Mol Hungarian Oil & Gas Plc Class A · BET:MOL
Mol Hungarian Oil & Gas Plc Class A — MOL Group — Debt Investor Presentation (May 2017)
56 slides from Mol Hungarian Oil & Gas Plc Class A's debt investor presentation, May 10, 2017
Slide 1: MOL Group Rabo/RBI Schuldschein and EUPP Day, London
MOL GROUP RABO/RBI SCHULDSCHEIN AND EUPP DAY, LONDON INVESTOR PRESENTATION 10 May 2017
Slide 2: Agenda
AGENDA 1 Company Highlights 2 Downstream 3 Consumer Services 4 Exploration and Production 5 Financial and Credit Profile 6 Appendix 2
Slide 3: Company Highlights
COMPANY HIGHLIGHTS
Slide 4: A Mid-Cap Integrated Oil & Gas Company
A MID-CAP INTEGRATED OIL & GAS COMPANY High quality, low-cost asset base with CEE focus Resilient integrated business model: well balanced exposure to exploration and production (E&P), refining, petrochemicals and consumer services Strong balance sheet, stable and robust cash generation Headquartere
Slide 5: Consistent Business Results Delivered
CONSISTENT BUSINESS RESULTS DELIVERED STRONG EBITDA AND CASH GENERATION ACROSS THE CYCLE EXTERNAL ENVIRONMENT 2012 2013 2014 2015 2016 BRENT CRUDE OIL 112 109 99 52 44 (USD/bbl) GROUP REFINERY MARGIN* 4.7 2.0 3.4 6.1 5.7 (USD/bbl) INTEGRATED PETCHEM MARGIN* 242 295 359 680 613 (EUR/t) KEY FINANCIALS
Slide 6: MOL Group 2030: A Vision, a Strategy and One Overriding Objective
MOL GROUP 2030: A VISION, A STRATEGY AND ONE OVERRIDING OBJECTIVE MOL 2030 BUILD ON EXISTING LEAD THE INDUSTRIAL LEVERAGE ON CEE STRENGTHS TRANSFORMATION LEADERSHIP DIVERSIFY AWAY FROM USE EXISTING MARKET RESILIENT INTEGRATED FUELS… PRESENCE AND BUSINESS MODEL CUSTOMER BASE …AND GROW HIGH-QUALITY (P
Slide 7: FCF to Cover Strategic Capex in 2017-21
FCF TO COVER STRATEGIC CAPEX IN 2017-21 AND TO CREATE HEADROOM FOR ADDITIONAL TRANSFORMATIONAL SPENDING NEXT 5-YEAR CASH FLOW GENERATION AMBITIONS, 2017-21 (USD BN)1 10-11 -1.4-1.6 -5.0-5.5 -2.0 -1.0-1.3 ~0.6 Clean CCS EBITDA Funding cost/tax/FX Sustain Capex Transformational Dividends FCF-post-divi
Slide 8: Downstream
DOWNSTREAM
Slide 9: Downstream: CEE Stronghold
DOWNSTREAM: CEE STRONGHOLD TRANSFORMATIONAL PROJECTS TO ADD USD 3/BBL BY 2022 TO THE ALREADY OUTSTANDING MARGIN CAPTURE MOL 2030 Downstream strategy prepares for peak fossil-fuel demand R&M: raising the yield of high-value non-motor fuel product to at least 50% by 2030 Petchem: debottlenecking exist
Slide 10: Deep Downstream Integration
DEEP DOWNSTREAM INTEGRATION HIGH-QUALITY LAND-LOCKED ASSETS WITH OUTSTANDING MARGIN CAPTURE MARKET SHARE (%)1 DOWNSTREAM INTEGRATION (FUELS)2 ~24% CRUDE INTAKE: • Russian: ~40% 67% • Seaborne: 25% ~85% • Own Refining ~80% production: ~36% 8% captive Retail ~45% market3 own ~15% market Petchem <10% 2
Slide 11: Over 12 USD/bbl Margin Capture in 2016
OVER 12 USD/BBL MARGIN CAPTURE IN 2016 FURTHER ~3 USD/BBL UPLIFT POTENTIAL FROM PETCHEM & CONSUMERS DOWNSTREAM (W/O INA) CAPTURED EBITDA MARGIN (USD/BBL) ~1 ~2 12.3 2.0 Sales margin 4.6 ~5 USD/BBL delivered through internal efficiency Bulk improvement (2012-16) margin 5.7 R&M gross R&M OPEX R&M Petc
Slide 12: ~USD 1.9bn Earmarked for Petchem Until 2021
~USD 1.9BN EARMARKED FOR PETCHEM UNTIL 2021 PROVIDING ~2 USD/BBL ADDITIONAL EBITDA CAPTURE IN DOWNSTREAM CAPEX EARMARKED FOR PETROCHEMICAL GROWTH PROJECTS (2017-21, USD MN) ~1,800-2,000 Annual incremental 900-1,000 1,500-1,700 EBITDA1 of USD 250-300mn from growth projects • Growth CAPEX shall be cov
Slide 13: Consumer Services
CONSUMER SERVICES
Slide 14: A Leading Regional Network
A LEADING REGIONAL NETWORK CZECH R. 10 COUNTRIES MARKET POSITION: 2 MARKET SHARE: 20%1 SLOVAKIA MARKET POSITION: 1 MARKET SHARE: 47%1 7 WELL ESTABLISHED BRANDS HUNGARY MARKET POSITION: 1 MARKET SHARE: 43%1 ~2000 SLOVENIA MARKET POSITION: 3 MARKET SHARE: 8%2 SERVICE STATIONS ROMANIA MARKET POSITION:
Slide 15: A Value Generating Network
A VALUE GENERATING NETWORK… …AS EBITDA PER SITE ALMOST DOUBLES EBITDA (REPORTED, USD MN) NORMALIZED FCF (USD MN1) 0 56 193 200 29 179 307 126 204 221 151 2013 2014 2015 External Internal FX 2016 2013 2014 2015 2016 EBITDA (CONSTANT, USD MN 2) EBITDA PER SITE (USD TH1) COMMENTS 164 Fuel is still the
Slide 16: 2021 Organic Growth Targets
2021 ORGANIC GROWTH TARGETS TRANSFORMATION FROM TRADITIONAL RETAIL TO CONSUMER SERVICES 2021 2000 NUMBER OF SERVICE STATIONS EBITDA 750+ NUMBER OF FRESH CORNER SITES MOL GROUP CONSUMER SERVICES 2030 5.8 LITERS SOLD (BN LITRES) 1. 2. 3. CURRENT PLUS MOBILITY NON-FUEL SHARE OF TOTAL RETAIL 30% MARGIN
Slide 17: Exploration and Production
EXPLORATION AND PRODUCTION
Slide 18: E&P Business Successfully Rebalanced
E&P BUSINESS SUCCESSFULLY REBALANCED CREATING VALUE AT ~50 USD/BBL OIL PRICE 7 USD/boe free cash-flow delivered in 2016 on the back of the successful New Upstream Program implementation Production to peak at ~115 mboepd in 2018/19 E&P business shall seek for inorganic expansion possibilities to repl
Slide 19: Production in 8 Countries
PRODUCTION IN 8 COUNTRIES RUSSIA Reserves: 50 MMboe CEE TOTAL Production: 7 mboepd Croatia, Hungary KAZAKHSTAN Reserves: 262 MMboe Reserves: 60 MMboe Production: 81 mboepd PAKISTAN o/w CEE offshore Reserves: 10 MMboe Reserves: 10 MMboe Production: 8 mboepd Production: 9 mboepd OTHER INTERNATIONAL UK
Slide 20: 7 USD/boe Free Cash-Flow Delivered in 2016
7 USD/BOE FREE CASH-FLOW DELIVERED IN 2016 ON THE BACK OF SUCCESSFUL NEW UPSTREAM PROGRAM IMPLEMENTATION 2016 2016 TARGET FACT Material CEE onshore growth on Production Optimization PRODUCTION1 105-110 112 (110) 1 Higher UK volumes, growth in Mboepd low-cost Russia, Pakistan YoY production growth fu
Slide 21: Production to Stabilize at ~110 mboepd Until 2019
PRODUCTION TO STABILIZE AT ~110 MBOEPD UNTIL 2019 ~10-15 MBOEPD NEEDED TO SUSTAIN PRODUCTION BEYOND 2020 MID-TERM PRODUCTION PROFILE KEY MESSAGES (MBOEPD) 120 112 ~110-115 Stable contribution from CEE ~110 ~110 New 104 ~10-15 barrels Impact of successful production required 100 optimization and EOR
Slide 22: Financial and Credit Profile
FINANCIAL AND CREDIT PROFILE
Slide 23: Sustained Cash Generation
SUSTAINED CASH GENERATION IN 2016 AND IN THE NEXT 5 YEARS CLEAN-CCS EBITDA (USD BN) 2.5 2.3 2.5 2.2 2.2 0.7 2.0-2.2 2.0+ 0.7 1.9 1.6 1.2 1.7 1.5 0.7 0.9 0.7 0.6 Q1 0.3 0.3 0.3 0.2 0.2 -0.3 -0.3 -0.1 -0.1 -0.2 2012 2013 2014 2015 2016 2017 YTD 2017-21E Average Upstream Downstream Gas Midstream Corpor
Slide 24: Robust Balance Sheet, Ample Headroom
ROBUST BALANCE SHEET, AMPLE HEADROOM REMAIN A PRIORITY IN „MOL 2030” NET DEBT TO EBITDA (X) MOL 2030 2.5 1.96 Net debt/EBITDA to be in 1.0-2.0x tolerance 2.0 1.66 1.72 range on a forward-looking basis under 1.5 1.44 1.38 „normal” circumstances (covenant 1.31 threshold at significantly higher levels)
Slide 25: Well Balanced Maturity Profile
WELL BALANCED MATURITY PROFILE FROM DIVERSIFIED FUNDING SOURCES AVERAGE MATURITY OF 2.7 YEARS 2,500 Reported cash & cash equivalents Medium term loan Undrawn facilities 2,000 Senior Unsecured Bonds Long term loan (multilaterals) 1,500 1,550 1,000 21 117 500 992 802 783 41 802 500 657 0 59 41 22 22 1
Slide 26: Double Investment Grade Rating Achieved
DOUBLE INVESTMENT GRADE RATING ACHIEVED NEW MOODY’S BAA3 INVESTMENT GRADE RATING RECEIVED ON 31 MARCH HISTORICAL FOREIGN LONG TERM FFO ADJUSTED NET LEVERAGE RATINGS (3Y AVG. 2013-2015) MOL Fitch MOL Moody's MOL S&P (BBB-) 1.7 BBB+ Baa1 (A-) 1.9 BBB Baa2 BBB- Baa3 (A-) 2.2 BB+ Ba1 (BBB-) 2.7 BB Ba2 3
Slide 27: Appendix Downstream
TOMORROW APPENDIX DOWNSTREAM
Slide 28: Production: 50% Non-Motor Fuel Products by 2030
PRODUCTION: 50% NON-MOTOR FUEL PRODUCTS BY 2030 FROM THE CURRENT LESS THAN 30% MOTOR FUEL GROUP REFINERIES YIELD PRODUCTS 2010 2015 2030 • KEEP CURRENT LEADING POSITION • BUILD ON CURRENT RETAIL NETWORK VALUABLE NON-MOTOR FUEL PRODUCTS ~60% ~70% • INCREASE PRODUCTION OF PETCHEM FEEDSTOCK UP TO 3 MTP
Slide 29: NxDSP: USD 350mn Asset & Efficiency Improvement
NXDSP: USD 350MN ASSET&EFFICIENCY IMPROVEMENT ADDITIONAL USD 150MN TARGETED FROM GROWTH PROJECTS EFFICIENCY IMPROVEMENT GROWTH PROJECTS’ CONTRIBUTION 2 1 (CUMULATIVE, MN USD) (MN USD) 350 Production USD ~270MN 1. Availability & USD ~70MN DELIVERED SO FAR DELIVERED SO FAR maintenance (ONLY USD 10MN I
Slide 30: Outstanding Mid-Cycle FCF Generation
OUTSTANDING „MID-CYCLE” FCF GENERATION WITH CONTINUOUS FOCUS ON EFFICIENCY IMPROVEMENT CLEAN CCS EBITDA (USD MN) 1 453 1,400-1,500 ~150 ~160 ~410 400-500 ~170 ~340 ~1000 874 24 500 350 2011 NDSP Macro* 2014 NxDSP Offsetting Macro 2016 Macro* NxDSP 2017 Normalized Simplified delivered items** CAPEX F
Slide 31: Appendix Consumer Services
APPENDIX = CONSUMER SERVICES
Slide 32: Fuel Sales on the Rise
FUEL SALES ON THE RISE GROWTH MOSTLY DRIVEN BY RISING CEE FUEL CONSUMPTION; M&A CONTRIBUTES M&A DRIVEN NETWORK EXPANSION FUEL SALES (MN LITERS) CZECH R. HUNGARY SLOVAKIA ROMANIA SLOVENIA 5 239 BOSNIA 4 837 MONTENEGRO CZECH R. SLOVENIA SLOVENIA CZECH R. 4 292 4 323 ITALY CROATIA BOSNIA CROATIA AUSTRI
Slide 33: Gradual EBITDA Transformation
GRADUAL EBITDA TRANSFORMATION TOWARDS „HIGHER-VALUE”, STABLE CONSUMER SERVICES CASH FLOW EBITDA TRANSFORMATION IN 2013-2030 (USD MN) Consumer services EBITDA (USD mn) 600 40% Weight in Group EBITDA (%), right axis 550 500 450-500 30% 450 30% 400 ~23% 350 307 300 20% 250 221 14% 200 151 9% 150 10% 7%
Slide 34: Appendix Exploration and Production
APPENDIX EXPLORATION AND PRODUCTION
Slide 35: E&P Delivers Substantial FCF in 2016-21
E&P DELIVERS SUBSTANTIAL FCF IN 2016-21 WITH MATERIAL FLEXIBILITY ON THE CAPEX SIDE EBITDA, CAPEX AND FCF EXPECTATIONS (2016-21, USD MN) KEY MESSAGES Brent @ 60 USD/bbl Next 5Y post-tax free +USD Less than 20% of cash-flow shall cover ~750mn the total Upstream reserve replacement EBITDA CAPEX pool i
Slide 36: The Minimum Aspiration to Sustain Production
THE MINIMUM ASPIRATION TO SUSTAIN PRODUCTION BUT IT HAS TO MAKE ECONOMIC SENSE PRO-FORMA 2016-21 2P RESERVES EVOLUTION (MMBOE) KEY MESSAGES 514 514 Sustain at least current 100% RRR level of production to maintain the integrated 100-105 business model of MOL 170-175 Group Maintain production 65-75 O
Slide 37: Balancing the Portfolio in the Mid-Term Is a Challenge
BALANCING THE PORTFOLIO IN THE MID-TERM IS A CHALLENGE Time to first oil 1-3 years 4-5 years 5+ years KEY MESSAGES Pakistan Hungary Hungary Norway Exploration Croatia Limit ExpEx to nearfield FED Croatia exploration in CEE and Pakistan as well as to high- impact Norway Limited development project pi
Slide 38: Strict Cost Discipline to Continue
STRICT COST DISCIPLINE TO CONTINUE CAPEX SPENDING IN THE NEXT 5 YEARS DIRECT UNIT OPEX (USD/BOE) (USD BN) 1, 2 2.0-2.2 Exploration ~20% 9 2013-14 average @ 8.0 USD/bbl 8 Development ~55% 7 6 Other ~25% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2014 2015 2016 2017 2
Slide 39: Appendix Finance & Other
APPENDIX FINANCE & OTHER
Slide 40: Sources and Applications of Cash
SOURCES AND APPLICATIONS OF CASH SOURCES AND APPLICATIONS OF CASH, 2012-17 (USD MN) 180 -549 284 666 521 407 579 459 196 205 270 450 200 202 456 420 302 350 2 524 370 2 477 164 2 308 2 183 2 153 111 2 000 1 689 1 211 1 258 1 200 1 034 1 011 2012 2013 2014 2015 2016 2017E Clean CCS EBITDA Organic CAP
Slide 41: Strong Sustain Capex Discipline
STRONG „SUSTAIN” CAPEX DISCIPLINE SUSTAIN CAPEX (USD BN)1 Organic US Organic DS Organic GM Organic C&O (incl. intersegment) Group total 1.8 1.7 1.6 1.4 1.3 1.2 0.9 Up to 1.2 1.2 1.0 1.0 1.0-1.1 1.0 0.7 0.7 0.8 0.5 0.4 0.6 0.4 0.7 0.4 0.4 0.5 0.5 0.2 0.1 Q1 0.0 2012 2013 2014 2015 2016 2017 YTD 2017-
Slide 42: Robust Simplified Free Cash Flow
ROBUST SIMPLIFIED FREE CASH FLOW ACROSS THE CYCLE AND ACROSS ALL BUSINESS SEGMENTS SIMPLIFIED FREE CASH FLOW1 (USD BN) Organic US Organic DS Organic GM Organic C&O (incl. intersegment) Group total 1.5 1.8 1.6 1.1 1.2 1.4 1.1 0.0 1.2 0.2 1.0-1.1 1.3 1.0 0.9 0.8+ 0.8 1.2 0.5 0.6 1.0 0.3 0.4 0.3 0.2 0.
Slide 43: Natural Gas Transmission Provides Stable Return (FGSZ)
NATURAL GAS TRANSMISSION PROVIDES STABLE RETURN (FGSZ) GAS MIDSTREAM EBITDA1 (2013-16, HUFbn) 59 59 60 54.5 2013 2014 2015 2016 Stable EBITDA, strong free cash flow contribution and low capex need No exposure to the typical oil&gas industry cycle Recent regulatory changes expected to affect EBITDA g
Slide 44: MOL 2030 Works With or Without INA
MOL 2030 WORKS WITH OR WITHOUT INA FOCUS ON SECURING RETURN ON INVESTMENT NET DEBT (USD MN), NET DEBT/EBITDA INA: WHAT IS UNCHANGED? (X) AND FCF (USD MN) IN 2016* The priority is to maximise the value of the Full consolidation of INA INA investment: INA as Discontinued ops Keeping and operating INA
Slide 45: Simpler Shareholder Structure
SIMPLER SHAREHOLDER STRUCTURE1 HIGHER FREE FLOAT AND LIQUIDITY DESIRABLE IN THE MEDIUM TERM Considerable increase in free-float and liquidity following the CEZ divestment (of 7.4% MOL shares) Crescent has also been selling its MOL shares since H2 2016 AGM approved 8-for-1 stock split from September
Slide 46: Sustainable Development; HSE Commitment
SUNSTAINABLE DEVELOPMENT; HSE COMMITMENT “SUSTAINABILITY PLAN 2020” AND RANKING INCLUSIONS SD GOVERNANCE SD PLAN 2020 Sustainable Development Committee of MAIN OBJECTIVE: achieve and maintain an Board of Directors since 2006; MOL Group internationally acknowledged leading position CEO is a permanent
Slide 47: Q1 2017 Recap
TOMORROW Q1 2017 RECAP
Slide 48: Q1 2017: Well on Track for a Strong Year
Q1 2017: WELL ON TRACK FOR A STRONG YEAR WITH THE ESSENTIAL FUNDAMENTAL BUILDING BLOCKS IN PLACE 2017 2016 Q1 2017 TARGETS RESILIENT GROUP CLEAN INTEGRATED CCS EBITDA USD 2.15 BN USD 614 MN USD 2 BN+ BUSINESS MODEL GROUP CAPEX USD 1.0 BN USD 109 MN Up to USD 1.2 BN (ORGANIC) FINANCIAL DISCIPLINE SIM
Slide 49: Outstanding Simplified FCF in Q1 2017
OUTSTANDING SIMPLIFIED FCF IN Q1 2017 IN A SUPPORTIVE EXTERNAL ENVIRONMENT FINANCIAL HIGHLIGHTS Clean CCS EBITDA rose 21% YoY to USD 614mn in Q1 2017, as all segments improved their contribution Simplified FCF surged to over USD 500mn (+54% YoY), as organic capex was seasonally low at USD 109mn Upst
Slide 50: Strongest Q1 EBITDA Since 2013, Up 21% YoY
STRONGEST Q1 EBITDA SINCE 2013, UP 21% YOY ALL SEGMENTS BOOSTED THEIR EBITDA CONTRIBUTION SEGMENT CLEAN CCS EBITDA (USD mn) COMMENTS +21% +26% Downstream 614 Both refining and petchem enjoyed better availability (no material 587 506 571 488 unplanned event) both YoY and QoQ 525 219 Both refinery and
Slide 51: Surging Simplified FCF in Q1 2017
SURGING SIMPLIFIED FCF IN Q1 2017 SIMPLIFIED FCF AT USD 0.5+BN; STRENGTH ACROSS THE BOARD SIMPLIFIED FCF* (USD mn) COMMENTS +54% +218% Group-level simplified FCF (Clean CCS EBITDA less organic capex) jumped 505 54% YoY to USD 505m in Q1 2017 163 All segments improved simplified FCF contribution YoY
Slide 52: DS: USD 43mn Higher CCS EBITDA in Q1 2017 YoY
DS: USD 43MN HIGHER CCS EBITDA IN Q1 2017 YOY ON SIGNIFICANTLY IMPROVING R&M CONTRIBUTION CLEAN CCS EBITDA YoY (USD mn) COMMENTS 369 Unlike in Q1 2016 smooth 30 45 281 47 34 59 operations resulted in yield 123 improvement in refining and higher volumes Petchem 160 Wider headline margin supported ref
Slide 53: Consumer Services Continues Its Ascent
CONSUMER SERVICES CONTINUES ITS ASCENT GROWTH IN FUEL CONSUMPTION DRIVES VOLUMES AND EARNINGS QUARTERLY EBITDA (USD mn) EBITDA YoY (USD mn) 15% 56 3 55 112 1 1 7 81 47 67 55 43 47 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 EBITDA Q1 Fuel volume Non-fuel Others EBITDA Q1 FX EBITDA Q1 2016 & marg
Slide 54: E&P: Higher Prices, Lower Opex Boost EBITDA
E&P: HIGHER PRICES, LOWER OPEX BOOST EBITDA BROADLY NEUTRAL VOLUMES IMPACT UPSTREAM EBITDA QoQ (USD mn) COMMENTS 9 219 1 2 0 Oil price continued to rise in 193 20 Q1 2017 QoQ (+4.2 USD/bbl), while spot gas prices edged up as well 115 Lower opex continued to add to EBITDA, cash flows 103 EBITDA Price
Slide 55: Stable Production in Q1 2017
STABLE PRODUCTION IN Q1 2017 LOWER CEE GAS OUTPUT MOSTLY OFFSET BY HIGHER PAKISTAN, UK PRODUCTION QUARTERLY PRODUCTION BY COUNTRY (mboepd) COMMENTS QoQ: -3% -1% CEE: -2.3 mboepd on various 114.4 113.1 operational issues, weather 112.4 111.5 Estimate 108.3 109.2 ~110 7.5 8.0 UK: +1.6 mboepd QoQ 8.7 8
Slide 56: 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