Refining NZ Operational Update for July/August 2020

HIGHLIGHTS ? Operated safely through the period, including the six-week temporary shutdown of the refinery to help balance fuel stocks. ? All processing units have now been safely restarted. ? Refinery to Auckland (RAP) pipeline throughput was approximately 62% of the previous corresponding period reflecting the impact of COVID-19 travel restrictions. ? Processing Fee revenue remained at the Fee Floor due to negative international refining margins and low refinery throughput. ? Refining NZ net debt was $249 million as at the end August, reflecting five months of cash neutral operations at the Fee Floor. ? The company is in the final stage of planning for a refinery simplification, in order to extend cash neutral operations at the Fee Floor into 2021. COMMENTARY Refining NZ's excellent health and safety performance continued through July and August, with no Tier 1 or Tier 2 process safety events or recordable cases. Refining NZ promptly addressed the causes of two releases outside of consent that occurred. The refinery was shut down for six weeks during the period in order to help rebalance stocks across the country, due to the COVID-19 impacts on New Zealand fuel demand. All processing units have now been safely restarted and are expected to operate in low production mode to the end of the year. Refinery to Auckland Pipeline (RAP) throughput was approximately 62% of the previous corresponding period, reflecting the continuing impact of international border restrictions on jet demand and the impact of recent COVID-19 lockdown restrictions on Auckland fuel demand. International markets remain heavily impacted by the effects of COVID-19 with increased global demand during July and August as lockdown restrictions were eased in many countries, offset by the ramp-up of exports from China and India causing the Singapore Dubai Complex Margin for the July/August period to average US$ -2.46 per barrel. Refining NZ's GRM uplift over the Singapore margin was negative due to the temporary shutdown of the refinery. Processing Fee revenue was NZ$23.7 million, reflecting Fee Floor payments by our customers. GRM for the two months was US$ -4.18 per barrel reflecting low margins and low production during the period and the fuel and loss impact of the shutdown and restart of the refinery. In addition, the Company earned NZ$4.3 million in terminal fees from the import of petrol and diesel to Marsden Point during the temporary shutdown. The Company continues to expect Processing Fees to remain at the Fee Floor through 2H 2020, given Fee Floor payments year to date total NZ$70.4 million (with Processing Fee Revenue excluding Fee Floor payments of NZ$23.3 million). Net debt was NZ$249 million at the end of August, reflecting five months of cash neutral operations at the Fee Floor. Refining NZ is now in the final stages of planning to simplify refinery operations and structurally reduce operating costs, in order to extend cash neutral operations in 2021 under a Fee Floor scenario. The Company remains on track to provide a market update on the simplification plans in early October. For further information: Ellie Martel Government and External Affairs Manager Ellie.Martel@refiningnz.com +64 (0)20 4174 7226 End CA:00360059 For:NZR Type:MKTUPDTE Time:2020-09-21 10:22:36