounted to €1,351 m, with net debt down 22% compared to the end of last year, considering dividends to non-controlling interests of €89 m, dividends paid to shareholders of €422 m and €308 m invested through the share buybacks.

3rd QUARTER AND NINE MONTHS 2023

October 2023

Short Term Outlook

Galp updated its expected 2023 Ebitda and OCF, mostly on the back of improved business performance and the slightly stronger than initially assumed commodity price environment.

Assumptions for 2023FY		Previous	2023
Brent	$/bbl	c.75	83
Realised refining margin	$/boe	c.9	11
Iberian PVB natural gas price	€/MWh	c.40	40
Iberia solar capture price	€/MWh	c.80	75
Average exchange rate	EUR:USD	c.1.10	1.08
WI production	kboepd	>115	c.120

Financial indicators for 2023FY		Previous	2023
RCA Ebitda	€ bn	c.3.2	>3.5
OCF	€ bn	c.2.2	>2.3
Organic capex	€ bn	-	c.1.1

3rd QUARTER AND NINE MONTHS 2023

October 2023

Financial data

€m (RCA, except otherwise stated)

	Quarter					Nine Months
3Q22	2Q23	3Q23	% Var. YoY		2022	2023	% Var. YoY
784	916	1,057	35%	RCA Ebitda	2,897	2,838	(2%)
612	522	594	(3%)	Upstream	2,292	1,664	(27%)
38	33	43	12%	Renewables & New Businesses	34	110	n.m.
48	289	342	n.m.	Industrial & Midstream	333	866	n.m.
103	68	111	7%	Commercial	256	249	(3%)
(17)	5	(32)	86%	Others	(17)	(51)	n.m.
408	643	741	81%	RCA Ebit	1,870	2,058	10%
420	405	469	12%	Upstream	1,627	1,311	(19%)
32	23	(27)	n.m.	Renewables & New Businesses	27	19	(30%)
(86)	218	258	n.m.	Industrial & Midstream	82	674	n.m.
77	4	78	2%	Commercial	179	126	(29%)
(34)	(5)	(37)	8%	Others	(44)	(72)	66%
187	258	210	12%	RCA Net income	608	718	18%
223	16	24	(89%)	Special items	172	232	35%
(103)	(23)	69	n.m.	Inventory effect	241	(45)	n.m.
307	251	303	(1%)	IFRS Net income	1,020	906	(11%)
484	702	716	48% Adjusted operating cash flow (OCF)	2,087	1,781	(15%)
320	326	363	13%	Upstream	1,493	762	(49%)
35	55	43	22%	Renewables & New Businesses	30	135	n.m.
57	248	252	n.m.	Industrial & Midstream	343	735	n.m.
88	43	79	(10%)	Commercial	234	164	(30%)
1,024	733	686	(33%) Cash flow from operations (CFFO)	1,964	1,919	(2%)
(558)	(207)	(161)	(71%)	Net Capex	(924)	(476)	(48%)
427	503	497	16% Free cash flow (FCF)	944	1,351	43%
(34)	(87)	(2)	(94%)	Dividends paid to non-controlling interests	(145)	(89)	(39%)
(213)	(209)	(213)	0%	Dividends paid to Galp shareholders	(420)	(422)	1%
(77)	(159)	(72)	(5%)	Buyback	(116)	(308)	n.m.
2,096	1,363	1,211	(42%)	Net debt	2,096	1,211	(42%)
0.6x	0.4x	0.3x	(46%) Net debt to RCA Ebitda1	0.6x	0.3x	(46%)

1 Ratio considers the LTM Ebitda RCA (€3,549 m), which includes the adjustment for the impact from the application of IFRS 16 (€240 m).

3rd QUARTER AND NINE MONTHS 2023

October 2023

Operating data

	Quarter									Nine Months
3Q22	2Q23	3Q23	% Var. YoY						2022	2023	% Var. YoY
127.7	117.1	125.0	(2%)	Working interest production (kboepd)	126.0	120.8	(4%)
126.1	116.9	124.7	(1%)	Net entitlement production (kboepd)	124.5	120.6	(3%)
99.4	73.5	84.0	(15%)	Upstream oil realisations indicator (USD/bbl)	103.8	77.7	(25%)
55.5	43.7	40.8	(27%)	Upstream gas realisations indicator (USD/boe)	52.5	44.2	(16%)
627	775	760	21%	Equity renewable power generation (GWh)	1,323	1,983	50%
127	64	77	(39%)	Renewables' realised sale price (EUR/MWh)	151	79	(47%)
22.9	21.7	22.4	(2%)	Raw materials processed in refinery (mboe)	67.5	63.6	(6%)
7.7	7.7	14.6	90%	Galp refining margin (USD/boe)			11.0	12.2	11%
4.3	3.9	3.9	(11%)	Oil products supply	1	(mton)			12.0	11.4	(5%)
13.1	12.7	13.1	(0%)	NG/LNG supply & trading volumes	1	(TWh)	41.9	36.5	(13%)
177	158	159	(10%)	Sales of electricity from cogeneration (GWh)	464	479	3%
2.0	1.8	1.8	(8%)	Oil Products - client sales (mton)			5.5	5.3	(4%)
4,180	3,282	3,388	(19%)	Natural gas - client sales (GWh)			14,776	10,392	(30%)
979	899	880	(10%)	Electricity - client sales (GWh)			3,207	2,712	(15%)

1 Includes volumes sold to the Commercial segment.

Market indicators

	Quarter					Nine Months
3Q22	2Q23	3Q23	% Var. YoY		2022	2023	% Var. YoY
1.01	1.09	1.09	8%	Exchange rate EUR:USD	1.06	1.08	2%
5.28	5.39	5.31	1%	Exchange rate EUR:BRL	5.46	5.42	(1%)
100.8	78.1	86.7	(14%)	Dated Brent price (USD/bbl)	105.5	82.1	(22%)
138.5	32.7	33.7	(76%)	Iberian MIBGAS natural gas price (EUR/MWh)	108.0	39.5	(63%)
196.2	35.1	33.0	(83%)	Dutch TTF natural gas price (EUR/MWh)	129.1	40.7	(68%)
152.3	34.3	39.5	(74%)	Japan/Korea Marker LNG price (EUR/MWh)	110.9	42.2	(62%)
339.1	139.9	249.4	(26%)	Diesel 10 ppm CIF NWE Crack (USD/ton)	280.6	215.1	(23%)
189.0	241.0	283.9	50%	EuroBob NWE FOB Bg Crack (USD/ton)	230.0	238.3	4%
146.3	80.3	96.5	(34%)	Iberian power baseload price (EUR/MWh)	185.8	91.1	(51%)
129.4	60.7	79.2	(39%)	Iberian solar market price (EUR/MWh)	159.9	73.5	(54%)
16.4	15.7	16.2	(1%)	Iberian oil market (mton)	47.1	47.0	(0%)
103.8	86.1	91.0	(12%)	Iberian natural gas market (TWh)	327.6	281.9	(14%)

Source: Platts for commodities prices; MIBGAS for Iberian natural gas price; APETRO and CORES for Iberian oil market; REN and Enagás for Iberian natural gas market; OMIE and REE for Iberian pool price and solar captured price.

UPSTREAM

3rd QUARTER AND NINE MONTHS 2023

OCTOBER 2023

2. UPSTREAM

€m (RCA, except otherwise stated; unit figures based on net entitlement production)
	Quarter												Nine Months
3Q22	2Q23	3Q23	% Var. YoY									2022	2023	% Var. YoY
127.7	117.1	125.0	(2%)	Working interest production	1	(kboepd)			126.0	120.8	(4%)
				By product
114.8	98.9	102.9	(10%)	Oil production (kbpd)						113.3	101.1	(11%)
12.9	18.3	22.2	72%	Gas production (kboepd)						12.7	19.7	55%
				By country
115.8	111.6	116.2	0%	Brazil						114.2	114.2	0%
0.1	5.5	8.9	n.m.	Mozambique						0.0	6.6	n.m.
11.8	-	-	n.m.	Angola						11.8	-	n.m.
115.8	117.1	125.0	8%	Working interest production excluding Angola	2	114.2	120.8	6%
126.1	116.9	124.7	(1%)	Net entitlement production	1	(kboepd)			124.5	120.6	(3%)
						3
				Realisations indicators
99.4	73.5	84.0	(15%)	Oil (USD/bbl)						103.8	77.7	(25%)
55.5	43.0	40.8	(27%)	Gas (USD/boe)						52.5	44.2	(16%)
7.8	6.4	7.1	(9%)	Royalties (USD/boe)						8.3	6.8	(19%)
3.2	1.8	2.9	(10%)	Production costs (USD/boe)					3.0	2.7	(10%)
13.3	12.0	11.9	(11%)	DD&A	4	(USD/boe)						13.1	11.6	(11%)
612	522	594	(3%)	RCA Ebitda						2,292	1,664	(27%)
(192)	(117)	(125)	(35%)	Depreciation, Amortisation and Impairments	3		(665)	(353)	(47%)
420	405	469	12%	RCA Ebit						1,627	1,311	(19%)
420	480	532	27%	IFRS Ebit						1,627	1,494	(8%)
320	326	363	13%	Adjusted operating cash flow				1,493	762	(49%)
205	113	160	(22%)	Capex							466	387	(17%)

1. Includes natural gas exported; excludes natural gas used or reinjected.
2. Excludes Angola's contribution for comparison purposes.
3. Oil realisation indicator is estimated based on the differential to the average Brent price of the period when each of Galp's oil cargoes were negotiated, deducted from logistic costs associated with its delivery. Gas realisation indicator represents the revenues collected from the equity gas sold during the period net of all gas delivery and treatment costs.
4. Includes abandonment provisions. 9M22 and 9M23 unit figures exclude impairments of €245 m and €10 m, respectively, related with exploration and appraisal assets.