Mol Hungarian Oil & Gas Plc Class A · BET:MOL
Mol Hungarian Oil & Gas Plc Class A — MOL Group — Investor Presentation (October 2019)
82 slides from Mol Hungarian Oil & Gas Plc Class A's investor presentation, October 2019
Slide 1: MOL Group Investor Presentation October 2019
MOL GROUP INVESTOR PRESENTATION October, 2019
Slide 2: MOL Group in Brief
MOL GROUP IN BRIEF INTEGRATED CENTRAL EUROPEAN MID-CAP OIL & GAS COMPANY CORE ACTIVITIES UPSTREAM DOWNSTREAM CONSUMER GAS SERVICES MIDSTREAM Exploration Petrochemicals Retail Production Refining Mobility CLEAN CCS EBITDA BY SEGMENTS IN 2018 (USD MN) UPSTREAM DOWNSTREAM CONSUMER GAS 1,270 995 423 189
Slide 3: MOL Group Geography
MOL GROUP GEOGRAPHY CEE-BASED INTEGRATED OPERATIONS AND INTERNATIONAL UPSTREAM SLOVAKIA UK RUSSIA NORWAY CZECH REP. KAZAKHSTAN HUNGARY HQ IRAQ SLOVENIA PAKISTAN OMAN CROATIA ROMANIA EGYPT SYRIA (IN FORCE MAJEURE) BOSNIA SERBIA MONTENEGRO ANGOLA UPSTREAM DOWNSTREAM CONSUMER SERVICES 3
Slide 4: Agenda
AGENDA THE MOL GROUP EQUITY STORY SUPPORTING SLIDES Q3 2019 RECAP (LINK TO Q3 2019 RESULTS) DOWNSTREAM CONSUMER SERVICES EXPLORATION AND PRODUCTION FINANCIALS, GOVERNANCE AND OTHERS 4
Slide 5: The MOL Group Equity Story
THE MOL GROUP EQUITY STORY
Slide 6: Delivering Today, Transforming for Tomorrow
DELIVERING TODAY, TRANSFORMING FOR TOMORROW Efficiency & Safety: systematic focus on efficiency and safety in each business Integration: deeply integrated business model provides remarkable cash flow stability Resilience: high-quality, low-cost asset base, breaking even at the bottom of the cycle MO
Slide 7: Downstream: Cash Engine to Drive Fuel to Chemicals Transformation
DOWNSTREAM: CASH ENGINE TO DRIVE „FUEL TO CHEMICALS” TRANSFORMATION AND GROWTH DELIVERING TODAY High-quality, low-cost asset base Market leading position in Central Europe with long-standing customer relations Strong captive markets and a deeply integrated refining-chemicals-distribution value chain
Slide 8: Consumer Services: Becoming a True Consumer Goods Retailer
CONSUMER SERVICES: BECOMING A TRUE CONSUMER GOODS RETAILER AND LEADING THE REVOLUTION OF TRANSPORTATION IN CEE DELIVERING TODAY Leading CEE fuel retailer with ~1,900 sites, market leader in 4 countries Exploiting the fuel market potential in CEE TRANSFORMING FOR TOMORROW USD 500mn+ EBITDA in 2023 fr
Slide 9: E&P: Highly Value Accretive Barrels to Fund Inorganic Reserve Replacement
E&P: HIGHLY VALUE ACCRETIVE BARRELS TO FUND INORGANIC RESERVE REPLACEMENT DELIVERING TODAY Upgraded mid-term production profile; maintaining production at 100-110 mboepd through 2023 Strong cost discipline with an E&P cost base fit for the bottom of the cycle Existing 2P reserves generate substantia
Slide 10: Gas Midstream: Stable, Non-Cyclical Cash Flow
GAS MIDSTREAM: STABLE, NON-CYCLICAL CASH FLOW DELIVERING TODAY Regulated domestic transmission business Profitable international transit business spanning 6 regional countries Recent years saw significant pipeline and trade infrastructure developments as well as efficiency improvements TRANSFORMING
Slide 11: Robust Financial Framework Supports Strategic Transformation
ROBUST FINANCIAL FRAMEWORK SUPPORTS STRATEGIC TRANSFORMATION DELIVERING TODAY Q1-Q3 2019: Strong delivery allows for upgraded (around USD 2.4bn) EBITDA guidance for FY 2019 Clean CCS EBITDA at USD 2.2-2.4bn in 2019-21; strategic projects to boost EBITDA to USD 2.4-2.6bn in 2022-23 – based on MOL mid
Slide 12: Sustainable: Transforming to Low Carbon World
SUSTAINABLE: TRANSFORMING TO LOW CARBON WORLD DELIVERING TODAY Sustainable Development Committee integral part of the Board of Directors Minimize environmental footprint in line with climate change policy Only Emerging European corporation member of the Dow Jones Sustainability Index Strong sustaina
Slide 13: MOL Group 2030: Delivering Today, Transforming for Tomorrow
MOL GROUP 2030: DELIVERING TODAY, TRANSFORMING FOR TOMORROW Reducing motor fuel yield from 70%+ to below From „FUELS” 50% to „CHEMICALS” Becoming the leading CEE chemicals company From „FUEL Leading the revolution of transport in CEE to „CONSUMERS RETAILING” Becoming a true consumer goods retailer G
Slide 14: MOL 2030: Tracking Progress in 2017-18
MOL 2030: TRACKING PROGRESS IN 2017-18 INTERIM (2021) TARGETS 2017 STATUS 2018 STATUS NXDSP SLIGHTLY BEHIND TARGET; DOWNSTREAM EFFICIENCY USD 110 MN DELIVERED NEW TARGETS SET IN DS2022 ENTER NEW CHEMICAL ALL POLYOL TECHNOLOGY POLYOL FID IN SEP 2018 PRODUCT LINE(S) LICENSE AGREEMENTS SIGNED FY 2017 E
Slide 15: Downstream
DOWNSTREAM
Slide 16: Integrated Downstream Model in CEE Countries
INTEGRATED DOWNSTREAM MODEL IN CEE 11 COUNTRIES 18 SALES OF mtpa REFINED PRODUCTS AND 1.25 mtpa PETROCHEMICALS EMPLOYEES 9,500 16
Slide 17: High Quality Core Refining Assets
HIGH QUALITY CORE REFINING ASSETS COMPLEX REFINERIES WITH VERY HIGH WHITE PRODUCT YIELD REFINERY NELSON COMPLEXITY OF PEERS1 GROUP REFINERY YIELD, 2018 (%) 16 6.1 Mtpa 9,2% 2.6% 14 8,9% 8.1 Mtpa 8.1% 12 11.5 8,1% LPG 10.6 4.5 Mtpa 10 9.1 2.2 Mtpa 2.7% Naphta NCI 8 18,2% 19.0% Motor gasoline 6.1 4,6%
Slide 18: Significant Upside Potential from IMO 2020
SIGNIFICANT UPSIDE POTENTIAL FROM IMO 2020 LANDLOCKED REFINERIES: 47% MIDDLE DISTILLATES, NO MATERIAL FUEL OIL GROUP REFINERY YIELD, 2018 (%) PRODUCT FORWARDS (USD/BBL)1 Diesel HFO Brent-Ural 9,2% 2.6% 8,9% 8.1% 18,9 8,1% LPG 17,9 17,7 2.7% Naphta 14,8 14,9 -0,3 18,2% 19.0% Motor gasoline -9,1 -8,0
Slide 19: Deep Downstream Integration
DEEP DOWNSTREAM INTEGRATION MARKET LEADING POSITION WITH STRONG CUSTOMER RELATIONS IN CEE MARKET SHARE (%)1 DOWNSTREAM INTEGRATION (FUELS)2 ~24% CRUDE INTAKE: • Russian: 61% • Seaborne: 32% ~85% ~39% • Own Refining production: 7% ~80% ~37% captive ~45% market <10% 10-20% 20-40% 40+% Retail own marke
Slide 20: Petrochemicals in MOL's Integrated Downstream Value Chain
PETROCHEMICALS IN MOL’S INTEGRATED DOWNSTREAM VALUE CHAIN MOL PETROCHEMICAL VALUE CHAIN Capacity HDPE 420 kt OLEFINS (ETHYLENE, PROPYLENE, LDPE 285 kt C4 STREAM) Refining Ethylene PP 535 kt Petchem 890 kt Internal feedstock1: Butadiene 130 kt SSBR 60 kt ~2.0 Mt in 2018 AROMATICS2 350 kt LDPE4: 220 k
Slide 21: Improving Margin Capture by 2023
IMPROVING MARGIN CAPTURE BY 2023 DS 2022 PROGRAM TARGETS OFFSETTING POTENTIAL MACRO NORMALIZATION DS EBITDA PROFITABILITY EVOLUTION (2017-23, USD/BBL)1 • MOL group ref.: USD 4-5/bbl • Petchem: EUR 300-400/t 11.4 0,8 ~3.5 Higher energy 4.0-4.5 prices and CO2 Wage pressure in 6,9 the CEE ~1.5 R&M Pote
Slide 22: Proven Efficiency Track Record
PROVEN EFFICIENCY TRACK RECORD GRADUALLY INCREASING FOCUS ON GROWTH AND TRANSFORMATION PROGRAM SCOPE FINANCIALS 3 200+ 0 0 0 500 150 years Actions Enabler1 Operational2 Large USD mn USD mn program actions actions projects3 EBITDA4 CAPEX 3 300+ 0 0 8 500 1,200 years Actions Enabler1 Operational2 Larg
Slide 23: DS 2022 Continues to Deliver Net Efficiency Gain
DS 2022 CONTINUES TO DELIVER NET EFFICIENCY GAIN AND VISIBLE CONTRIBUTION FROM THE FIRST ROUND OF STRATEGIC, TRANSFORMATIONAL PROJECTS BY 2023 CLEAN CCS EBITDA EVOLUTION (USD MN) R&M & Consumer ~180 1,536 1,536 petchem services (Retail) 440 358 358 ~250 1,200+ ~400 ~140 874 ~400 ~350 500 203 1 178 1
Slide 24: Transforming to Beyond the Fuel Age
TRANSFORMING TO „BEYOND THE FUEL AGE” FOSSIL FUEL DOMINANCE TO DIMINISH BY 2030, BUT DEMAND STILL SUBSTANTIAL ASSUMPTIONS MOL 2030 Fossil fuel demand likely to decline by TRANSFORM… 2030, but will still remain material …FUEL TO CHEMICALS Alternative fuels and (petro)chemical markets likely to grow I
Slide 25: DS Roadmap to Converge Towards 50% Non-Fuel Vision
DS ROADMAP TO CONVERGE TOWARDS 50% NON-FUEL VISION STRIKING THE RIGHT BALANCE BETWEEN INCREASED FLEXIBILITY AND FUEL DEMAND EVOLUTION GROUP REFINERIES’ YIELD (%) NON-FUEL YIELD INCREASE ROADMAP Defining economically viable alternatives: 2015 2030 Utilizing existing flexibility: Existing asset pool a
Slide 26: What Comes Beyond Polyol?
WHAT COMES BEYOND POLYOL? REPLICATING THE DOWNSTREAM SUCCESS STORY WITH STRONG CEE FOCUS Polyethylenes (LDPE, HDPE) Polyols Propylene glycol ethers 26 Source: www.petrochemistry.eu
Slide 27: Polyol: A New Market Entry
POLYOL: A NEW MARKET ENTRY MOVING TOWARDS HIGHER VALUE-ADDED (PETRO)CHEMICALS (PETRO)CHEMICAL TRANSFORMATIONAL JOURNEY CRITERIA FOR SEGMENT CHOICE Crude oil (naphtha) based chemistry and REFINING PETROCHEMICALS CHEMICALS feedstock integration COMMODITY SEMI-COMMODITY SPECIALITY NICHE Attractive end-
Slide 28: Naphtha-Based Propylene Chemistry
NAPHTHA-BASED PROPYLENE CHEMISTRY ENTERING THE POLYURETHANES VALUE CHAIN Petchem feedstock Basic chemicals Intermediates / pre-polymers Polymers nitro- benzene MDI/PMDI benzene propylene Polyurethanes naphtha propylene polyols -oxide (PUR) nitro- toluene TDI toluene PUR FORMULATORS OLEFIN „SYSTEM HO
Slide 29: Attractive End-User Markets
ATTRACTIVE END-USER MARKETS WIDESPREAD APPLICATION OF POLYOL AS PUR COMPONENT DRIVES DEMAND GLOBAL POLYURETHANE DEMAND BY INDUSTRY (% OF GROWTH DRIVERS GLOBAL DEMAND Improving access to „essentials of life”, increasing comfort ~30% needs FURNITURE & INTERIOR Improving life expectancy and population
Slide 30: Limited Regional Competition
LIMITED REGIONAL COMPETITION MOL TO BECOME THE SOLE INTEGRATED REGIONAL POLYOL PRODUCER Netherlands Legend: LOCATION Multiple units 984 ktpa Marl POLYOL UNIT LyondellBasell 80 ktpa Sasol 18 ktpa PG UNIT Multiple units 1013 ktpa Schwarzheide PO UNIT (TECHNOLOGY) (PO/SM, PO/TBA) Dormagen/Cologne Stade
Slide 31: Polyol Project Progress Over 35%
POLYOL PROJECT PROGRESS OVER 35% PROJECT TO ADD USD 170MN EBITDA UNDER MID-CYCLE CONDITIONS POLYOL INVESTMENT HIGHLIGHTS ECONOMIC AND COMMERCIAL HIGHLIGHTS Engineering, procurement, construction (EPC) contracts cover 85% of Total project costs estimated at USD 1.4bn technical scope (incl. key units,
Slide 32: A High Margin Semi-Commodity Product
A HIGH MARGIN SEMI-COMMODITY PRODUCT WITH AN EXPECTED USD 170MN+ MID-CYCLE EBITDA CONTRIBUTION PROPYLENE VS. POLYOL SPREADS1 (EUR/T) POLYOL PLANT EBITDA & SENSITIVITY (USD MN) Relative deviation: PO – propylene: 18% PP – propylene: 36% 170+ 1.200 1.000 ~100 800 600 400 200 0 2003 2004 2005 2006 2007
Slide 33: Translating MOL2030 Goals in Mid Term Targets
TRANSLATING MOL2030 GOALS IN MID TERM TARGETS DS2022 IS CURRENTLY ON TRACK FOR FINANCIALS TARGETS MOL GROUP 2030 TARGETS DS2022 TARGETS EMPLOYEE INCREASE DS 2022 EBITDA ENGAGEMENT CUSTOMER SAFETY UPLIFT BE THE FIRST CHOICE 5001 BEST SATISFACTION TO 1ST IN THE MN USD REGION 95% QUARTILE EBITDA EFFICI
Slide 34: USD 600mn Incremental EBITDA Potential by 2023
USD 600MN INCREMENTAL EBITDA POTENTIAL BY 2023 FROM TRANSFORMATIONAL PROJECTS AND EFFICIENCY (USD 2.3BN TOTAL CAPEX) INCREMENTAL EBITDA POTENTIAL BY 2023 (USD MN) CAPEX SPENDING REQUIRED BY 2022 (USD MN)1 Efficiency 210 2018 170 Efficiency Other strategic Strategic 190 2019 850 Polyol Polyol 100 202
Slide 35: Strategic (Brownfield) Projects of DS 2022
STRATEGIC (BROWNFIELD) PROJECTS OF DS 2022 LARGE, TRANSFORMATIONAL INVESTMENTS ALONG THE 2030 STRATEGIC GOALS STRATEGIC PROJECT GOALS MAIN INVESTMENTS GROUPS Delayed coker investment in Rijeka 1 big ticket CAPEX project Annual capacity of 0.8mn t Engineering complete, FID is contingent Enhancing yie
Slide 36: Efficiency: USD 210mn EBITDA Uplift
EFFICIENCY: USD 210MN EBITDA UPLIFT MOSTLY COMING FROM IMPROVED ENERGY EFFICIENCY AND NON-FUEL FOCUS INCREMENTAL EBITDA CONTRIBUTION BY ACTION (USD MN) 22 Butadiene 20 sales Energy portfolio Key areas: efficiency 18 Strengthen market position 16 Group Fuel 100+ margin ACTIONS Energy efficiency 14 LU
Slide 37: Crude Diversification Continues
CRUDE DIVERSIFICATION CONTINUES TARGETING 33% SEABORNE SUPPLY BY 2022 ADRIATIC PIPELINE ACCESS ESTABLISHED CRUDE DIVERSIFICATION1 Increased pipeline capacity: 6Mtpa = SN Ural 97% (Friendship pipeline) Seaborne Increased 3% 18% 33% pipeline capacity: 14Mtpa = MOL+SN 2011 2018 2022 ENHANCING FEEDSTOCK
Slide 38: Consumer Services
CONSUMER SERVICES
Slide 39: A Leading Regional Network
A LEADING REGIONAL NETWORK CZECH R. MARKET POSITION: 2 MARKET LEADING MARKET SHARE: 20% SLOVAKIA MARKET POSITION: 1 MARKET SHARE: 48% IN 60% OF THE NETWORK HUNGARY TOP 3 MARKET POSITION: 1 MARKET SHARE: 44% IN 90% OF THE NETWORK SLOVENIA MARKET POSITION: 3 MARKET SHARE: 10% ROMANIA 9 COUNTRIES MARKE
Slide 40: USD 500mn+ EBITDA in 2023 from a More Diverse Portfolio
USD 500MN+ EBITDA IN 2023 FROM A MORE DIVERSE PORTFOLIO TRANSFORMATION FROM A FUEL RETAILER TO A LEADING CEE CONSUMER SERVICES BRAND EBITDA (USD mn) New Consumer Goods businesses USD 500mn+ 5 Consumer Goods (CG) 4 Mobility services* 3 2 Mileage demand - Alternative fuels 1 Mileage demand - Fossil fu
Slide 41: Exploiting the CEE Fuel Potential
EXPLOITING THE CEE FUEL POTENTIAL NON-FUEL INCREASINGLY A GROWTH DRIVER FUEL THROUGHPUT PER SITE EBITDA PER SITE CEE1 MOTOR FUEL DEMAND (2008 = 100%) (MN L/SITE) (USD TH PER SITE) 1,20 +14% 71% 1,15 +21% 3,04 3,10 224 1,10 2,73 2,80 196 169 1,05 131 1,00 0,95 0,90 0,85 2015 2016 2017 2018 2015 2016
Slide 42: Scaling Up Mobility Services
SCALING UP MOBILITY SERVICES USD 30MN INCREMENTAL MOBILITY EBITDA IN 2021 FROM 3 SOURCES Car sharing Fleet mgmt. EV charging Connect MOL brand and Build capabilities to manage Strategic aim is to develop only shared cars in customers’ the future connected car high performing infrastructure minds (bu
Slide 43: Boost Consumer Goods EBITDA with Proficient FMCG Capabilities
BOOST CONSUMER GOODS EBITDA WITH PROFICIENT FMCG CAPABILITIES Product Store Supply place- Big data format chain ment Develop own Fine-tune space Build SCM Leverage data for format allocation capabilities business decisions Making Fresh Corner Spaceman tool to Build warehousing All key performance da
Slide 44: New Business Models: Consumer Investments
NEW BUSINESS MODELS: CONSUMER INVESTMENTS PENETRATE (FMCG) VALUE CHAIN DIVERSIFIED SALES CHANNELS Water Non-fuel Fresh Corner retail sites Purchased Fonte Viva mineral water Developing and implementing coffee shop and kiosk concept bottling company for own brand Open 100 new coffee shop stores and 1
Slide 45: ~USD 1.2bn Simplified FCF in 2019-23
~USD 1.2BN SIMPLIFIED FCF IN 2019-23 SUFFICIENT BOTH FOR INORGANIC INVESTMENTS AND FUNDING DIVIDENDS EBITDA STRATEGIC ACTIONS EBITDA AND FCF (2019-2023) DRIVERS (2014-2018) 100 50 Increasing gross margin contribution of 100 Product & shelf mgmt. consumer goods from 27% in 2018 to 30%+ by 2023 One-to
Slide 46: Exploration and Production
EXPLORATION AND PRODUCTION
Slide 47: Production in 8 Countries
PRODUCTION IN 8 COUNTRIES RUSSIA Reserves: 45.2 MMboe CEE TOTAL Production: 4.9 mboepd Croatia, Hungary KAZAKHSTAN Reserves: 187.5 MMboe Reserves: 23.5 MMboe Production: 70.8 mboepd PAKISTAN o/w CEE offshore Reserves: 15.2 MMboe Reserves: 10.5 MMboe Production: 8.2 mboepd Production: 6.3 mboepd OTHE
Slide 48: Maintain Production at 100-110 mboepd Through 2023
MAINTAIN PRODUCTION AT 100-110 MBOEPD THROUGH 2023 STABLE FOR LONGER - THE LONGEVITY OF OUR MATURE PORTFOLIO WILL EXCEED EXPECTATIONS PRODUCTION PROFILE (MBOEPD) Full commercial turnaround 120 112 Raise capacity to 55 mboepd by 2020, 111 107 ~105-110 2020-21 SHAIKAN en route to up to 110 mboepd late
Slide 49: Strong Cost Discipline
STRONG COST DISCIPLINE REMAINS IN OUR DNA EVEN IN A HIGH OIL PRICE ENVIRONMENT COST CONTROL STABILIZATION SUSTAIN & CONTROL IMPLEMENTED DIRECT PRODUCTION COST (USD/BOE) KEY MESSAGES -15% E&P’s cost base became fit for a Keep flat 7 30 USD/bbl oil price environment Cost discipline remains in our 2015
Slide 50: At Least USD 500mn Simplified FCF @ USD 60/bbl
AT LEAST USD 500MN SIMPLIFIED FCF @ USD 60/BBL PROVEN TRACK RECORD OF GENERATING CASH FLOW EVEN AT LOW OIL PRICES (2016) PRICE REALIZATION, EBITDA, SIMPLIFIED FCF1 (USD/BOE) 71 70 65 Brent price 60 52 54 44 Realized HC price Unit EBITDA Unit Simplified FCF 25 19 19 15 14 7 1 2015A 2016A 2017A 2018A
Slide 51: ~350 MMboe Gap to Reach 500 MMboe Reserves by 2023
~350 MMBOE GAP TO REACH 500 MMBOE RESERVES BY 2023 BIGGEST ORGANIC REPLACEMENT POTENTIAL IS NORWAY, INORGANIC STEPS ALSO REQUIRED RESERVES GAP MOL Group 2P reserves (MMboe) 514 500 459 A Smaller replacement in CEE ~350 Largest potential for organic 356 MMboe reserve replacement is Norway 324 Two com
Slide 52: Inorganic Deals Required for Reserves Target
INORGANIC DEALS REQUIRED FOR RESERVES TARGET MOL CONSTANTLY SCREENS THE MARKET FOR THE RIGHT OPPORTUNITIES OUR VALUE FRAMEWORK How can we generate value? 2 Assets with restructuring potential RUSSIA/CIS Swaps in Norway post-discovery 4 Strong G2G relations What assets are we pursuing? 1 CONTINENTAL
Slide 53: Current Assets to Generate USD 2bn+ FCF in 2019-2023
CURRENT ASSETS TO GENERATE USD 2BN+ FCF IN 2019-2023 FUNDING RESERVE REPLACEMENT AND ADDING TO THE DIVIDEND POOL EBITDA, CAPEX AND FCF (USD BN)1 KEY MESSAGES Brent @ 70 USD/bbl +USD USD 1.2 bn post-tax free cash flow achieved ~0.9 bn in 2017-2018, above guidance Brent @ 60 EBITDA USD/bbl Current ass
Slide 54: Financials, Governance and Others
FINANCIALS, GOVERNANCE AND OTHERS
Slide 55: 9M 2019: Strong Delivery; Raising Full-Year Guidance
9M 2019: STRONG DELIVERY; RAISING FULL-YEAR GUIDANCE WITH THE ESSENTIAL FUNDAMENTAL BUILDING BLOCKS IN PLACE 2019 2018 Q1-Q3 2019 TARGETS RESILIENT GROUP CLEAN USD 2.69 BN UPGRADED TO INTEGRATED CCS EBITDA USD 1.84 BN ~USD 2.4 BN BUSINESS MODEL GROUP CAPEX USD 1.29 BN USD 1.37 BN USD 1.9-2.1 BN (ORG
Slide 56: 2017-18 Recap: More EBITDA and FCF
2017-18 RECAP: MORE EBITDA AND FCF, NO TRANSFORMATIONAL CAPEX STRONG OIL MACRO, GOOD INTERNAL DELIVERY = EBITDA, FCF ABOVE NORMALIZED GUIDANCE EXPECTED CASH FLOW GENERATION IN 2017-181 (USD BN) 4.6-5.0 5,1 -2.0 Last two years turned out to be In-line sustain capex, hardly stronger than the original,
Slide 57: First Investment Cycle to Boost EBITDA from 2022-23
FIRST INVESTMENT CYCLE TO BOOST EBITDA FROM 2022-23 UPGRADED CASH FLOW PROFILE FOR 2019-21 ON STRONGER E&P AND CONSUMER SERVICES NEW NORMALIZED EBITDA GUIDANCE CLEAN CCS EBITDA (USD BN) FOR 2019-23E (USD BN) 2.4-2.6 2.7 2.2-2.4 2.5 2.4 2.0-2.2 2.2 2.4 2.2 0.7 0.9 1.3 0.7 1.2 Q3 0.7 1.4 1.2 1.0 1.2 0
Slide 58: Annual Sustain Capex to Stay Around USD 1.0-1.1bn
ANNUAL „SUSTAIN” CAPEX TO STAY AROUND USD 1.0-1.1BN STRONG DISCIPLINE MAINTAINED ACROSS THE SEGMENTS SUSTAIN CAPEX (USD BN) 1.7 1.3 0.9 1.1 1.1 1.0-1.1 1.0 1.0 0.3 0.7 0.3 0.4 Q3 0.3 0.4 0.7 0.4 0.4 0.4 Q2 0.3 0.2 0.1 0.1 0.1 0.1 Q1 0.2 2014 2015 2016 2017 2018 2019E 2019-23E Average Organic US Orga
Slide 59: USD 3bn Transformational Capex in 2019-2023
USD 3BN TRANSFORMATIONAL CAPEX IN 2019-2023 INCLUDING SOME CAPEX RELATED TO THE 2ND INVESTMENT CYCLE OF MOL 2030 TRANSFORMATIONAL CAPEX (USD BN) 0.85 0.85 0.05 Q1-Q3 2019: 0.15 0.20 Transformational CAPEX: USD 556mn 2nd Investment cycle o/w Polyol: USD 496mn 0.15 INA Delayed Coker (DS2022) 0.50 ~0.4
Slide 60: Robust Simplified Free Cash Flow in 2015-2018
ROBUST SIMPLIFIED FREE CASH FLOW IN 2015-2018 TRANSFORMATIONAL CAPEX WILL REDUCE FCF IN THE COMING YEARS SIMPLIFIED FCF (USD BN) 1.4 1.4 1.2 1.2 0.5 0.2 1.0 1.0 0.5 0.8 0.7 0.3 0.4 0.5 Q3 0.1 0.2 0.2 0.3 0.2 Q2 0.1 0.2 0.2 0.2 0.2 0.2 0.2 Q1 0.2 2014 2015 2016 2017 2018 2019E Upstream Downstream Con
Slide 61: FCF Covers DS Transformation, Dividends in 2019-23
FCF COVERS DS TRANSFORMATION, DIVIDENDS IN 2019-23 OIL PRICE, IMO HOLD UPSIDE TO CASH FLOWS IN THE NEXT 5 YEARS UPSIDE POTENTIAL TO NEXT 5-YEAR CASH FLOW GENERATION AMBITIONS, 2019-23 (USD BN)1 CASH FLOWS 11.5-12.5 -5.0-5.5 Oil price at USD IMO upside in 70/bbl in 2020-21 6.5-7.0 -3.0 2019-23 -1.5 2
Slide 62: Strong Cash Flows Allow for Increased Dividends
STRONG CASH FLOWS ALLOW FOR INCREASED DIVIDENDS STEADILY RISING BASE DPS, COMPLEMENTED BY SPECIAL DIVIDEND IN 2018 AND 2019 DIVIDEND PER SHARE1 (HUF) 3.6% 3.5% 3.0% 2.9% Dividend 2.5% 2.9% 3.3% 3.0% +1% +2% +1.5% +1.5% yield2 ? ? Special dividend Regular dividend BASE DPS: +10% 48 CAGR IN 2014-19 43
Slide 63: Sources and Applications of Cash
SOURCES AND APPLICATIONS OF CASH SOURCES AND APPLICATIONS OF CASH, 2012-18 (USD MN)1 180 -613 348 715 546 557 354 738 579 402 205 270 196 383 164 202 575 350 473 302 262 427 2 687 37 2 524 2 477 2 447 2 308 322 164 2 183 2 153 111 1 689 1 211 1 258 1 290 1 034 1 011 1 037 2012 2013 2014 2015 2016 20
Slide 64: Robust Balance Sheet Can Fund E&P Reserves Replacement
ROBUST BALANCE SHEET CAN FUND E&P RESERVES REPLACEMENT ~USD 1.6bn post-dividend FCF in 2017-18… E&P needs to find 350mn boe new reserves to reach the 500mn boe 2P target by 2023 …leads to material deleveraging and building up further balance sheet flexibility Inorganic steps (M&A) are needed and may
Slide 65: Ample Financial Headroom
AMPLE FINANCIAL HEADROOM FROM DIVERSIFIED FUNDING SOURCES AVERAGE MATURITY OF 3.9 YEARS Reported cash & cash equivalents Medium term loan Undrawn facilities Senior Unsecured Bonds Long term loan (multilaterals) Series 2 000 1 500 USD mn 909 1 000 670 512 500 817 649 14 620 300 130 9 22 0 2 16 18 18
Slide 66: Full Investment Grade Rating Achieved
FULL INVESTMENT GRADE RATING ACHIEVED FOLLOWING S&P UPGRADE IN NOVEMBER 2017 HISTORICAL FOREIGN LONG TERM RATINGS FFO ADJUSTED NET LEVERAGE (3Y AVG. 2016-2018) PKN Orlen, BBB- 0,44 MOL, BBB- 0,89 Bashneft, BBB- 1,16 OMV, A- 1,38 Total, AA- 1,64 Tupras, BB- 2,14 Repsol, BBB 2,39 ENI, A- 2,42 0,0 0,5
Slide 67: MOL 2030 Works With or Without INA
MOL 2030 WORKS WITH OR WITHOUT INA FOCUS ON SECURING RETURN ON INVESTMENT REALITIES AND PRIORITIES STRONG REGIONAL ASSET BASE MOL 2030 strategy can be and will be executed with or Low-cost E&P in Croatia* (both onshore and without INA off-shore) Good geographical fit and untapped efficiency upside i
Slide 68: The History of INA & MOL, 2003-2019
THE HISTORY OF INA & MOL, 2003-2019 STORYLINE SHAREHOLDER AGREEMENTS UNDER THE FASHA, MOL DELEGATES FIVE 1ST SHAREHOLDER RIGHTS AGREEMENT (SHA): MOL AND THE GOVT OF CROATIA SIGN THE GAS OUT OF NINE MEMBERS TO THE MOL ALLOWED TO NOMINATE TWO MEMBERS 1ST AMENDMENT MASTER AGREEMENT (GMA) AND AN SUPERVI
Slide 69: MOL-Croatia Arbitration Status
MOL-CROATIA ARBITRATION STATUS UNCITRAL ARBITRATION ICSID ARBITRATION (CROATIA VS. MOL) (MOL VS. CROATIA) INITIATED GOVERNMENT OF CROATIA MOL BY WHEN 17 JANUARY 2014 26 NOVEMBER 2013 PCA (PERMANENT COURT OF ARBITRATION), GENEVA ICSID (INTERNATIONAL SETTLEMENT OF INVESTMENT FORUM UNDER UNCITRAL (UNIT
Slide 70: Shareholder Structure
SHAREHOLDER STRUCTURE1 MUFG Treasury shares 8,1% UniCredit Bank AG 3,3% ING Bank N.V. 0.6% 4,4% Foreign investors (mainly institutional) OTP Bank Plc. 34,7% 4,9% Free-float OmanOil (Budapest) Limited 7,1% 46.3% 10,0% Maecenas Corvini Foundation2 6,8% 1.2% Domestic institutional 3,6% 15,2% Domestic p
Slide 71: Solid, Consistent EBITDA Generation
SOLID, CONSISTENT EBITDA GENERATION RESILIENT INTEGRATED BUSINESS MODEL IN A HIGHLY VOLATILE ENVIRONMENT EXTERNAL ENVIRONMENT* VS MOL CLEAN CCS EBITDA (USD MN) 100% 800 85% 70% 600 55% 400 40% 200 25% 10% 0 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4
Slide 72: Key Items of Taxation
KEY ITEMS OF TAXATION CORPORATE INCOME TAX (CIT) RATES CUT IN CORE OPERATING COUNTRIES HUNGARY CIT tax remains at 9% Profit based ’Robin Hood’ with an implied tax rate of 21% Only energy related part of the profit affected (~66%), nameplate tax rate is 31% Only the Hungarian operation of certain com
Slide 73: Transforming MOL to Adapt to Circular Economy
TRANSFORMING MOL TO ADAPT TO CIRCULAR ECONOMY PLASTICS RECYCLING: A GREAT OPPORTUNITY TO COMPLEMENT THE PETCHEM PRODUCT MIX AVOIDED EMISSIONS CIRCULAR ECONOMY Legislation and changing end-user behavior provides an opportunity in Avoided emissions: biofuels, semi- recycling commodity petchem products
Slide 74: MOL First Ever Scenario Analysis
MOL FIRST EVER SCENARIO ANALYSIS IN COOPERATION WITH: ENTER TOMORROW PUTS MOL ON THE RIGHT TRACK SCENARIO ANALYSIS MOL 2030 SCOPE 1,2,3 GHG EMISSIONS (tonnes) MOL Group teamed up with sustainability advisory firm Quantis to conduct its first ever scenario analysis CPS NPS The scenario was completed
Slide 75: 2030 Strategy Reduces the Footprint
2030 STRATEGY REDUCES THE FOOTPRINT ADDITIONAL STEPS REQUIRED TO REACH SCENARIOS ANALYSIS OF THE RESULTS FURTHER STEPS Transformational strategy sets MOL’s total footprint on 2030 footprint vs 2023 peak: ~5.8 million tonnes reduction the right path Further steps required to achieve: Decrease in foot
Slide 76: Strong ESG Ratings
STRONG ESG RATINGS TOP POSITIONS ACROSS LEADING ESG1 RESEARCH, RATING AND INDEX HOUSES SUSTAINABILITY OF 2030 STRATEGY RELATIVE RATING2 VS INDUSTRY PEERS TOP 10% TOP 20% TOP 2%3 MOL selected as one of the 10 companies MOL SCORE 70 AA5 83 in Sustainalytics’ “10 ENVIRONMENTAL 75 7.6 84 for 2019” thema
Slide 77: MOL Group Refinery and Petchem Margins
MOL GROUP REFINERY AND PETCHEM MARGINS MOL GROUP REFINERY MARGIN1 (USD/bbl) PETROCHEMICALS MARGIN (EUR/t)2 9,0 900 8,0 800 7,0 700 6,0 600 5,0 500 4,0 400 3,0 2,0 300 1,0 200 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2014-2018 range 2019 2018 Min
Slide 78: MOL Mid-Term Base Macro Framework
MOL MID-TERM BASE MACRO FRAMEWORK RESILIENT, INTEGRATED BUSINESS MODEL, LESS EXPOSED TO OIL MACRO KEY MACRO ASSUMPTIONS EBITDA SENSITIVITY TO KEY EXTERNAL DRIVERS Sensitivity Est. Clean CCS EBITDA % of Group impact (USD mn) EBITDA 2018 7Y 2015 2016 2017 2018 2019-23E AVG +/- 50 USD/Mcm ~30 1% Gas Pr
Slide 79: Top Management Incentive Schemes
TOP MANAGEMENT INCENTIVE SCHEMES FOR EXECUTIVE MEMBERS**, MORE THAN 2/3 OF TOTAL REMUNERATION IS VARIABLE AND PERFORMANCE DRIVEN SHORT-TERM INCENTIVES Bonus opportunity between 0.85x and 1x of annual base salary, depending on the level Payout linked to yearly performance based on financial, operatio
Slide 80: Gas Midstream: Non-Cyclical Cash Flow
GAS MIDSTREAM: NON-CYCLICAL CASH FLOW GAS MIDSTREAM EBITDA (HUF BN, USD MN) FACTS & FIGURES Domestic natural gas transmission system 70 300 256 250 252 operator 60 223 250 213 Regulated business (asset base and return) 50 194 189 200 with continuous regulatory scrutiny 40 141 150 Nearly 6,000km pipe
Slide 81: Disclaimer
DISCLAIMER "This presentation and the associated slides and discussion contain forward-looking statements. These statements are naturally subject to uncertainty and changes in circumstances. Those forward-looking statements may include, but are not limited to, those regarding capital employed, capit
Slide 82: Presentation Manual
PRESENTATION MANUAL LINKS ( )ARE AVAILABLE THROUGHOUT THE PRESENTATION THAT DIRECT YOU TO MORE INFORMATION ON THE SELECTED TOPIC. A NAVIGATION BAR ON THE TOP OF EACH SLIDE IS ALSO AVAILABLE, WITH THE FOLLOWING BUTTONS: HOME: GO TO THE SUMMARY SLIDE HELP: GO TO PRESENTATION MANUAL BACK: GO TO PREVIOU