Repsol Sa · BME:REP
Repsol Sa — Investor Day (November 2020)
74 slides from Repsol Sa's investor day presentation, Nov 26, 2020
Slide 1: Strategic Plan 2021-2025: Stepping up the Transition
Strategic Stepping up the Transition Plan Driving growth and value 2021-2025 1
Slide 2: Disclaimer
Disclaimer ALL RIGHTS ARE RESERVED © REPSOL, S.A. 2020 Repsol, S.A. is the exclusive owner of this document. No part of this document may be reproduced (including photocopying), stored, duplicated, copied, distributed or introduced into a retrieval system of any nature or transmitted in any form or
Slide 3: Delivering a compelling investment case into the Transition
Strategic Plan 2021-2025: Delivering a compelling investment case into the Transition ‒ A legacy double-geared engine providing cash-flow and solid foundations for the Transition ‒ Profitable business platforms with leading advantaged positions: Iberia & Downstream ‒ New operating model, catalyzing
Slide 4: Agenda
Agenda 01. A complex environment offering opportunities 02. Repsol: Outstanding platform to thrive in the energy transition 03. Path to Repsol 2030 04. Strategy 2021-25: Stepping up the Transition 05. Leading investment case 06. Conclusions
Slide 5: A complex environment offering opportunities
A complex environment offering opportunities 01.
Slide 6: A complex environment offering significant opportunities
A complex environment offering significant opportunities Economic Energy transition Volatile commodity recovery and decarbonization prices ‒ Challenging economic environment ‒ Regulatory and social alignment ‒ High market uncertainty and volatility towards decarbonization priority • Recovery to 2019
Slide 7: Repsol: Outstanding platform to thrive in the energy transition
Repsol: Outstanding platform to thrive in the energy transition 02.
Slide 8: Pioneering commitment with decarbonization goals
Repsol: Pioneering commitment with decarbonization goals First O&G to target Net Zero emissions Leading ESG company Committed in December 2019, now increasing our ambition Carbon Intensity Indicator1 reduction target [gCO2/MJ] Top grade 2020 2016 2025 2030 2040 2050 Previous targets -10% Top grade 2
Slide 9: Double-geared machine: Upstream
Doubled-geared machine Upstream Strong FCF generation Focus on OPEX reduction Value vs. Volume mindset ‒ Portfolio with balanced exposure Free cash flow (B€/y) OPEX ($/boe) and optionality Growth Cash generation ‒ Selective capex allocation Cash generation -22% → intensity: <$10/boe1 @ low prices ‒
Slide 10: Double-geared machine: Downstream
Doubled-geared machine Downstream 1. World-Class Industrial business1, with Tier 1 assets 2. Iberian leading Customer business WMK Refining Net Cash Margin Solid integrated chemical business model2 by EU companies 2020 (42 companies, 84 refineries) ‒ 40% LPG feedstock flexibility vs ‒ Leading energy
Slide 11: Repsol today: Starting the Transition from a strong position
Repsol today: Starting the Transition from a strong position Relevant low carbon portfolio & sustained and resilient Free Cash Flow RENEWABLES INDUSTRIAL FCF resilient CUSTOMER CENTRIC Only company to be FCF positive each and every year since prices dropdown 24 M customers 1.1 GW Operational2 in 700
Slide 12: Path to Repsol 2030
Path to Repsol 2030 03.
Slide 13: Ambitious transformation journey to thrive in Energy Transition
Ambitious transformation journey to thrive in Energy Transition De-carbonize New operating the portfolio Profitable Four verticals model FCF growth New partnerships Path to 2030 Advantaged Value transformation crystallization Towards Net Zero emissions Leading investor proposition 13
Slide 14: New Repsol corporate model for accountability and value transparency
Early movement: New Repsol corporate model for increased accountability and value transparency REPSOL Group Group Corporate Center (Governance, Financial and Strategic Management and Integration synergies) Group Global Services (Efficiency and Scale) Upstream Industrial Customer-centric Low-carbon g
Slide 15: Clear logic for Repsol new corporate model
Clear logic for Repsol new corporate model Clear differentiation of businesses profiles and equity stories within the Group Alignment of cost of capital with business profile for each business Ability to develop appropriate partnerships for each business Value crystallization and transparency Accele
Slide 16: Repsol 2030: A more sustainable, balanced and profitable company
Repsol 2030: A more sustainable, balanced and profitable company Transforming the company's portfolio Strong cash-flow growth CE 2019 CE 2025 CE 2030 FCF (B€) 8% 7% 10% 5 % Low Carbon Retail 2% 12% Customer centric business 25% x 2.6 Renewables 34% 37% Industrial transformation (circularity, H2 & e-
Slide 17: Uniquely positioned to thrive in the energy transition
Uniquely positioned to thrive in the energy transition: Distinctive approach and differentiated starting point - De-carbonization as a business opportunity creating profitable Transition growth the right platforms ambition - Legacy business providing cash-flow to enable Transition - Large enough to
Slide 18: Strategy 2021-25: Stepping up the Transition
Strategy 2021-25: Stepping up the Transition 04.
Slide 19: Delivering financial targets while transforming the company
Delivering financial targets while transforming the company Ambition 21-25 2021 - 2022 2023 - 2025 Ensuring strong Accelerating transformation and delivering performance and financial strength growth In an uncertain economic and commodities environment ‒ Efficiency & capital discipline ‒ Portfolio o
Slide 20: 2020: Successfully managing COVID to deliver resilience
2020: Repsol is successfully managing COVID situation to deliver resilience, setting up the path for 2021 Resilience savings as % of ‘19 CFFO1 2020e Gearing Increase2 2020 de-leverage 50% €2.4 B Savings in 2020 22% 4.0 p.p. Peers Average Peergroup Average 1pp Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer
Slide 21: Pre-COVID recovery position expected by 2022
2019 Pre-COVID recovery position expected by 2022 on the same price basis Extending and strengthening competitiveness EBITDA Adjusted Net income programs into 2021 to maximize resilience 2021 Impact Billion € Billion € Procurement efficiency program Renegotiation initiatives, standardization and sim
Slide 22: Legacy and new businesses driving portfolio performance
Legacy and new businesses driving portfolio performance along the Transition Contribution to portfolio financial profile 21-25 Contribution to carbon intensity reduction Focus and Low carbon strategies Efficiency and 21-25 Net Cash Contribution New platforms efficiency Industrial1 CIRCULAR LOW CARBO
Slide 23: Discipline, flexibility and transformation: Capex 21-25
Discipline, flexibility and transformation Capex 21-25 Building up transformation within 2021-2025 Profitable decarbonization Capex (B€/y) IRR-WACC2 (%) 4.0 0.4 3.6 >10% €5.5 B 0.2 0.3 0.9 (30% of total CAPEX) 0.8 Capex to Low Carbon1 0.9 projects in 2021-2025 2.5 1.6 0% 2019 Avg. 2021-2025 5.5 Cust
Slide 24: Leading distribution and clear capital allocation framework
Leading distribution and clear capital allocation framework Capital allocation 21-25 Resilient shareholder distribution Capital allocation priorities €/share >1.00 If Price deck 4 Extra shareholder distribution 0.89 SBB SBB improves SBB 0.60 SBB 3 Additional Low carbon CAPEX 0.70 0.75 0.65 €0.6/sh 0
Slide 25: Strategy 2021-25: Business strategies
Strategy 2021-25: Stepping up the Transition Business strategies 04.
Slide 26: Setting the new business priorities
Setting the new business priorities Upstream Industrial Customer-centric Low-carbon generation Yield and Focus Yield and New Platforms Yield and Transformation Business Build 26
Slide 27: Setting the new business priorities
Setting the new business priorities Upstream Industrial Customer-centric Low-carbon generation Yield and Focus Yield and New Platforms Yield and Transformation Business Build 27
Slide 28: Upstream: Focus on capital efficiency and cash generation
Focus on capital efficiency and cash generation Upstream FCF (B€) @50/2.5 FCF BE, Brent ($/bbl) OPEX reduction (B€) Emissions reduction (Mt CO2) -20% -15% x 1.5 -75% 4.50.9 < 50 2.1 10.3 0.6 1.8 < 40 -0.1 2.5 Av. 2016-18 Av. 2019-20 Av. 2021-25 2016-2020 2021-2025 Av. 2016-20 Av. 2021-25 2020 2021-2
Slide 29: Repsol E&P priorities 2021-25
Repsol E&P priorities 2021-25 1 FCF as a priority (Leading FCF B-even) 2 Resilient Value delivery 3 Focused portfolio 4 Tier 1 CO2 emissions − FCF breakeven <$40/bbl − Top leading project − Value over volume − Emissions intensity − Low capital intensity and profitability • Flexible production level
Slide 30: Strong portfolio of short-cycle projects with attractive economics
Strong portfolio of short-cycle projects with attractive economics <40 < 30 Pikka Yme Oil Tier 1 New projects profitability <2 < 30 New Projects IRR Marcellus UK 22% weighted by Capex ~35 Eagle Ford ~40 Leon Moccasin Oil ~40 Mexico < 40 Oil Buckskin FFD Peer1 Peer2 Peer3 Peer4 Peer5 Peer6 Peer7 Peer
Slide 31: Value maximization maintaining one of the lowest capex intensity
Value maximization maintaining one of the lowest CAPEX intensity < $8/boe NPV Growth %, 2025 vs 2020 CAPEX 21-25 2025+ Flexibility Tier 1 (≥20%) Tier 2 (≥10%) Tier 3 (<10%) Maximizing value extracted from Capex Legacy / Others ‒ Large CAPEX investment optionality, allowing value maximization or easy
Slide 32: High grading portfolio supporting carbon intensity reduction
High grading portfolio supporting carbon intensity reduction Repsol to become tier 1 lowest carbon intensity High growth new barrels with lower with a 75% reduction emission intensity Emissions reduction Emissions intensity per barrel produced (kgCO2/boe) New production pushes down emissions intensi
Slide 33: Setting the new business priorities
Setting the new business priorities Upstream Industrial Customer-centric Low-carbon generation Yield and Focus Yield and New Platforms Yield and Transformation Business Build 33
Slide 34: Industrial: Solid cashflow generation and new businesses build up
Solid cashflow generation and new businesses build up Industrial FCF (B€) CAPEX (B€) + 50% 0.9 2025 BE1 reduction 0.2 >$1.5/bbl 1.3 0.9 0.9 0.7 CO2 reduction2 by 2025 0.6 > 2 Mt CO2 2019 Av. 2021-22 Av. 2023-25 2019 Av. 2021-25 Low carbon 34 1. For Refining business 2. Scope 1+2+3 emissions
Slide 35: Maximizing yield and developing the next wave of profitable growth
Maximizing yield and developing the next wave of profitable growth Refining1 Chemicals Trading ‒ ‒ ‒ Maximizing margin across businesses 1 Net Cash Margin 1Q Solomon and Wood Mackenzie Differentiation with high value products Maximize the integration and value from assets through a highly integrated
Slide 36: Maintaining competitiveness in a complex environment
Maintaining competitiveness in a complex environment Refining Strong focus on Maximizing margins competitiveness increase Reducing breakeven to Refining Margin Indicator support cashflow projections progressively recovering1 Maximizing margins generation / Maximizing margins − Supply chain: Greater
Slide 37: 25/25 decarbonization program with strong contribution to margin
25/25 decarbonization program with strong contribution to margin improvement and CO2 reduction Maximizing energy efficiency with attractive returns New low carbon business selected projects C43: Waste & UCOs Investment Capacity Industrial energy efficiency treatment plant 250 kta Sustainable biofuel
Slide 38: Setting the new business priorities
Setting the new business priorities Upstream Industrial Customer-centric Low-carbon generation Yield and Focus Yield and New Platforms Yield and Transformation Business Build 38
Slide 39: Customer Centric Business: Growth ambition with strong FCF generation
Growth ambition with strong FCF generation Customer Centric Business Digital customers ('000) EBITDA (B€) FCF (B€) X 1.3 X 1.4 X 4.0 8,000 1.4 0.8 0.6 1.0 0.5 0.9 2,000 2020 2025 2019 2020 2025 2019 2020 2025 P&G + 1,100 k 2,000 k Mobility contribution margin (M€) x 1.15 E-Mobility customers Non-oil
Slide 40: Building on a position of leadership with a successful transformation
Building on a position of leadership with a successful transformation track-record Customer Centric Business Leading market shares1 CCB EBITDA evolution (M€) Spain Portugal x 1.4 1.0 Fuels 34% (#1) 23% (#2) Launch of TwP3 LPG 74% (#1) 20% (#3) Program 0.04 0.1 Lubes 26% (#1) 19% (#3) 0.2 P&G 3% (#5)
Slide 41: Multi-energy customer-centric approach
Ambition to become the leading multi-energy retailer in Iberia Accompanying our >24 M customers through the energy transition with the ambition and the competitive edge to become their end-to-end multi-energy supplier Traditional commercial New energy transition businesses P&G retail business (Mobil
Slide 42: Strong and growing profits and cash generation
Strong and growing profits and cash generation Customer-Centric Businesses Strategy 2021-25 Mobility leader in Key Longstanding Iberian continuous High-growth power foundations Energy Leader customer business transformation Multi-energy Cross-sell to current customers and channels, adding new servic
Slide 43: Launching Repsol's Transversal Loyalty Program
Launching Repsol's Transversal Loyalty Program to orchestrate customer-centric multienergy approach across customer base Engage customers repsol.es >8 M customers Transversal by 2025 >35 M >24 M >10 M 2M loyalty Program Repsol registered Repsol digital Mobility ‒ Integrated customer data Home app En
Slide 44: Unique position to serve the multi-energy needs of our customers
Unique position to serve the multi-energy needs of our customers Mobility Home More than double growth in enhancing CO2 offset contribution margin per customer Biofuels & synthetic fuels Power & Gas Margin (€/customer) Traditional fuels P&G value-added Home services Services Mobility Services Home N
Slide 45: Setting the new business priorities
Setting the new business priorities Upstream Industrial Customer-centric Low-carbon generation Yield and Focus Yield and New Platforms Yield and Transformation Business Build 45
Slide 46: Low carbon generation: Building a new business with ambitious targets
Building a new business with ambitious targets Low carbon generation Capex (B€) Low carbon consolidated1 capacity (GW) Gross EBITDA2 (M€) RES (incl. hydro) 15.0 Cogenerations x8 X8 CCGT 1.4 X 2.5 7.5 12.7 331 3.3 0.6 3.0 5.2 0.7 1.1 0.6 0.6 0.6 0.6 0.2 1.6 1.6 1.6 1.6 40 2019 2020 2025 2019 2020 202
Slide 47: Developing a competitive RES player with international platforms
Developing a competitive RES player with international platforms Estimated low carbon operating capacity (GW)1 International Spain2 2025 0.7 GW 1.3 GW 2025 1.0 GW 1.4 GW 0.7 GW − Launch organic growth – development of 2030 3.1 GW 3.6 GW 2030 2.0 GW 2.3 GW 1.7 GW Phase I Ready to Build and earlier st
Slide 48: Strong portfolio of advanced stage projects
Strong portfolio of advanced stage projects with short term material growth and robust profitability Spain Chile 482MW1 275 MW Add. pipeline DELTA 335 MW Elena 2021 (137.5 MW) Boosting project PI 175 MW Castilla y León 2021/2022 Aragón 2020 2022 (137.5 MW) Antofagasta 385 MW returns through +3-4% PE
Slide 49: Strategy 2021-25: 2025+ advantaged zero-carbon business platforms
Strategy 2021-25: Stepping up the Transition 2025+ advantaged zero-carbon business platforms 04.
Slide 50: Decarbonization is an opportunity to build business platforms
Decarbonization is an opportunity to build business platforms as technology evolves 2025-2030 +2030 2020-2025 Advanced biofuels, biogas and recycling Industrial transformation Renewable hydrogen Synthetic fuels (e-fuels) Hybrid plants Renewable generation Stationary energy storage Low carbon power r
Slide 51: Renewable Hydrogen: ambition to become a leader in the Iberian Peninsula
Ambition to become a leader in the Iberian Peninsula Renewable Hydrogen Clear ambition2 to become Iberian leader Multi-technology Renewable H2 capacity approach under development 1.2 providing flexibility, [GWeq] and optimizing production Electrolysis Biomethane Photoelectrocatalysis in existing SMR
Slide 52: Clear advantages in renewable hydrogen production
Repsol with clear advantages in renewable hydrogen production Renewable Hydrogen Repsol's with an advantageous position resulting in tier#1 LCOH1 ~30% Spain, the best EU location to produce hydrogen with lower vs. a local renewable H2 producer electrolyzers − Renewable H2 production from biomethane
Slide 53: Sustainable biofuels: Repsol becoming an advantaged producer
Repsol becoming an advantaged producer Sustainable biofuels Repsol best positioned for sustainable Reaching > 2 Mta of sustainable With a multi-technology and raw biofuels production biofuels in 20301 material approach Sustainable biofuels gross production (Mta) Use of wastes as feedstock Already a
Slide 54: Pipeline of initiatives prioritized through the abatement curve
Pipeline of initiatives prioritized through the abatement curve Repsol abatement cost curve in 2030 (€/t CO2e). H2 abatement cost potentially lowered, driven by Scope 1+2 technology development and regulatory support 25 Mt (Scope 1&2) Efficiency 100 Flaring 50 Repsol CO2 reference price €35/t Waste
Slide 55: CII evolution: speeding up carbon reduction targets
CII evolution: Repsol speeds up the transformation by increasing its carbon reduction targets from 20% to 25% by 2030 CII reduction breakdown by decarbonization lever A clear decarbonization pathway towards net zero in 2050 % CII reduction (baseline 2016) % CII reduction (baseline 2016) 0 -20 -12% 2
Slide 56: Strategy 2021-25: New operating model
Strategy 2021-25: Stepping up the Transition New operating model 04.
Slide 57: A new operating model driven by a lean and vanguard mindset
A new operating model driven by a lean and vanguard mindset More efficient and agile Strategic talent management 2025 targets Enhance workforce planning, reskilling and upskilling to Boost Data driven New and adapted professional Diversity and inclusion -20% >35% directors female leadership face dig
Slide 58: World-Class Digital: already transforming how we operate
World-Class Digital Already transforming how we operate our businesses E&P Industrial & Trading 308 0.5% Gross production increase in our assets +$0.4/bbl Refining margin increase Incremental economic impact (CFFO + Capex savings, M€) due to digital initiatives 82 2018 2020e -7% Reduction of drillin
Slide 59: Taking digitalization to the next level, delivering €800 M impact
Taking digitalization to the next level, delivering €800 M impact to 2022 World-Class Digital Artificial Intelligence Automated operations Customer Centricity €800 M “Artificial intelligence first” approach as a Improve operational efficiency of our Enable best-in-class digital customer- Incremental
Slide 60: Repsol tech platform to support decarbonization and transformation
Great Repsol tech platform to support business de-carbonization and transformation Technology Driven Our goal to transform the energy sector through technology innovation Relevant technological achievements (Examples) Repsol Technology Lab Industrial processes disruption 26 +190 Characterization of
Slide 61: Leading Investment Case
Leading Investment Case 05.
Slide 62: Leading shareholder distribution
Leading shareholder distribution 2021-2025 Highlights Resilient shareholder distribution… … growing with organic excess cash at SP price deck €/share > 1.00 0.89 SBB 2021 €0.6/sh dividend paid in cash SBB SBB (except Jan 2021) SBB 0.75 – Committed @$40/bbl Brent 0.65 0.70 0.60 0.60 2022-2025 Increas
Slide 63: Leading dividend yield and dividend coverage among peers
Repsol with a leading dividend yield and dividend coverage among peers Dividend Yield1 2020 (%) New announced distribution schemes @$50/bbl Brent, compared to pre-cuts proposition (%) < 15% distributions cut Pre-cuts Dividend Conditioned 6.1% Avg. to debt reduction 9.1%2 8.5% 6.2% 4.8% 4.5% 2.9% Pee
Slide 64: Self-financed plan: sources and uses of cash
Self-financed plan Cash generation Cumulative sources and uses of cash, 2021-2025 (B€) 2021-2025 B-even post-dividends ($/bbl) Shares buyback Divestments1 29.4 29.4 & Optionalities 1.4 1.4 2.0 0.3 0.7 5.0 4.7 4.4 Dividends Financials2 $50/bbl 9.4 FCF BE (inc. SBB) CFFO 18.3 Capex 12.6 < $45/bbl Sour
Slide 65: Specific gearing target range, preserving a strong financial structure
Specific gearing target range, preserving a strong financial structure 2021-2025 gearing1 25% average Strong Liquidity Position Proforma 2020 (Billion €) 9.1 3.4 Debt Maturities €8.2 B 5.7 3.9 2.9 Proforma 2020 2021-22 2023-25 Same Debt with strong EBITDA growth Committed Credit lines Cash & Eq. Mat
Slide 66: Clear cash allocation framework, preserving prudent financial policy
Clear cash allocation framework, preserving our prudent financial policy Gearing discipline and commitment with our current credit rating If Price deck improves At base case If Price deck worsens 3 4 1 2 Additional Low carbon CAPEX Extra shareholder distribution 0 Value CAPEX Shareholder distributio
Slide 67: Strong growth in per share metrics driving valuation upsides
Strong growth in per share metrics driving valuation upsides +20%CAGR +7%CAGR +10%CAGR FCF per share CFFO per share Adjusted Net Income per share 3.2 5.7 2.2 0.6 €/sh €/sh +7% €/sh CAGR 4.6 +10% 2.1 CAGR 1.5 +20% CAGR 5.0 1.8 2.6 2.1 3.3 1.0 0.8 Adjusted1 2019 2025 Adjusted1 2019 2025 Adjusted1 2019
Slide 68: Conclusions
Conclusions 06.
Slide 69: Delivering a compelling investment case into the Transition
Delivering a compelling investment case into the Transition Strategic Plan 2021-2025. Driving growth and value with capital discipline FCF generation FCF 21-25: €2.2 B/y Profitable business platforms EPS 25: €1.8/share ‒ 2021-22: Resilience and Strength CFFO/share +7% CAGR 19-25 ‒ 2023-25: Accelerat
Slide 70: Stepping up the Transition
Strategic Stepping up the Transition Plan Driving growth and value 2021-2025 70
Slide 71: Appendix
Appendix
Slide 72: Scenario assumptions
Scenario assumptions Projections (2021-2025) 2021 2022 2023 2024 2025 Brent price ($/bbl) 50 50 50 50 50 Henry Hub Price ($/Mbtu) 2.5 2.5 2.5 2.5 2.5 Repsol Refining Margin indicator ($/bbl) 3.5 4.0 4.5 5.2 5.8 Spanish average power price (€/MWh) 42.5 42.5 42.5 42.5 42.5 ± $10/bbl BRENT ± $0.5/Mbtu
Slide 73: Main business value growth and ESG KPIs and commitments
Main business value growth and ESG KPIs and commitments Low-carbon ESG Upstream Industrial Customer-centric generation FCF (B€) 2021-25 @50/2.5 FCF (B€) 5.1 EBITDA (B€) Low-carbon capacity (GW) 2025 Peru R&M X5 x2.5 12% IIC reduction1 5.1 + 0.34 1.4 7.5 Chemicals 4.5 4.3 LAS4 Trading 3 LPG 1st quart
Slide 74: EBITDA 2019 breakdown by business
EBITDA 2019 breakdown by business Repsol Group EBITDA 2019 (B€) CCB EBITDA 2019 (B€) 0.04 7.3 1.0 0.4 1.0 0.3 0.04 0.1 1.3 4.3 0.2 P&G LAS2 4.3 2.0 0.7 LPG Mobility 1.0 Upstream Refining1 Chemicals Trading & Customer- Low Carbon Gen Repsol Total 2019 Wholesale Gas Centric Customer- Businesses Centri