SK INNOVATION REPORTS 1^st QUARTER 2011 EARNINGS RESULTS:

●        The 1st quarter 2011 revenue increased 40% year-over-year(YoY), to KRW 17,084.1 billion, due to the rising oil prices

●        Operating profit for the quarter increased 195% YoY, to KRW 1,193.3 billion, due to adaptation of international accounting standards and improved refining margin

●        The company posted net income of KRW 853.3 billion.

* Please note that result figures are subject to further verification by independent auditors.

SEOUL, April 29, 2011 – SK Innovation [KS 096770], Korea’s leading energy provider, today announced the 1^st quarter earnings results for 2011. SK Innovation’s revenue for the 1^st quarter increased by 40% year-over-year(YoY) to KRW 17,084.1 billion, while the company’s operating profit increased by 195% YoY to stand at KRW 1,193.3 billion. The growth resulted from the rising oil prices, improved refining margin and adaptation of new accounting standards, the K-IFRS(International Financial Reporting Standards).

The company posted net income of KRW 853.3 billion, 181% higher than the same period in 2010 due to favorable operating profit and net non-operating gains.

The 1^st quarter net non-operating profit was KRW 4.3 billion, from net foreign exchange gains and higher equity method earnings.

The company’s financial structure remained stable in the 1^st quarter of 2011. The debt-to-equity ratio increased by 4% points  YoY to 168%, while the net debt-to-equity ratio decreased by 4% points  YoY to 63% as of the end of March 2011.

Mr. Sung Hyun Yoo, Head of IR at SK Innovation, said, “SK Innovation achieved healthy growth during the 1^st quarter due to higher oil prices, improving refining margins and solid performance of E&P, petrochemical business. Increase in oil prices and demand may continue throughout next quarter.” He added, “By managing four companies independently, we look forward to having stronger competitiveness and growth in the changing business environment.”

As of January 1, 2011, former SK Energy was renamed SK Innovation and the petroleum and petrochemical businesses were spun-off into wholly-owned subsidiaries; SK Energy and SK Global Chemical. Following the spin-off, SK Innovation now operates E&P(Exploration & Production)  and R&D business, and holds three major subsidiaries; SK Energy, SK Global Chemical and SK Lubricants.

BUSINESS DIVISION PERFORMANCE

SK Innovation (E&P/ Others)

·         SK Innovation (E&P business and others) marked revenue of KRW 339.4 billion with operating profit of KRW 148.2 billion for the 1^st quarter.

·         SK Innovation’s E&P business continued its revenue and operating profit growth during the 1^st quarter. Its revenue marked KRW 277.8 billion with operating profit of KRW 161.3 billion mainly due to higher crude oil prices.

·         The average daily production in the quarter decreased to 63,000 barrels of oil equivalent per day (BoE/D) from 74,000 BoE per day in the previous quarter. This is due to exclusion of production from Brazil BM-C-8 block which was sold, and decrease of production led by regular maintenance of Peru LNG. However, the number is a significant increase from the daily average production of 40,000 BoE per day from the same period last year.

·         Based on the liquidity secured from the sale of SK do Brazil, the E&P business aims to strengthen its business portfolio and continue to seek operatorship.

SK Energy (Petroleum)

·         The 1^st quarter revenue of SK Energy (petroleum business) recorded KRW 12,242.2 billion, with operating profit of KRW 713.2 billion following strong performance of 2010.

·         The main performance drivers were healthy refining margins from increased demand for heating oil, demand in China and Southeast Asia, as well as higher oil prices due to healthy global petroleum consumption.

·         SK Energy forecasts favorable market conditions to continue, while increased demand in fuel oil is expected from the nuclear power plant shutdown in Japan, as well as high oil prices from political instability in the Middle East and North African region.

SK Global Chemical (Petrochemical)

·         SK Global Chemical (petrochemical business) recorded revenue of KRW 3,891.4 billion with operating profit of KRW 242.9 billion for the 1^st quarter.

·         The positive business performance resulted from an increase in demand, reduced supply from regular maintenance, as well as the Japanese earthquake effect. Moreover, consolidated earnings of SK Petrochemical and other subsidiaries from new accounting standards contributed to the YoY gains.

·         Although Chinese government’s monetary policy and start-up of new facilities may be a burden, SK Global Chemical anticipates favorable performance due to continued strength in PX market.

SK Lubricants

·         During the 1^st quarter, SK Lubricants posted quarterly revenue of KRW 611.1 billion and operating profits of KRW 89 billion due to sharp increase in oil price.

·         SK Lubricants expects stable earnings to continue on sustained global demand increase in fuel-efficient and eco-friendly engine oil market.

·         SK Lubricants accelerates its China Insider strategy and global marketing in China with plans to complete its lubricants plant in Tianjin, China by the end of this year, which is expected to produce 80,000 tons annually, while the company continues to pursue the No.4 LBO(Lube base oil) plant in Spain with Repsol for annual production of 650,000 tons.

About SK Innovation

Founded in 1962 as the Korea’s first oil refiner, SK Innovation, formerly called SK Energy, is one of the world’s leading energy and petrochemical companies with nearly 5,600 employees. It posted KRW 43.9 trillion in sales in 2010.

In January 2011, the former SK Energy has transformed into SK Innovation with its three subsidiaries of SK Energy, SK Global Chemical and SK Lubricants. The independent four-company management structure separating petroleum and chemical business is to respond rapidly to the changes in the business environment and expedite growth through fast decision-making process. Each company will be managed with optimized strategies fitted for its unique business environment under the new vision and goals.

Based on its technological expertise, SK Innovation will be renewed as a leading technology company focusing on lithium-ion batteries for electric vehicles, I/E(information electronic) materials, and E&P(exploration & development) business. SK Energy will evolve into a major trading company as it strengthens its position as the largest oil refiner and seller in Korea. SK Global Chemical will grow to become a leading chemical company in Asia by entering the burgeoning Chinese market. Moreover, SK Lubricants will continue to grow not only in the base oil market, but also in the lubricant market through affiliation with major European, North American and Asian companies.

Contact at SK Innovation

Taehoon Chung

Public Relations Team

Tel. (82)2-2121-5957

Mobile. (82)10-9026-2581

Email. thchung@sk.com

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