Mol Hungarian Oil & Gas Plc Class A · BET:MOL
Mol Hungarian Oil & Gas Plc Class A — MOL Group — Investor Day (November 2016)
102 slides from Mol Hungarian Oil & Gas Plc Class A's investor day presentation, Nov 7, 2016
Slide 1: MOL Group 2030 Strategy Capital Markets Day
MOL GROUP 2030 STRATEGY CAPITAL MARKETS DAY Budapest, 7 November 2016
Slide 2: MOL Group 2030 Enter Tomorrow
MOL GROUP 2030 ENTER TOMORROW
Slide 3: 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 4: 2000-2016: A Successful Journey of MOL Becoming a Regional Champion
2000-2016: A SUCCESSFUL JOURNEY OF MOL BECOMING A REGIONAL CHAMPION COUNTRIES HQ INTERNATIONAL MANAGEMENT 10 22 3% 24% SERVICE STATIONS 2P RESERVES (MMBOE) 447 ~2000 289 514 EBITDA (USD BN) MARKET CAP (USD BN) 0.36 2.65 1.3 6.5 4
Slide 5: The World Is Changing Around Us
THE WORLD IS CHANGING AROUND US… 5
Slide 6: ...With Fast Developing Consequences
...WITH FAST DEVELOPING CONSEQUENCES… GLOBAL WARMING & CLIMATE CHANGE LOW-CARBON SOLUTIONS ALTERNATIVE FUELS ELECTRIC VEHICLES TAKEN SEPARATELY DIGITALIZATION OF TRANSPORT THESE CHANGES ARE SELF-DRIVING CARS EVOLUTIONARY, BUT WHEN COMBINED THEY WILL BE URBANIZATION REVOLUTIONARY! CONNECTTIVITY & MOB
Slide 7: ...That Will Transform Our Industry
...THAT WILL TRANSFORM OUR INDUSTRY MOL WILL EMBRACE THE CHANGES AND LEAD THE TRANSFORMATION IN THE CEE REGION… BUILD ON EXISTING LEAD THE INDUSTRIAL LEVERAGE ON CEE STRENGTHS TRANSFORMATION LEADERSHIP THE FUTURE BELONGS TO THOSE WHO DARE TO CREATE IT 7
Slide 8: Upstream: Self-Funded and Value Generating in a Low Oil Price Environment
UPSTREAM SELF-FUNDED AND VALUE GENERATING IN A LOW OIL PRICE ENVIRONMENT EFFICIENT & ROBUST OPERATIONS OPEX & CAPEX EFFICIENCY PORTFOLIO MAXIMIZE VALUE OF CURRENT ARMOUR ASSET BASE OPTIMIZATION UPSTREAM FOCUS ON RISK CAPABILITIES BALANCE BETWEEN BUILD ON EXPLORATION AND CURRENT CORE DEVELOPMENT CAPA
Slide 9: Refining & Marketing: Ensure Sustainable Leadership Within Core CEE Region
REFINING & MARKETING ENSURE SUSTAINABLE LEADERSHIP WITHIN CORE CEE REGION EFFICIENCY & COMPLEXITY AVAILABILITY & FLEXIBILITY COMPLEX REFINERIES IN DIVERSIFY AWAY EUROPEAN TOP BY FROM FUELS DEVELOP NET CASH MARGIN R&M INCREASE CUSTOMER REACH INCREASE PETCHEM FEEDSTOCK BUILD CAPTIVE MARKETS AND MARKET
Slide 10: Petchem/Chemicals: Become CEE Leader
PETCHEM/CHEMICALS BECOME CEE LEADER IN PETROCHEMICALS AND CHEMICALS BEYOND COMMODITIES SPECIALITY CHEMICALS INTEGRATED NEW PRODUCTS FEEDSTOCK GROW CAPTIVE MARKET MOVE FURTHER ALONG THE PETCHEM VALUE CHAIN PARTNERSHIPS REMAIN FULLY INTEGRATED MORE COMPLEX KNOWLEDGE BASED PRODUCTS 10
Slide 11: Consumer Services: Become the Customer's First Choice
CONSUMER SERVICES BECOME THE CUSTOMER’S FIRST CHOICE IN THE CEE REGION CHANGING CONSUMER LEVERAGE ON EXISTING NETWORK B2B MOBILITY SOLUTIONS TRANSFORM SOLUTIONS INTO CONSUMER SERVICES EXTEND RETAIL INDUSTRIAL INTO CONSUMER SERVICES & ENGINEERING SERVICES NEW SERVICES, NEW MARKETS ENHANCE EXISTING SA
Slide 12: Entrepreneurship, Education, Innovation & Incentives
ENTREPENEURSHIP, EDUCATION, INNOVATION & INCENTIVES THE KEY TO THE FUTURE OF MOL GROUP GOES THROUGH… PIONEER: TRAINING & 29 NATIONALITIES EDUCATION WORKING TOGETHER AT MOL GROUP HQ IN BUDAPEST INNOVATION NEW BUSINESSES SHAREHOLDER ALIGNMENT SHARE BASED INCENTIVES …AS CULTURAL CHANGE IS THE KEY TO RE
Slide 13: Sustainable Development
SUSTAINABLE DEVELOPMENT INTEGRATION OF ECONOMIC, ENVIRONMENTAL AND SOCIAL FACTORS INTO EVERYDAY OPERATIONS PIONEER: 20 YEARS OF SD PLAN 2020 SUSTAINABILITY MANAGEMENT ACHIEVE TOP 15% & TRANSPARENCY INTERNATIONALLY SIX KEY AREAS: ETHICS & GOVERNANCE – PEOPLE AT MOL CLIMATE CHANGE – STAKEHOLDER ENVIRO
Slide 14: Competitive, Sustainable Shareholder Returns
COMPETITIVE, SUSTAINABLE SHAREHOLDER RETURNS WE WILL GENERATE SUFFICIENT CASH FLOWS TO FUND THE TRANSFORMATION AND RISING DIVIDENDS TO OUR SHAREHOLDERS WE WILL MAINTAIN A „CRISIS-PROOF” BALANCE SHEET FOR OPTIONALITY AND SELECTIVE INORGANIC GROWTH OPPORTUNITIES BUILD ON STRENGTHS: INTEGRATED, EFFICIE
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Slide 16: Financial Framework
FINANCIAL FRAMEWORK
Slide 17: 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 18: MOL Group 2030 – Financial Framework
MOL GROUP 2030 – FINANCIAL FRAMEWORK FUNDING THE TRANSFORMATION BALANCE SOURCE USE OF CASH SHEET OF CASH EBITDA Interest/ Tax/FX Sustain CAPEX Transformational CAPEX Net debt / EBITDA (x) Dividends ~0 ~1 Change in Net Debt ~2 Optionality /flexibility ~3 Note: the bars are for illustration only, not
Slide 19: Conservative Macro Assumptions for 2017-21
CONSERVATIVE MACRO ASSUMPTIONS FOR 2017-21 KEY MACRO ASSUMPTIONS EBITDA SENSITIVITY TO KEY EXTERNAL DRIVERS Sensitivity1 Est. Clean CCS EBITDA % of Group impact (USD mn) EBITDA 2015 2016 5Y 2017- 2014 2015 YTD AVG 21E +/- 50 USD/Mcm ~30 1.4% Gas Price (NCG2) Brent crude 99 52 42 87 40-60 (USD/bbl) +
Slide 20: Resilient Integrated Business Model
RESILIENT INTEGRATED BUSINESS MODEL SOLID, CONSISTENT EBITDA GENERATION 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 21: High Quality, Low Cost Asset Base
HIGH QUALITY, LOW COST ASSET BASE VERY LOW BREAK-EVEN PRICES IN BOTH UPSTREAM AND DOWNSTREAM E&P UNIT OPEX1 (USD/BOE) MOL 2030 17 MOL WILL BUILD ON USD/bbl 12 EXISTING STRENGTHS 7 CONTINUED RELENTLESS FOCUS ON EFFICIENCY... 2 2010 2011 2012 2013 2014 2015 ...TO MAINTAIN Peer range MOL Group Average
Slide 22: Constant Drive for Efficiency
CONSTANT DRIVE FOR EFFICIENCY SUCCESSFUL EFFICIENCY PROGRAMS WITH MAJOR EBITDA CONTRIBUTION CLEAN CCS EBITDA (USD MN) ~500 1,500 ~ 1300-1400 ~500 N DSP 1,000 874 500 350 0 2011 2014 2017 NEW UPSTREAM PROGRAM (USD MN, MBOEPD) ~-15% ORGANIC CEE +5% OPEX CAPEX PRODUCTION -38% 886 711 500-550 81 77 79 2
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 1.9 1.6 1.2 1.7 1.7 0.7 0.9 0.7 Q1-Q3 2016 0.3 0.3 0.3 0.2 -0.3 -0.3 -0.1 -0.1 2012 2013 2014 2015 2016E 2017-21E Average Upstream Downstream Gas Midstream Corporate & Other (incl. in
Slide 24: Gradual EBITDA Transformation
GRADUAL EBITDA TRANSFORMATION TOWARDS „HIGHER-VALUE”, STABLE CONSUMERS 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% 350 300+ 300 20% 250 221 ~15% 200 151 9% 150 10% 7% 100 5
Slide 25: Strong Sustain Capex Discipline
STRONG „SUSTAIN” CAPEX DISCIPLINE 2016 CAPEX OF USD 1.1BN REFLECTS SMALL SPENDING BEYOND „SUSTAIN” CAPEX SUSTAIN CAPEX (USD BN) Organic US Organic DS Organic GM Organic C&O (incl. intersegment) 1.8 1.7 1.6 1.4 1.3 1.2 0.9 1.2 Up to 1.1 1.0 1.0-1.1 1.0 0.7 0.7 0.8 0.5 0.6 0.4 0.7 Q1-Q3 0.7 0.4 0.4 0.
Slide 26: Transformational Capex
TRANSFORMATIONAL CAPEX MOL 2030 STRATEGY IMPLEMENTATION TRANSFORMATIONAL CAPEX (USD BN) MOL 2030 REFINING/CHEMICALS TRANSFORMATIONAL tbd Consumers CAPEX: A TOTAL OF ~USD 4.5BN UNTIL 2030 Up to USD 1.9bn spending in petchem/chemicals in 2017-21 tbd E&P Steam cracker integration and debottlenecking an
Slide 27: Increasing Distribution to Shareholders
INCREASING DISTRIBUTION TO SHAREHOLDERS 2% SHARE CANCELLATION IMPROVED SHAREHOLDERS’ TOTAL RETURN IN 2016 DIVIDEND PAYMENTS (HUF BN) Special dividend +10% Regular dividend 13 MOL WAS ONE OF THE VERY FEW INTEGRATEDS WHO COULD INCREASE DPS IN 2016.... 47 50 55 ...AND CAN COMFORTABLY COVER 45 46 DIVIDE
Slide 28: 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 29: 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 1.66 1.72 TOLERANCE RANGE ON A FORWARD- 1.5 1.44 1.38 LOOKING BASIS UNDER „NORMAL” 1.31 1.07 CIRCUMSTANCES (COVENANT THRESHOLD 1.0 0.79 AT SIGNIFICANTLY
Slide 30: Simpler Shareholder Structure
SIMPLER SHAREHOLDER STRUCTURE1 HIGHER FREE FLOAT AND LIQUIDITY DESIRABLE IN THE MEDIUM TERM DANA GAS SOLD ITS STAKE IN 2015; CRESCENT SOLD FURTHER SHARES IN Q3 2016 (INCREASING FREE FLOAT) 6M SHARES FROM MAGNOLIA MIGRATED TO TREASURY SHARES IN MARCH 2016 2% SHARE CANCELLATION IN 2016 MOL Plc & MOL I
Slide 31: 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 Q1-Q3 2016* THE PRIORITY IS TO MAXIMISE THE VALUE Full consolidation of INA OF THE INA INVESTMENT: INA as Discontinued ops Keeping and operatin
Slide 32: Supporting Slides
TOMORROW ‘ SUPPORTING SLIDES
Slide 33: Sources and Applications of Cash
SOURCES AND APPLICATIONS OF CASH SOURCES AND APPLICATIONS OF CASH, 2010-16 (USD MN) 180 984 -549 284 830 666 521 407 579 197 196 590 310 205 270 200 11 421 2 970 456 420 302 400 2 739 132 2 524 2 477 164 2 308 110 2 183 2 200 1 588 1 689 1 236 1 211 1 258 1 034 1 100 2010 2011 2012 2013 2014 2015 20
Slide 34: Exploration and Production
EXPLORATION AND PRODUCTION
Slide 35: Top 15% in Sustainability
TOP 15% IN SUSTAINABILITY A COMMITMENT TO THE INTEGRATION OF ECONOMIC, ENVIRONMENTAL AND SOCIAL FACTORS INTO EVERYDAY OPERATIONS HEALTH & SAFETY WE OPERATE SAFELY OR WE DON’T OPERATE IMPLEMENTING ACTIONS AIMING AT ZERO INCIDENTS AND ZERO FATALITIES 1 ENVIRONMENT REDUCE THE NUMBER OF SPILLS (OVER 1 C
Slide 36: People Assets
MOL BELIEVES LONG TERM IN ITS E&P BUSINESS WHICH HAS TO BE VALUE GENERATING IN A LOW OIL PRICE ENVIRONMENT DELIVERY SELF-FUNDING CAPABILITIES AND BALANCED SUBSURFACE BUILD ON PORTFOLIO CORE EXPLORATION COUNTRIES EFFICIENCY PORTFOLIO OPERATIONS & COSTS PEOPLE ASSETS 36
Slide 37: New Upstream Program Brings Sustainable Cut in Unit Opex
NEW UPSTREAM PROGRAM BRINGS SUSTAINABLE CUT IN UNIT OPEX OPEX OVERVIEW (EXCL. DIRECT UNIT OPEX (USD / BOE) ROYALTY, DD&A (USDMN) Sustain savings, pursuing further -80-100 efficiencies 9 2013-14 average @ 8.0 8 USD/bbl 7 6 2015 2016 2017 2018-21 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q
Slide 38: Greater Scrutiny to Lower Unit F&D to USD 12-16/BOE
GREATER SCRUTINY TO LOWER UNIT F&D TO USD 12- 16/BOE UNIT FINDING & DEVELOPMENT FORWARD-LOOKING PROJECT BREAKEVEN PRICE (USD/BOE) COST (USD/BOE) 70 ~20 60 50 50 ~12-16 40 30 20 2011-151 2016 onwards1 10 5Y CAPEX 0 (USDMN) Exploration (in a low oil price environment): Focus on near-field exploration
Slide 39: Technical and Organizational Capabilities Need to Support Our Long Term Goals
TECHNICAL AND ORGANIZATIONAL CAPABILITIES NEED TO SUPPORT OUR LONG TERM GOALS New operating model New organizational rolled out to increase structure introduced accountability and to support operating improve delivery model Operating model Organization People Technical capabilities aligned with the
Slide 40: Upstream Production to Meet 2016 Guidance
UPSTREAM PRODUCTION TO MEET 2016 GUIDANCE WITH MATERIAL IMPROVEMENT IN LIQUID/GAS RATIO GROUP PRODUCTION (MBOEPD) KEY MESSAGES 44% 44% 45% 49% Production decline was successfully reversed at 2016 FY group level: Liquids guidance (%)1 high-end (@ In CEE legacy assets oil production grew by 110 mboepd
Slide 41: 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 ~110-115 Stable contribution from CEE ~105-110 ~110 ~110 New ~10-15 barrels Impact of successful production required 100 optimization and EOR
Slide 42: 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 43: Balancing Capital Allocation Between Development and Exploration
BALANCING CAPITAL ALLOCATION BETWEEN DEVELOPMENT AND EXPLORATION CAPEX SPENDING IN THE NEXT 5 YEARS (BN USD) 1, 2 KEY MESSAGES 2.0-2.2 Scrutiny on all CAPEX, yet maintaining safe and secure operations Exploration ~20% Focus on near-field exploration (CEE and Pakistan) In CEE all undeveloped 2P reser
Slide 44: The Minimum Aspiration Is to Sustain Current Production
THE MINIMUM ASPIRATION IS TO SUSTAIN CURRENT PRODUCTION BUT IT HAS TO MAKE ECONOMIC SENSE PRO-FORMA 2017-21 2P RESERVE EVOLUTION (MMBOE) KEY MESSAGES Sustain at least current level of production to 514 514 100% maintain the RRR integrated business Maintain model of MOL Group today’s 235-245 producti
Slide 45: Upstream Delivers FCF Mainly from CEE Operations
UPSTREAM DELIVERS FCF MAINLY FROM CEE OPERATIONS WITH MATERIAL FLEXIBILITY ON THE CAPEX SIDE EBITDA, CAPEX AND FCF EXPECTATIONS (2017-21, USD MN) KEY MESSAGES Brent @ 60 USD/bbl Next 5Y post-tax free +USD cash-flow shall cover ~750mn EBITDA Less than 20% of reserve replacement the total Upstream nec
Slide 46: Supporting Slides
TOMORROW ‘ SUPPORTING SLIDES
Slide 47: CEE: Positive Cash Flow, Rising On-shore Production
CEE: POSITIVE CASH FLOW, RISING ON-SHORE PRODUCTION ON THE BACK OF COMPREHENSIVE PRODUCTION OPTIMIZATION PROGRAM HUNGARY AND CROATIA (117+172 MMBOE)1 Hungary CRO onshore CRO offshore Employed a systematic approach to identify improvement 100 0% potential in both surface and subsurface 80 Production
Slide 48: Pakistan: 15+ Years of Successful Operation
PAKISTAN: 15+ YEARS OF SUCCESSFUL OPERATION HIGHLY SUCCESSFUL TAL DEVELOPMENT WITH EXPLORATION IN NEARBY BLOCKS HIGHLIGHTS AND KEY FOCUS AREAS (11 MMBOE)1 Operator of the TAL block 30 km from the border of Afghanistan, where production is to reach 80 mboepd on 100% basis in H2 2016 13 discoveries (9
Slide 49: CIS: Field Development of Low-Cost Baitugan
CIS: FIELD DEVELOPMENT OF LOW-COST BAITUGAN WITH STABLE CASH FLOW GENERATION EVEN AT CURRENT OIL PRICES RUSSIA (72 MMBOE)1 - Baitugan A shallow, compact field with developed infrastructure ensures low unit costs thus stable cash-flow generation Ongoing intensive development program to be pursued in
Slide 50: North Sea, UK: Visible Contribution in 2016
NORTH SEA, UK: VISIBLE CONTRIBUTION IN 2016 WITH AN ONGOING COMPREHENSIVE VALUE OPTIMIZATION PLAN NORTH SEA, UK (26 MMBOE)1 First oil achieved on Cladhan in Dec 2015 Scott: infill drilling program to continue Scolty & Crathes: both development wells completed, one on prognosis, the other exceeded ex
Slide 51: Norway: A New Exploration Hub
NORWAY: A NEW EXPLORATION HUB WITH 750 MMBOE UNRISKED PROSPECTIVE RESOURCES INCREASING FOOTHOLD IN THE NCS Entered Norway in 2015, acquiring 100% ownership in Ithaca Petroleum Norge – a pre-qualified operator 18 exploration blocks (6 operated, of which one received in October) in the Norwegian Conti
Slide 52: Downstream
DOWNSTREAM
Slide 53: Top 15% in Sustainability
TOP 15% IN SUSTAINABILITY A COMMITMENT TO THE INTEGRATION OF ECONOMIC, ENVIRONMENTAL AND SOCIAL FACTORS INTO EVERYDAY OPERATIONS HEALTH & SAFETY ZERO LOST-TIME INJURY FREQUENCY (LTIF) (OWN + ON-SITE CONTRACTORS) AND FATALITIES ENVIRONMENT REDUCE NOX & SOX EMISSIONS BY 15% CLIMATE CHANGE DECREASE DIR
Slide 54: Integrated Downstream Model in CEE
INTEGRATED DOWNSTREAM MODEL IN CEE 12 COUNTRIES SERVICE STATIONS ~2000 54
Slide 55: Downstream Changed Radically Since 2000
DOWNSTREAM CHANGED RADICALLY SINCE 2000 COUNTRIES EBITDA (USD bn) 5 12 0.4 1.6 PRODUCTION SITES REFINED PRODUCT SALES (MT) 1 6 7.6 18 SERVICE STATIONS FUEL SOLD IN RETAIL (BN L) 447 ~2000 1.3 5 2000 2015 55
Slide 56: Consistently Delivering Results
CONSISTENTLY DELIVERING RESULTS Clean CCS EBITDA (USD mn) ~570 1,650 ~500 ~1,400- ~300 1,500 ~210 70 ~600 160 136 874 500 350 2011 New DS Macro Offsetting 2014 NxDSP Macro 2015 Macro NxDSP 2017 Program items delivered effect effect N DSP Offset elements in NDSP Delivered as of H1 2016 56
Slide 57: Downstream World Is Under Pressure
DOWNSTREAM WORLD IS UNDER PRESSURE REGULATORY ENVIRONMENT AND CHANGING CUSTOMER BEHAVIOUR CAN SERIOUSLY AFFECT CEE REFINERS LOW-CARBON REVOLUTION DECLINING DEMAND AND BACKED BY PROGRESSIVE ENERGY POLICY1 INCREASING IMPORT IN CEE FOSSIL FUELS PUSHED ECO-FRIENDLINESS and OUT FROM SOME OPENNESS TOWARDS
Slide 58: Fossil Fuel Dominance to Diminish by 2030
FOSSIL FUEL DOMINANCE TO DIMINISH BY 2030 HOWEVER SUBSTANTIAL DEMAND IS EXPECTED TO REMAIN CHEMICALS FOSSIL FUEL DEMAND MAY DECLINE, AIR TRANSPORT BUT STILL MATERIAL OIL-BASED FUEL CONSUMPTION ALTERNATIVE FUELS LIKELY TO GAIN SIGNIFICANT MARKET SHARE TRUCKS PASSENGER CARS 58
Slide 59: The Future Will Be Built on Three Pillars
THE FUTURE WILL BE BUILT ON THREE PILLARS FOCUS OF NEXT SLIDES REFINING PETROCHEMICALS & CONSUMER & MARKETING CHEMICALS SERVICES “CUSTOMERS’ FIRST CHOICE IN REFINING, PETROCHEMICALS AND MOBILITY PRODUCTS AND SERVICES IN THE WIDER CEE REGION” CULTURAL CHANGE PEOPLE ASSET MARKET 59
Slide 60: R&M: From Asset to Market Driven Approach
R&M: FROM ASSET TO MARKET DRIVEN APPROACH FOLLOW THE PRODUCE PLAN, SELL WHAT WHAT IS CUSTOMER PRODUCED! WANTS TO BUY! INTEGRATED SUPPLY, PLANNING AND SALES TO QUICKLY ADAPT PRODUCTION TO MARKET NEEDS 60
Slide 61: A Customer Focused R&M
A CUSTOMER FOCUSED R&M SALES “AS LEADING CEE COMPANY, BE THE END CUSTOMERS’ FIRST CHOICE” PRODUCTION ST&O1 “INVESTMENTS TO INCREASE FLEXIBILITY, “FROM PLANNING TO STRUCTURAL RELIABILITY & NON-MOTOR FUELS YIELD” ADAPTABILITY” LOGISTICS “EFFICIENT AND INTEGRATED OPERATIONS TO SERVE CUSTOMERS AND DELIV
Slide 62: Sales & Supply Approach to Be Transformed
SALES & SUPPLY APPROACH TO BE TRANSFORMED INCREASE SUPPLY FLEXIBILITY TO WIDEN CEE END CUSTOMER REACH KEEP LEADING POSITION IN CORE COUNTRIES BE END CUSTOMERS’ FIRST CHOICE IN THE ENLARGED CEE REGION DEVELOP THE BEST LOYALTY SYSTEM IN THE REGION CEE MARKETS BECOME CUSTOMERS’ FIRST CHOICE BY PROVIDIN
Slide 63: Constantly Improve Efficiency and Availability
CONSTANTLY IMPROVE EFFICIENCY AND AVAILABILITY 96+% EXTEND TURNAROUND CYCLES ~96,0% SYSTEMATIC IMPROVEMENT OF MECHANICAL INTEGRITY 94.7% RELIABILITY AWARENESS MIND-SET AMONG WORKERS 2014 2018 2020 REFINING OPERATIONAL 1ST QUARTILE IN COST 50%+ OF NON MOTOR FUELS AVAILABILITY TO ~96% EFFICIENCY2 IN R
Slide 64: Production: 50% Non-Motor Fuel Products
PRODUCTION: 50% NON-MOTOR FUEL PRODUCTS 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 MTPA • TAKE ADVANTAGE OF GROWING PROFITABL
Slide 65: Increase Flexibility and Petchem Feedstock
INCREASE FLEXIBILITY AND PETCHEM FEEDSTOCK FURTHER INVESTMENTS ARE UNDER EVALUATION Jet ENHANCED Light fuel FCC INCREASE FLEXIBILITY distillates Black Base USD 50-80mn 50-70 KTPA OF PROPYLENE PRODUCTION products oils Duna refinery INCREASE optimization FEASIBILITY STUDY BY H2 2017 Aromatics Other ch
Slide 66: Enhance Crude Flexibility
ENHANCE CRUDE FLEXIBILITY PROCESSING THE MOST PROFITABLE CRUDE THAT MATCHES PRODUCT DEMAND CRUDE INTAKE1 CRUDE BASKET REB 97% 82% SEABORNE 3% 18% 2011 2015 2020 I NCREASE SEABORNE I NCREASE CRUDE BASKET CRUDE INTAKE TO 33% TO 50+ TYPES 66 (1) Group level, including INA
Slide 67: 2030 Strategy to Materially Add to DS Results
2030 STRATEGY TO MATERIALLY ADD TO DS RESULTS FURTHER EFFICIENCY PROGRAMS TO OFFSET MACRO-RELATED DECLINE Clean CCS EBITDA (USD mn) 1,650 ~500 ~1,400- NXDSP ~300 1,500 DELIVERED ~500 2015 Macro NxDSP 2017E Oil world Further Strategic Consumer 2030E decline efficiencies/ projects services flexibility
Slide 68: 2030 Strategy and 2030 Culture
2030 STRATEGY AND 2030 CULTURE VISION VALUES STRATEGY STANDARDS GOALS CULTURE 2030 STRATEGY ENTER TOMORROW COMPETENCY ACTIONS BEHAVIOUR PROCESSES RESULT 68
Slide 69: Refining to Support Petchem Expansion
REFINING TO SUPPORT PETCHEM EXPANSION …AND TO DELIVER SUPERIOR PERFORMANCE BY AN INTEGRATED VALUE CHAIN REFINING FLEXIBILITY AND EFFICIENCY IN FOCUS FOR REFINING MAXIMIZE PETCHEM FEEDSTOCK AND HIGH VALUE ADDED SPECIALITIES INCREASE SCALE AND VALUE VIA DIVERSIFICATION WITH FOCUS ON VALUE ADDED SEGMEN
Slide 70: Petrochemicals
PETROCHEMICALS
Slide 71: Petrochemicals in MOL's Integrated Downstream Value Chain
PETROCHEMICALS IN MOL’S INTEGRATED DOWNSTREAM VALUE CHAIN RELEVANT POLYOLEFIN CAPACITY IN MOL’S PETROCHEMICALS VALUE CHAIN EUROPE (2015 KTPA) Capacity LyondellBasell 420 kT HDPE Borealis SABIC Europe INEOS 285 kT LDPE Total Petrochemicals Repsol MOL Group 1150 ExxonMobil Refining Petchem 535 kT PP B
Slide 72: Petchem Optimization Constrained by R&M
PETCHEM OPTIMIZATION CONSTRAINED BY R&M IMPLYING FURTHER ~800KT FEEDSTOCK INTAKE POTENTIAL STEAM CRACKER FEED PRODUCTION MAXIMUM TOTAL STEAM CRACKER FEED FLEXIBILITY IN REFINING 1 INTAKE OF PETROCHEMICALS3 (mT) Σ = ~12.5 mT 2.6 2.6 2.4 0.2 Maximum steam Other2 cracker feed intake is 0.7 0.9 LPG ~800
Slide 73: Debottlenecking to Raise Naphtha Intake
DEBOTTLENECKING TO RAISE NAPHTHA INTAKE BY UP TO 800 KT AND TO YIELD MAINLY INCREMENTAL PROPYLENE OUTPUT CAPEX EARLIEST PROJECT TARGET (USD mn) START-UP • Energy efficiency and propylene yield MPC Steam improvement Cracker Revamp - ~300 2020-2021 • naphtha processing NEXT FIVE YEARS 200kt additional
Slide 74: Several Options to Expand Along the Value Chain
SEVERAL OPTIONS TO EXPAND ALONG THE VALUE CHAIN Polyethylenes (LDPE, HDPE) source: www.petrochemistry.eu 74
Slide 75: Propylene, Butadiene & Aromatics Attractive for European Naphtha-Based Producers
PROPYLENE, BUTADIENE & AROMATICS ATTRACTIVE FOR EUROPEAN NAPHTHA-BASED PRODUCERS EUROPE • Naphtha crackers are not competitive NORTH-AMERICA against ethane-based producers MIDDLE-EAST Shale gas developments • Crackers that rely on more expensive Economic slow-down in threatening the ethylene naphtha
Slide 76: Focus on Propylene in the Next Years
FOCUS ON PROPYLENE IN THE NEXT 5 YEARS Maintain EXPLOITING THE POTENTIAL OF NEW SLOVNAFT LDPE-4 LIFETIME EXTENSION OF MPC LDPE-2 AND HDPE-2 INVESTIGATE POTENTIAL DEFENSIVE STEPS ETHYLENE PROPYLENE YIELD IMPROVEMENT AND INVESTMENT INTO Expand and diversify ATTRACTIVE PROPYLENE DERIVATIVES ARE THE MAI
Slide 77: Polyols – An Attractive Propylene Derivative
POLYOLS – AN ATTRACTIVE PROPYLENE DERIVATIVE WITH ~800 USD/T ADDITIONAL MARGIN CAPTURE OPPORTUNITY FORWARD INTEGRATION OPTIONS ALONG THE STRATEGIC OBJECTIVES PROPYLENE VALUE CHAIN Other Propylene Global market size: 26 mt/y Further analysis is in progress Derivatives to recognize other attractive Co
Slide 78: Forward Integration Towards Polyol
FORWARD INTEGRATION TOWARDS POLYOL SHALL PUT MOL INTO A LEADING POSITION IN THE REGION CE POLYOL MARKET CHARACTERISTICS MOL’S COMPETITIVE ADVANTAGES CAGR ~3% Sole fully integrated supplier in CE Competitive technology Su p p ly First quartile position in EU cost benchmark Deman d ~80kt ~150 MOL plan
Slide 79: Additional Growth Directions Yet to Be Analysed and Decided
ADDITIONAL GROWTH DIRECTIONS YET TO BE ANALYSED AND DECIDED Enablers Selection criteria FORMULATION BASED BUSINESSES DIVERSIFICATION PILLARS TO IMPLEMENT 2030 PETCHEM TARGETS FEEDSTOCK TECHNOLOGY AROMATIC AVAILABILITY DERIVATIVES ACCESS Feedstock integration Flexi bility Strong regional position SYN
Slide 80: ~USD 1.9bn Earmarked for Petchem Till 2021
~USD 1.9BN EARMARKED FOR PETCHEM TILL 2021… EARMARKED CAPEX FOR PETROCHEMICAL GROWTH PROJECTS (2017-21, USD MN) ~1,800-2,000 900-1,000 1,500-1,700 Annual incremental EBITDA1 of USD 250-300mn from growth projects confirming targeted IRR range of 10-15% 600-700 Steam cracker Polyol Other growth Total
Slide 81: ...and USD 4.5bn+ in Total Until 2030
… AND USD 4.5BN+ IN TOTAL UNTIL 2030 DOUBLING PETCHEM FEEDSTOCK FROM REFINING PETROCHEMICALS CAPEX (GROWTH PROJECTS 2017-30, USD BN) 4.5+ ~1.5 • Growth CAPEX shall be covered from operating cash-flow ~1.5 • Projects to be committed if meeting 10-15% IRR target ~1.9 2017-21 2022-26 2027-30 Refining f
Slide 82: We Shall Grow Beyond Commodities by 2030
WE SHALL GROW BEYOND COMMODITIES BY 2030 … & OPTIMIZE THE PETCHEM BUSINESS LINE AS PART OF THE DS VALUE CHAIN REFINING FLEXIBILITY AND EFFICIENCY IN FOCUS FOR REFINING MAXIMIZE PETCHEM FEEDSTOCK & HIGH VALUE ADDED SPECIALTIES INCREASE SCALE AND VALUE VIA DIVERSIFICATION WITH FOCUS ON VALUE ADDED SEG
Slide 83: Supporting Slides
TOMORROW ‘ SUPPORTING SLIDES
Slide 84: Historical Polyol-Propylene Spread
HISTORICAL POLYOL-PROPYLENE SPREAD PROPYLENE VS. POLYOL SPREADS (USD/T) 1,200 1,000 800 600 400 200 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 PP-propylene polyol - propylene Real 2015 figures; PP: PP homopolymer Injection MOVING TOWARDS POLYOL is ~800 USD/T STEP FORWARD IN T
Slide 85: The Petrochemicals Value Chain
THE PETROCHEMICALS VALUE CHAIN source: www.petrochemistry.eu 85
Slide 86: Consumer Services
CONSUMER SERVICES
Slide 87: Vision: Retail Aims to Be a Solid Cash & Profit Contributor
VISION TO BE THE FIRST CHOICE FOR CUSTOMERS IN FUEL AND CONVENIENCE RETAILING… … BECOMING A POWER BRAND IN OUR CORE MARKETS RETAIL AIMS TO BE A SOLID CASH & PROFIT CONTRIBUTOR FOR THE COMPANY 87
Slide 88: On Track to Deliver What We Promised
ON TRACK TO DELIVER WHAT WE PROMISED WE SET A NEW DIRECTION IN 2014 > DIFFERENTIATION STRATEGY 2017 TARGETS RESULTS TODAY 1. GROW NUMBER OF ~2000 ~2000 STATIONS 2. GROW FUEL +25% +20% VOLUME 3. IMPLEMENT NEW FRESH CORNER 184 RETAIL CONCEPT ROLL-OUT FRESH CORNERS 4. HIGH DOUBLE- INCREASE DIGIT INCREA
Slide 89: New Concept
Vt 7 é = FUEL WITH SHOP | SHOP WITH FI vs a 1 a J ; ~ = NL EXPERIENCE > | 89
Slide 90: Understand Our Customers Better and More Completely
UNDERSTAND OUR CUSTOMERS BETTER AND MORE COMPLETELY DELIVER BEST-IN-CLASS PRODUCTS & SERVICES KEY FOCUS AREAS COFFEE SALES +92% SINCE LAUNCHING FRESH CORNER 90
Slide 91: Results of Our Actions
RESULTS OF OUR ACTIONS EBITDA (REPORTED USD MN) EBITDA (CONSTANT USD MN)* EBITDA PER STATION (USD TH) 147 157 350 360+ 291 300+ 123 265 119 204 221 204 87 148 145 2013 2014 2015 2016E 2017E 2013 2014 2015 2016E 2017E NON-FUEL SHARE OF MARGIN GROWTH (%) FUEL SALES (MN LITRES) 5,200 5,420 4,837 4,323
Slide 92: Differentiation Turns into Transformation Strategy
DIFFERENTIATION TURNS INTO TRANSFORMATION STRATEGY… 2030 ENTER TOMORROW CURRENT RETAIL TRADITIONAL RETAIL MOBILITY STRATEGY RETAIL PLUS DIFFERENTIATION 2016 TRANSFORMATION 92
Slide 93: Retail Plus
RETAIL PLUS NEW SERVICES TO MOVE BEYOND THE CURRENT OFFER HOST FRESH FIRST CLASS PROGRAM CORNER GASTRO PROVIDE BEST- CREATE A UNIQUE HOST CONCEPT OFFERS IN-CLASS COFFEE, CULTURE TO MAKE DEVELOP NEW PEOPLE SMILE ON THE FURTHER ROLL-OUT & FAST/STREET MOVE IMPROVEMENT FOOD FRESH & CONCEPT HEALTHY PRODU
Slide 94: Retail Plus
RETAIL PLUS BUILD ON CURRENT RETAIL NETWORK NEW SALES CHANNELS NEW SERVICES & PRODUCTS INNOVATION
Slide 95: Mobility: A New Era
MOBILITY: A NEW ERA NEW BUSINESS MODEL AND STRUCTURE TO BE ESTABLISHED TRANSPORT FUELS BEYOND REFINED PETROLEUM PRODUCTS: SELLING ALTERNATIVE FUELS ELECTRICITY, CNG, LNG, POSSIBLY HYDROGEN, AND ANY KILOMETERS, COMBINATION OF THESE NOT FUEL BIG DATA DATA MINING & ADVANCED ANALYTICS MOBILITY RIDE & CA
Slide 96: MOL Group Consumer Services 2030
MOL GROUP CONSUMER SERVICES 2030 OUR RESPONSE TO A CHANGING MARKET PLACE NEW TECHNOLOGY ELECTRIFICATION & DIGITALIZATION MOL GROUP OF TRANSPORT CONSUMER SERVICES 2030 SELF-DRIVING ALTERNATIVE CARS FUELS FLEXIBLE 1. 2. 3. ON-DEMAND SUSTAINABILITY CURRENT SERVICES PLUS MOBILITY RETAIL CAR & RIDE SHARI
Slide 97: 2021 Organic Growth Targets
2021 ORGANIC GROWTH TARGETS… … IN THE 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 3
Slide 98: Supporting Slides
TOMORROW ‘ SUPPORTING SLIDES
Slide 99: Retail Market Share (Gasoline & Diesel)
RETAIL MARKET SHARE (GASOLINE & DIESEL) HUNGARY SLOVAKIA 45 55 50 47.1% 45 40 38.4% 36.9% 40 35 36.2% 35 30 25 30 20 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 ROMANIA CZECH REPUBLIC 25 30 25 22.6% 18.9% 21.2% 20 20 14.2% 15 15 11.8% 10 10 5.8% 6.4% 5 5 0 2011 2012 2013 2014 2015 20
Slide 100: Improving Non-Fuel Contribution
IMPROVING NON-FUEL CONTRIBUTION INCREMENTAL NON FUEL MARGIN AS % OF TOTAL NON-FUEL MARGIN ABOVE NETWORK GROWTH MONTH 1 MONTH 2 MONTH 3 MONTH 4 MONTH 5 Site 1 31 39 42 35 44 Site 2 12 21 28 30 39 Site 3 24 31 34 16 31 Site 4 12 16 6 18 19 Site 5 5 13 14 14 19 Site 6 -7 2 11 7 17 Site 7 9 26 37 41 16
Slide 101: 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 102: More Info at www.molgroup.info
MORE INFO AT WWW.MOLGROUP.INFO CONTACT: PHONE: +36 1 464 1395 E-MAIL: INVESTORRELATIONS@MOL.HU