79 slides from Mol Hungarian Oil & Gas Plc Class A's investor presentation, May 2018
Slide 1: MOL Group Investor Presentation May 2018
MOL GROUP INVESTOR PRESENTATION May 2018
Slide 2: 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
Slide 3: 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 2017 (USD MN) UPSTREAM DOWNSTREAM CONSUMER GAS 854 1,178 358 223
Slide 4: 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 ANGOLA UPSTREAM DOWNSTREAM CONSUMER SERVICES 4
Slide 5: Agenda
AGENDA THE MOL GROUP EQUITY STORY SUPPORTING SLIDES Q1 2018 RECAP (LINK TO Q1 2018 RESULTS) DOWNSTREAM CONSUMER SERVICES EXPLORATION AND PRODUCTION FINANCIALS, GOVERNANCE AND OTHERS 5
Slide 6: The MOL Group Equity Story
THE MOL GROUP EQUITY STORY
Slide 7: 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 8: 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 9: Consumer Services: Leading Fuel Retailer
CONSUMER SERVICES: LEADING FUEL RETAILER TO DRIVE THE REVOLUTION OF TRANSPORTATION DELIVERING TODAY Leading CEE fuel retailer with ~1,900 sites, market leader in 4 countries Exploiting the fuel market potential in CEE Non-fuel increasingly a growth driver due to new store concept: Fresh Corner TRANS
Slide 10: E&P: Highly Value Accretive Barrels
E&P: HIGHLY VALUE ACCRETIVE BARRELS TO FUND INORGANIC RESERVE REPLACEMENT DELIVERING TODAY Existing 2P reserves generate substantial value and FCF even below USD 50/bbl oil price Exploration & Production adjusted to be fit and to prosper at the bottom of the cycle Proven capabilities to operate matu
Slide 11: Gas Midstream: Stable, Non-Cyclical Cash Flow
GAS MIDSTREAM: STABLE, NON-CYCLICAL CASH FLOW DELIVERING TODAY Stable FCF generation in domestic transmission Profitable international transit business spanning 6 regional countries Recent years saw significant pipeline and trade infrastructure developments as well as efficiency improvements TRANSFO
Slide 12: Robust Financial Framework Supports Strategic Transformation
ROBUST FINANCIAL FRAMEWORK SUPPORTS STRATEGIC TRANSFORMATION DELIVERING TODAY 2018: a strong start to the year USD 2.0-2.2bn annual Clean CCS EBITDA under normalized assumptions Existing assets require around USD 1.0-1.1bn „sustain” capex annually Simplified FCF (EBITDA less „sustain” capex) comfort
Slide 13: Sustainable: Sole Regional Member of DJSI
SUSTAINABLE: SOLE REGIONAL MEMBER OF DJSI, ADAPTING TO A 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 CEE corporation member of the Dow Jones Sustainability Index S
Slide 14: MOL 2030: Tracking Progress Towards 2021
MOL 2030: TRACKING PROGRESS TOWARDS 2021 TARGET 2017 STATUS NXDSP SLIGHTLY BEHIND TARGET; DOWNSTREAM EFFICIENCY NEW TARGETS SET IN DS2022 ENTER NEW CHEMICAL ALL POLYOL TECHNOLOGY PRODUCT LINE(S) LICENSE AGREEMENTS SIGNED FY 2017 EBITDA: USD 358MN, +17% CONSUMERS EBITDA 2021: USD 450MN YOY RISING NON
Slide 15: Downstream
DOWNSTREAM
Slide 16: Top 15% in Sustainability
TOP 15% IN SUSTAINABILITY A COMMITMENT TO THE INTEGRATION OF ECONOMIC, ENVIRONMENTAL AND SOCIAL FACTORS INTO EVERYDAY OPERATIONS Zero Lost-time injury frequency (LTIF) (own HEALTH & SAFETY and on-site contractors) and fatalities Decrease direct and indirect GHG CLIMATE CHANGE emissions by 200 kt1 th
Slide 17: 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 17
Slide 18: 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, 2017 (%) 16 6.1 Mtpa 9.1% 2.7% 7.7% 14 8.1 Mtpa 12 11.5 7.7% 10.6 4.5 Mtpa LPG 10 9.1 2.2 Mtpa 2.3% 18.8% Naphta NCI 8 3.9% 6.1 Motor gasoline 6 Middle d
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: 68% • Seaborne: 25% ~85% ~39% • Own Refining production: 7% ~80% ~37% captive ~45% market Retail <10% 10-20% 20-40% 40+% 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 ~1.5 Mt in 2017 AROMATICS2 350 kt LDPE4: 220 k
Slide 21: Downstream: Outstanding Margin Capture
DOWNSTREAM: OUTSTANDING MARGIN CAPTURE CREATES AMPLE HEADROOM TO ABSORB EXTERNAL SHOCKS FACT SENSITIVITY AS-IS: 2017 MARGIN, EBITDA, CAPEX AND FCF IN MID-CYCLE MACRO (USD/BBL) 1 EBITDA (USD/BBL)1 PUBLISHED MARGINS PUBLISHED MARGINS • MOL Group ref.: USD 4.5/bbl • MOL Group refining: • Petchem: EUR 4
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: Quadrupling EBITDA in Years
QUADRUPLING EBITDA IN 6 YEARS SUPPORTED BY TWO WAVES OF EFFICIENCY PROGRAMS (AND A STRONG MACRO) CLEAN CCS EBITDA EVOLUTION (USD MN) ~180 1,536 ~400 440 +2.5 USD/bbl complex ~160 ~140 874 refinery margin + 150 EUR/t (old) petchem margin 500 350 1 2011 NDSP delivered Macro Offsetting items 2014 NxDSP
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: 50% Valuable Non-Fuel Production by 2030
50% VALUABLE NON-FUEL PRODUCTION BY 2030 TRANSFORMATION AWAY FROM MOTOR FUELS GROUP REFINERIES’ YIELD STRATEGIC PRIORITIES ACTIONS 2010 2015 2030 1 Benefit from profitable products (jet, base oils, LPG) ~60% ~70% 2 Increase petchem feedstock up to First round of 3 mtpa actions defined in DS2022 prog
Slide 26: Several Options to Expand Along the Value Chain
SEVERAL OPTIONS TO EXPAND ALONG THE VALUE CHAIN Polyethylenes (LDPE, HDPE) Polyols Propylene glycol ethers source: www.petrochemistry.eu 26
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 REFINING PETROCHEMICALS CHEMICALS chemistry and 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 „SYSTEM HOUSES” O
Slide 29: Attractive End-User Markets
ATTRACTIVE END-USER MARKETS WIDESPREAD APPLICATION OF POLYOL AS PUR COMPONENT DRIVES DEMAND GLOBAL POLYURETHANE DEMAND BY GROWTH DRIVERS INDUSTRY % of global demand Improving access to „essentials of life”, increasing comfort needs ~30% Improving life expectancy and population growth FURNITURE & INT
Slide 30: Limited Regional Competition
LIMITED REGIONAL COMPETITION MOL TO BECOME THE SOLE INTEGRATED REGIONAL POLYOL PRODUCER Legend: LOCATION Netherlands POLYOL UNIT Multiple units 984 ktpa Marl PG UNIT LyondellBasell 80 ktpa Sasol 18 ktpa PO UNIT (TECHNOLOGY) Multiple units 1013 ktpa Schwarzheide (PO/SM, PO/TBA) Dormagen/Cologne Bubbl
Slide 31: All Technology Licenses Secured
ALL TECHNOLOGY LICENSES SECURED TEAMING UP WITH WORLD-CLASS PARTNERS WHAT HAS BEEN REACHED? Key contracts of HPPO technology licenses signed with Evonik and thyssenkrupp, Unit to be built in Tiszaújváros, Hungary Fluor Corporation selected as project management consultant (PMC) Selected licensor for
Slide 32: A High Margin Semi-Commodity Product
A HIGH MARGIN SEMI-COMMODITY PRODUCT WITH AN EXPECTED USD 170MN+ MID-CYCLE EBITDA CONTRIBUTION POLYOL PLANT EBITDA & SENSITIVITY PROPYLENE VS. POLYOL SPREADS1 (EUR/T) (USD MN) Relative deviation: PO – propylene: 18% PP – propylene: 36% 170+ 1.000 800 ~100 600 400 200 0 2003 2004 2005 2006 2007 2008
Slide 33: DS2022: A Major Milestone Towards MOL 2030
DS2022: A MAJOR MILESTONE TOWARDS MOL 2030 OTHER GROWTH STRATEGIC TRANSFORMATION (POLYOL) USD 140 MN USD 180 MN EBITDA EFFICIENCY & EBITDA UPLIFT UPLIFT FLEXIBILITY ROADMAP EFFICIENCY 2030 DS EBITDA USD 180 MN EBITDA 1.5+ UPLIFT USD BN SAFETY EMPLOYEES' ENGAGEMENT 1ST BEST IN THE QUARTILE REGION CUS
Slide 34: USD 500mn Incremental EBITDA by 2022
USD 500MN INCREMENTAL EBITDA BY 2022 FROM TRANSFORMATIONAL PROJECTS AND EFFICIENCY (USD 2.1BN TOTAL CAPEX) INCREMENTAL EBITDA CONTRIBUTION (USD MN) CAPEX SPENDING (USD MN) 135 500 170 25 2,100 Growth (Polyol) 690 Other strategic 140 Efficiency 175 1,020 830 180 40 50 900 100 270 180 115 180 2018 201
Slide 35: Other Strategic (Brownfield) Projects
OTHER STRATEGIC (BROWNFIELD) PROJECTS LARGE, TRANSFORMATIONAL INVESTMENTS ALONG 2030 STRATEGIC GOALS GOALS EXAMPLES FCC revamp in Duna refinery 11 projects Start up: 2021 Enhancing USD 900 mn flexibility & INA delayed coker CAPEX Debottlenecking Start up: 2021 Maleic Anhydride unit extension USD 180
Slide 36: Efficiency: USD 180mn EBITDA Uplift
EFFICIENCY: USD 180MN 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: 18 efficiency Strengthen market position 16 Group Fuel 100+ 14 margin ACTIONS Energy efficiency LU
Slide 37: Crude Diversification
CRUDE DIVERSIFICATION TARGETING 33% SEABORNE SUPPLY BY 2021 ADRIATIC PIPELINE ACCESS ESTABLISHED CRUDE DIVERSIFICATION1 Increased pipeline capacity: 6Mtpa = SN REB 97% 75% Seaborne Increased 3% 25% 33% pipeline capacity: 14Mtpa = MOL+SN 2011 2017 2021 ENHANCING FEEDSTOCK FLEXIBILITY Number of purcha
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 COUNTRIES1 MARK
Slide 40: 2021 Strategic Priorities
2021 STRATEGIC PRIORITIES EXPLOIT POTENTIAL IN FUEL, ACCELERATE SHIFT TOWARDS NON-FUEL MARGIN DEVELOPMENT GROWTH STRATEGY TO 2021 4 1 Exploiting the fuel potential: growing fuel sales and taking advantage of market upside throughout the CEE 2 3 Non-fuel increasingly a growth 2 driver: Optimize/custo
Slide 41: Exploiting the Fuel Potential
EXPLOITING THE FUEL POTENTIAL FUEL SALES ON THE RISE MOSTLY DRIVEN BY RISING CEE FUEL CONSUMPTION CEE1 MOTOR FUEL DEMAND (2008 = 100%) FUEL THROUGHPUT PER SITE (MN L/SITE) +17% +20% 1.08 1.06 3.03 2.84 1.04 2.52 1.02 1.00 0.98 0.96 0.94 0.92 0.90 0.88 0.86 0.84 2008 2009 2010 2011 2012 2013 2014 201
Slide 42: Non-Fuel Increasingly a Growth Driver
NON-FUEL INCREASINGLY A GROWTH DRIVER CONCEPTUAL CHANGE, COCO/A OPERATING MODEL SUPPORT GROWTH NON-FUEL SHARE OF TOTAL MARGIN NON-FUEL TO TOTAL GROSS MARGIN (%) GROWTH (%) ~30 34 24 22 26 19 10 2013 2015 2017 2021E 2013 2015 2017 NETWORK TRANSFORMATION (% OF RECONSTRUCTED SITES) Focus on own conveni
Slide 43: Digital: Personalized Customer Experience & Improved Operations
DIGITAL: FOR A PERSONALIZED AND CONVENIENT CUSTOMER EXPERIENCE & IMPROVED OPERATIONS Personalizing interactions via Enhancing convenience via leveraging data and AI introducing digital channels Digital Loyalty signage E- commerce Data Single Lake customer view Social media / chatbot Integrated AI mo
Slide 44: Beyond Non-Fuel: Mobility Services
BEYOND NON-FUEL: MOBILITY SERVICES BUILDING BLOCKS OF DEVELOPING MOBILITY SOLUTIONS Scalable CAPEX in mobility related activities, below EUR MOL LIMO: Innovative car- 100mn by 2021 sharing platform launched in Budapest in 2018 with 300 (o/w EBITDA break-even targeted 100 EV) cars within 2 years foll
Slide 45: Consumers to Deliver USD 450mn by 2021
CONSUMERS TO DELIVER USD 450MN BY 2021 AND A TOTAL FREE CASH FLOW OF OVER USD 1BN OVER 2017-21 BUILDING BLOCKS OF CONSUMERS EBITDA EBITDA TRANSFORMATION 2013-2021 UPLIFT BY 2021 (USD MN) (USD MN) Weight in group EBITDA (%), right USD 90mn+ Consumers EBITDA (USD mn), left 450+ ~20% 600 20 358 500 15%
Slide 46: Exploration and Production
EXPLORATION AND PRODUCTION
Slide 47: Top 15% in Sustainability
TOP 15% IN SUSTAINABILITY A COMMITMENT TO THE INTEGRATION OF ECONOMIC, ENVIRONMENTAL AND SOCIAL FACTORS INTO EVERYDAY OPERATIONS We operate safely or we don’t operate. HEALTH & SAFETY Implement actions aiming at zero incidents and zero fatalities2 Decrease GHG emissions from CLIMATE CHANGE flaring b
Slide 48: Production in 8 Countries
PRODUCTION IN 8 COUNTRIES RUSSIA Reserves: 47.2 MMboe CEE TOTAL Production: 6.0 mboepd Croatia, Hungary KAZAKHSTAN Reserves: 237 MMboe Reserves: 23.5 MMboe Production: 76.9 mboepd PAKISTAN o/w CEE offshore Reserves: 9.4 MMboe Reserves: 9.4 MMboe Production: 9.1 mboepd Production: 6.8 mboepd OTHER IN
Slide 49: Creating Value Below 50 USD/bbl Oil Price
CREATING VALUE BELOW 50 USD/BBL OIL PRICE ANNUAL PRICE REALIZATION, EBITDA, FCF (USD/boe) 120 112 109 110 99 100 90 80 76 69 70 67 62 60 54 Brent price 52 47 50 43 42 44 41 39 40 33 33 31 Realized HC price 30 22 19 16 Unit EBITDA 20 30 24 Unit FCF* 10 23 14 8 1 6 0 2012 2013 2014 2015 2016 2017 2018
Slide 50: E&P Adjusted to Be Fit and to Prosper
E&P ADJUSTED TO BE FIT AND TO PROSPER AT THE BOTTOM OF THE CYCLE OPERATIONAL EFFICIENCY, PRODUCTION OPTIMIZATION IN FOCUS G&A EXPENSES (USD MN) AVERAGE WELL COST CEE ONSHORE PRODUCTION IN HUNGARY (USD/M) (MBOEPD) -7% +6% ~-20% 71 70 66 2016 2017 2016 2017 2015 2016 2017 GROUP DIRECT UNIT OPEX1 (USD/
Slide 51: Production at ~110 mboepd Until 2019
PRODUCTION AT ~110 MBOEPD UNTIL 2019 LIKELY TO DECLINE BEYOND 2020 IF NO RESERVES ADDED INORGANICALLY MID-TERM PRODUCTION PROFILE KEY MESSAGES (MBOEPD) 120 112 Stable contribution from CEE ~110 ~110 New 107 barrels 104 ~10-15 Impact of successful production required 100 optimization and EOR Pursue t
Slide 52: Rebounding Production in Q1 2018
REBOUNDING PRODUCTION IN Q1 2018 CATCHER STARTING UP, OTHER UK FIELDS NORMALIZING QUARTERLY PRODUCTION BY COUNTRY (mboepd) COMMENTS Q1 2018 QoQ (vs. Q4 2017): -2% +6% 112.8 UK: +6.3 mboepd on Catcher 111.7 110.0 109.4 start-up, Fortis pipeline Associated 8.6 106.0 8.8 104.7 104.1 resumption, lack of
Slide 53: Existing Assets Deliver USD 2bn+ FCF in 2017-21
EXISTING ASSETS DELIVER USD 2BN+ FCF IN 2017-21 AND CAN COMFORTABLY FUND INORGANIC RESERVE REPLACEMENT EBITDA, CAPEX AND FCF EXPECTATIONS (2017-21, USD MN) KEY MESSAGES Brent @ 60 USD/bbl +USD Existing assets would ~600 mn generate USD 2bn+ EBITDA Brent @ 50 post-tax FCF in 2017-21 USD/bbl at USD 50
Slide 54: Targeting 100% Reserve Replacement
TARGETING 100% RESERVE REPLACEMENT TO TRANSFORM TO A SUSTAINABLE INTERNATIONAL UPSTREAM PORTFOLIO RESERVES GAP IN 2016-21 (MMBOE) MOL’S E&P FOOTPRINT – CORE REGIONS 459 459 356 30-40 200-220 150-160 2016 YE 2P 2017 YE 2P New booking Production Inorganic Reserves after Booked Booked and additions 100
Slide 55: Financials, Governance and Others
FINANCIALS, GOVERNANCE AND OTHERS
Slide 56: Q1 2018: On Track for Another Strong Year
Q1 2018: ON TRACK FOR ANOTHER STRONG YEAR WITH THE ESSENTIAL FUNDAMENTAL BUILDING BLOCKS IN PLACE 2018 2017 Q1 2018 TARGETS RESILIENT GROUP CLEAN INTEGRATED CCS EBITDA USD 2.45 BN USD 625 MN ~USD 2.2 BN BUSINESS MODEL GROUP CAPEX USD 1.04 BN USD 160 MN USD 1.1-1.3 BN (ORGANIC)1 FINANCIAL DISCIPLINE
Slide 57: Robust, Resilient Cash Generation
ROBUST, RESILIENT CASH GENERATION 2017: A YEAR OF VERY STRONG DELIVERY CLEAN-CCS EBITDA (USD BN) Upstream Consumer Services1 Corporate & Other (incl. intersegment) Downstream Gas Midstream Group total 2.3 2.5 2.4 2.2 2.2 2.2 0.7 0.9 2.0-2.2 0.7 1.6 1.2 1.4 1.2 1.2 0.6 0.5 0.1 0.2 0.3 0.3 0.4 0.6 0.3
Slide 58: Strong Capex Discipline
STRONG CAPEX DISCIPLINE ORGANIC CAPEX (USD BN)1 Organic US Organic GM Organic DS Organic C&O (incl. intersegment) 1.8 Organic CS 1.7 total Group 1.6 1.4 1.3 1.2 0.9 1.1-1.3 1.2 1.0 1.0-1.1 1.0 1.0 0.7 0.7 0.3 0.8 0.4 0.6 0.7 0.5 0.4 0.3 0.4 0.4 0.2 0.1 0.1 0.1 0.1 0.1 0.2 0.0 2013 2014 2015 2016 201
Slide 59: Substantial Simplified Free Cash Flows
SUBSTANTIAL SIMPLIFIED FREE CASH FLOWS ACROSS THE CYCLE AND ACROSS ALL BUSINESS SEGMENTS SIMPLIFIED FREE CASH FLOW1 (USD BN) Upstream Consumer Services C&O (incl. intersegment) Downstream Gas Midstream Group total 1.8 1.4 1.6 1.1 1.2 1.2 1.4 0.0 0.5 0.2 1.2 1.0-1.1 1.0 1.0 0.9 1.0 0.8 0.5 0.8 0.7 0.
Slide 60: Sources and Applications of Cash
SOURCES AND APPLICATIONS OF CASH SOURCES AND APPLICATIONS OF CASH, 2012-17 (USD MN)1 180 -613 348 546 557 354 718 579 402 205 270 196 164 202 370 575 473 302 427 2 524 2 477 2 447 2 308 322 164 2 183 2 153 111 1 689 1 211 1 258 1 034 1 011 1 037 2012 2013 2014 2015 2016 2017 Clean CCS EBITDA Organic
Slide 61: 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 2.0 1.96 Net debt/EBITDA to be in 1.0-2.0x tolerance 1.72 range on a forward-looking basis under 1.66 1.5 1.44 1.38 1.31 „normal” circumstances (covenant threshold at significantly higher levels)
Slide 62: Ample Financial Headroom
AMPLE FINANCIAL HEADROOM FROM DIVERSIFIED FUNDING SOURCES AVERAGE MATURITY OF 3.51 YEARS Reported cash & cash equivalents Senior Unsecured Bonds Medium term loan Long term loan (multilaterals) Undrawn facilities 2,000 1,500 USD mn 1,000 1,682 575 1,275 500 42 924 652 500 13 0 3 22 22 22 62 Reported
Slide 63: Full Investment Grade Rating Achieved
FULL INVESTMENT GRADE RATING ACHIEVED FOLLOWING S&P UPGRADE IN NOVEMBER 2017 HISTORICAL FOREIGN LONG TERM FFO ADJUSTED NET LEVERAGE RATINGS (3Y AVG. 2014-2016) MOL Fitch MOL Moody's MOL S&P (BBB-) 1.7 Baa1 BBB+ Baa2 (A-) 2 BBB Baa3 BBB- (BBB-) 2.2 Ba1 BB+ (A-) 2.6 Ba2 BB (BBB) 3.5 0 0.5 1 1.5 2 2.5
Slide 64: Increasing Distribution to Shareholders
INCREASING DISTRIBUTION TO SHAREHOLDERS STEADILY RISING BASE DPS, COMPLEMENTED BY SPECIAL DIVIDEND IN 2018 DIVIDEND PER SHARE1 (HUF) 3.6% 3.5% 3.0% Dividend 2.5% 2.9% 3.3% 3.0% +1% +2% +1.5% yield2 BASE DPS: +10% 43 CAGR IN 2014-18 Special dividend Regular dividend 16 78 85 71 57 58 58 61 2012 2013
Slide 65: 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 -5.0-5.5 Transformational 2017 delivery capex is back-loaded 1.04 5.0-5.5 -2.0 (20%) -1.4-1.6 1.6-1.90 -1.2-1.5 2.45 0.32 (23%)
Slide 66: 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 Low-cost E&P in Croatia* (both onshore and executed with or without INA off-shore) Good geographical fit and untapped Coastal refinery (R
Slide 67: The History of INA & MOL, 2003-2018
THE HISTORY OF INA & MOL, 2003-2018 STORYLINE SHAREHOLDER AGREEMENTS UNDER THE FASHA, MOL DELEGATES FIVE MOL AND THE GOVT OF CROATIA SIGN THE GAS 1ST SHAREHOLDER RIGHTS AGREEMENT (SHA): OUT OF NINE MEMBERS TO THE MASTER AGREEMENT (GMA) AND AN MOL ALLOWED TO NOMINATE TWO MEMBERS 1ST AMENDMENT SUPERVI
Slide 68: 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 UNDER UNCITRAL ICSID (INTERNATIONAL SETTLEMENT OF FORUM (UNITED NATIONS
Slide 69: Simpler Shareholder Structure
SIMPLER SHAREHOLDER STRUCTURE1 HIGHER FREE FLOAT AND LIQUIDITY The 8-for-1 stock split was successfully executed in September 2017 CEZ exit (selling 7.4% stake in MOL) in March 2017 was a major boost to free float and liquidity Treasury shares MUFG 9.9% 0.6% UniCredit Bank AG 3.0% ING Bank N.V. Fore
Slide 70: 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% 600 70% 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 71: 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 72: Transforming MOL to Adapt to Circular Economy and Low Carbon World
TRANSFORMING MOL TO ADAPT TO CIRCULAR ECONOMY AND A LOW CARBON WORLD BUILDING BLOCKS OF GREEN INITIATIVES IN MOL Targeting reductions by 2020 2030 strategy supports Solar power generation at Scope 3 GHG emission DS sites and mining plots reduction GHG Renewables Geothermal power Advanced biofuels: f
Slide 73: MOL Group Carbon Footprint
MOL GROUP CARBON FOOTPRINT TARGETING REDUCTIONS BY 2020; 2030 STRATEGY TO CONTRIBUTE GHG CHANGES 2016-17 CARBON FOOTPRINT 2017 (MT CO2 EMISSiON) 7.10 0.95 61.03 DIRECT GHG EMISSIONS INDIRECT GHG EMISSIONS FROM PURCHASED ENERGY CONSUMPTION GHG EMISSIONS BY CUSTOMERS AND OTHER INDIRECT RESOURCES 2020
Slide 74: Strong ESG Ratings
STRONG ESG RATINGS LEADING POSITIONS ACROSS LEADING ESG1 RESEARCH/RATING HOUSES RELATIVE RATING2 VS TOP 12% TOP 22% TOP 2%3 INDUSTRY PEERS MOL SCORE 69 AA 83 684 ENVIRONMENTAL 71 7.2 84 74 (LEADER) SOCIAL 78 6 84 63 (LEADER) GOVERNANCE 60 3.5 80 63 (OUTPERFORMER) Continuous monitoring of and respons
Slide 75: MOL Group Refinery and Petchem Margins
MOL GROUP REFINERY AND PETCHEM MARGINS VARIABLE REFINERY MARGINS1 (USD/bbl) PETROCHEMICALS MARGIN (EUR/t) 10 900 800 8 700 6 600 4 500 400 2 300 0 200 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 MOL Group refinery margin Complex refinery margin (MOL+SN) OLD petchem margin NEW MOL Group petchem
Slide 76: Macro Assumptions
MACRO ASSUMPTIONS KEY MACRO ASSUMPTIONS EBITDA SENSITIVITY TO KEY EXTERNAL DRIVERS Sensitivity2 Est. Clean CCS EBITDA % of Group impact (USD mn) EBITDA 2017 5Y 2018- 2015 2016 2017 +/- 50 USD/Mcm AVG 21E ~30 1% Gas Price (NCG3) Brent crude 52 44 54 72 40-60 (USD/bbl) +/- 10 USD/bbl ~100 4% MOL Brent
Slide 77: Top Management Incentive Schemes
TOP MANAGEMENT INCENTIVE SCHEMES FOR MOL GROUP EB 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, operati
Slide 78: Gas Midstream: Stable, Non-Cyclical Cash Flow
GAS MIDSTREAM: STABLE, NON-CYCLICAL CASH FLOW GAS MIDSTREAM EBITDA (HUF BN, USD MN) FACTS & FIGURES Domestic natural gas 70 300 256 250 252 transmission system operator 60 223 250 213 Regulated business (asset base 50 194 200 and return) with continuous 40 regulatory scrutiny 150 30 58 59 60 61 56 5
Slide 79: 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