*Please note that the earnings results for the fiscal second quarter of 2016 are subject to further verification by independent auditors.

SEOUL, July 22, 2016 – SK Innovation [KS 096770], Korea’s leading energy provider, today announced its financial results for the second quarter ending June 30, 2016.

Revenue in the second quarter was KRW 10.28 trillion, up by 8.7% from KRW 9.45 trillion from the previous quarter. The second- quarter revenue rose as strong oil prices have pushed up product prices.

The second-quarter operating profit stood at KRW 1.12 trillion, up by 32.5 % from KRW 844.8 billion, quarter-on-quarter. The rise in the operating profit mainly reflected robust market conditions of non-refining business and inventory-related gains in line with strong oil prices.

2^nd QUARTER BUSINESS ANALYSIS

Petroleum

• Petroleum business recorded revenue of KRW 7.44 trillion and an operating profit of KRW 705.2 billion in the second quarter, up by KRW214.7 billion quarter-on-quarter. The operating profit rose on the back of inventory-related gains from higher oil prices.

• Oil prices are likely to recover as the oil supplies in the US decline. However, the increase in the oil prices may be limited as Brexit boosts uncertainty in the market.

• The refining margins are likely to improve gradually as global refiners adjust down utilization rate due to scheduled maintenance activities in fall.

  Petrochemical

• Petrochemical business posted revenue of KRW 1.95 trillion and an operating profit of KRW 302.7 billion in the second quarter, up by KRW 78.4 billion compared to the previous quarter. Strong product spreads for ethylene and paraxylene led to the gain in the profit.

• The spread for ethylene was stronger than in the previous quarter as the supply in the market declined due to maintenance activities in cracker facilities in the region. The paraxylene spread remained at a favorable level due to high utilization rate of PTA facilities.

• The spread for ethylene is forecast to remain at current levels as some problems at cracker facilities in the region are likely to continue. The paraxylene spread is expected to maintain at a strong level on the back of solid utilization rate at PTA facilities ahead of G20 summit scheduled in September in China.

  Lubricants

• Lubricants business posted revenue of KRW 653.3 billion and an operating profit of KRW 132.9 billion in the second quarter, up by KRW 700 million from the previous quarter.

• The operating profit jumped as strong demands in the global market boosted sales and inventory-related gains are also reflected.

• The market condition for lubricants is expected to be stable due to growing demand for premium base oil products.

  Exploration & Production

• SK Innovation’s E&P business recorded revenue of KRW 120.2 billion and an operating profit of KRW 16.6 billion in the second quarter, down by KRW 6.6 billion from the previous quarter.

• The revenue is almost at the same level as the previous quarter due to the decline in sales volume and the of sales exchange rate offsetting positive impacts from higher oil prices.