Mol Hungarian Oil & Gas Plc Class A · BET:MOL
Mol Hungarian Oil & Gas Plc Class A — MOL Group — Investor Presentation (November 2018)
82 slides from Mol Hungarian Oil & Gas Plc Class A's investor presentation, November 2018
Slide 1: MOL Group Investor Presentation November 2018
MOL GROUP INVESTOR PRESENTATION November 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 Q3 2018 RECAP (LINK TO Q3 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: Becoming a True Consumer Goods Retailer
CONSUMER SERVICES: BECOMING A TRUE CONSUMER GOODS RETAILER AND LEADING THE REVOLUTION OF TRANSPORTATION IN CEE DELIVERING TODAY Leading CEE fuel retailer with ~1,900 sites, market leader in 4 countries Exploiting the fuel market potential in CEE TRANSFORMING FOR TOMORROW USD 500mn+ EBITDA in 2023 fr
Slide 10: E&P: Highly Value Accretive Barrels to Fund Inorganic Reserve Replacement
E&P: HIGHLY VALUE ACCRETIVE BARRELS TO FUND INORGANIC RESERVE REPLACEMENT DELIVERING TODAY Upgraded mid-term production profile; maintaining production at 100-110 mboepd through 2023 Strong cost discipline with an E&P cost base fit for the bottom of the cycle Existing 2P reserves generate substantia
Slide 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: another strong year in the making, on track to meet or beat upgraded full year gudidance Normalized Clean CCS EBITDA view raised to USD 2.2-2.4bn for 2019-21; strategic projects to boost EBITDA to USD 2.4-2.6bn in 20
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 Emerging European corporation member of the Dow Jones Sustaina
Slide 14: MOL 2030: Tracking Progress in 2017-18
MOL 2030: TRACKING PROGRESS IN 2017-18 INTERIM (2021) TARGETS 2017 STATUS 2018 STATUS NXDSP SLIGHTLY BEHIND TARGET; DOWNSTREAM EFFICIENCY DS2022 EFFICIENCY ON TRACK NEW TARGETS SET IN DS2022 ENTER NEW CHEMICAL ALL POLYOL TECHNOLOGY POLYOL FID IN SEP 2018 PRODUCT LINE(S) LICENSE AGREEMENTS SIGNED FY
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
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 14 9.6% 2.9% 8.1% 8.1 Mtpa 12 11.5 LPG 10.6 4.5 Mtpa 8.1% 10 9.1 2.2 Mtpa Naphta 2.3% NCI 8 19.0% Motor gasoline 6.1 4.2% 6 Middle d
Slide 19: Significant Upside Potential from IMO 2020
SIGNIFICANT UPSIDE POTENTIAL FROM IMO 2020 LANDLOCKED REFINERIES: 47% MIDDLE DISTILLATES, NO MATERIAL FUEL OIL GROUP REFINERY YIELD, 2017 (%) PRODUCT FORWARDS (USD/BBL)1 9.6% 2.9% Diesel HFO Brent-Ural 8.1% LPG 8.1% Naphta 16.6 16.7 16.6 Motor gasoline 14.5 14.6 2.3% 19.0% 12.9 4.2% Middle distillat
Slide 20: 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 21: 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 22: Improving Margin Capture by 2023
IMPROVING MARGIN CAPTURE BY 2023 DS 2022 PROGRAM TARGETS OFFSETTING POTENTIAL MACRO NORMALIZATION DS EBITDA PROFITABILITY EVOLUTION (2017-23, USD/BBL)1 • MOL group ref.: USD 4-5/bbl • Petchem: EUR 300-400/t 11.4 0.8 ~3.5 Higher energy 4.0-4.5 prices and CO2 Wage pressure in 6.9 the CEE ~1.5 R&M Pote
Slide 23: 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 24: DS 2022 Continues to Deliver Net Efficiency Gain
DS 2022 CONTINUES TO DELIVER NET EFFICIENCY GAIN AND VISIBLE CONTRIBUTION FROM THE FIRST ROUND OF STRATEGIC, TRANSFORMATIONAL PROJECTS BY 2023 CLEAN CCS EBITDA EVOLUTION (USD MN) R&M & Consumer ~180 1,536 1,536 petchem services (Retail) 440 358 358 ~250 1,200+ ~400 ~140 874 ~400 ~350 500 203 1,178 1
Slide 25: 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 26: DS Roadmap to Converge Towards 50% Non-Fuel Vision
DS ROADMAP TO CONVERGE TOWARDS 50% NON-FUEL VISION STRIKING THE RIGHT BALANCE BETWEEN INCREASED FLEXIBILITY AND FUEL DEMAND EVOLUTION GROUP REFINERIES’ YIELD (%) NON-FUEL YIELD INCREASE ROADMAP Defining economically viable alternatives: 2015 2030 Utilizing existing flexibility: Existing asset pool a
Slide 27: What Comes Beyond Polyol?
WHAT COMES BEYOND POLYOL? REPLICATING THE DOWNSTREAM SUCCESS STORY WITH STRONG CEE FOCUS Polyethylenes (LDPE, HDPE) Polyols Propylene glycol ethers 27 Source: www.petrochemistry.eu
Slide 28: Polyol: A New Market Entry
POLYOL: A NEW MARKET ENTRY MOVING TOWARDS HIGHER VALUE-ADDED (PETRO)CHEMICALS (PETRO)CHEMICAL TRANSFORMATIONAL JOURNEY CRITERIA FOR SEGMENT CHOICE Crude oil (naphtha) based chemistry and REFINING PETROCHEMICALS CHEMICALS feedstock integration COMMODITY SEMI-COMMODITY SPECIALITY NICHE Attractive end-
Slide 29: Naphtha-Based Propylene Chemistry
NAPHTHA-BASED PROPYLENE CHEMISTRY ENTERING THE POLYURETHANES VALUE CHAIN Petchem feedstock Basic chemicals Intermediates / pre-polymers Polymers nitro- benzene MDI/PMDI benzene propylene Polyurethanes naphtha propylene polyols -oxide (PUR) nitro- toluene TDI toluene PUR FORMULATORS OLEFIN „SYSTEM HO
Slide 30: Attractive End-User Markets
ATTRACTIVE END-USER MARKETS WIDESPREAD APPLICATION OF POLYOL AS PUR COMPONENT DRIVES DEMAND GLOBAL POLYURETHANE DEMAND BY INDUSTRY (% OF GROWTH DRIVERS GLOBAL DEMAND Improving access to „essentials of life”, increasing comfort ~30% needs FURNITURE & Improving life expectancy and population growth IN
Slide 31: Limited Regional Competition
LIMITED REGIONAL COMPETITION MOL TO BECOME THE SOLE INTEGRATED REGIONAL POLYOL PRODUCER Netherlands Legend: LOCATION Multiple units 984 ktpa Marl POLYOL UNIT LyondellBasell 80 ktpa Sasol 18 ktpa PG UNIT Multiple units 1013 ktpa Schwarzheide PO UNIT (TECHNOLOGY) (PO/SM, PO/TBA) Dormagen/Cologne Stade
Slide 32: Polyol: EPC Contract Signed with World-Class Partners
POLYOL: EPC CONTRACT SIGNED WITH WORLD-CLASS PARTNERS PROJECT TO ADD USD 170MN EBITDA UNDER MID-CYCLE CONDITIONS POLYOL INVESTMENT HIGHLIGHTS ECONOMIC AND COMMERCIAL HIGHLIGHTS Engineering, procurement, construction (EPC) contracts cover 85% of Total project costs estimated at USD 1.4bn technical sc
Slide 33: A High Margin Semi-Commodity Product
A HIGH MARGIN SEMI-COMMODITY PRODUCT WITH AN EXPECTED USD 170MN+ MID-CYCLE EBITDA CONTRIBUTION PROPYLENE VS. POLYOL SPREADS1 (EUR/T) POLYOL PLANT EBITDA & SENSITIVITY (USD MN) Relative deviation: PO – propylene: 18% PP – propylene: 36% 170+ 1.000 800 ~100 600 400 200 0 2003 2004 2005 2006 2007 2008
Slide 34: Translating MOL2030 Goals in Mid Term Targets
TRANSLATING MOL2030 GOALS IN MID TERM TARGETS DS2022 IS CURRENTLY ON TRACK FOR FINANCIALS TARGETS MOL GROUP 2030 TARGETS DS2022 TARGETS EMPLOYEE INCREASE DS 2022 EBITDA ENGAGEMENT CUSTOMER SAFETY UPLIFT BE THE FIRST CHOICE 500 BEST SATISFACTION TO 1ST IN THE MN USD REGION 95% QUARTILE EBITDA EFFICIE
Slide 35: USD 600mn Incremental EBITDA Potential by 2023
USD 600MN INCREMENTAL EBITDA POTENTIAL BY 2023 FROM TRANSFORMATIONAL PROJECTS AND EFFICIENCY (USD 2.3BN TOTAL CAPEX) INCREMENTAL EBITDA POTENTIAL BY 2023 (USD MN) CAPEX SPENDING REQUIRED BY 2022 (USD MN)1 Efficiency 210 Efficiency 2018 100 Other strategic Strategic 190 2019 850 Polyol Polyol 100 202
Slide 36: Strategic (Brownfield) Projects of DS 2022
STRATEGIC (BROWNFIELD) PROJECTS OF DS 2022 LARGE, TRANSFORMATIONAL INVESTMENTS ALONG THE 2030 STRATEGIC GOALS STRATEGIC PROJECT GOALS MAIN INVESTMENTS GROUPS 1 big ticket CAPEX project Delayed coker investment in Rijeka Annual capacity of 0.8mn t ~450 mn CAPEX Engineering complete, FID is contingent
Slide 37: Efficiency: USD 210mn EBITDA Uplift
EFFICIENCY: USD 210MN EBITDA UPLIFT MOSTLY COMING FROM IMPROVED ENERGY EFFICIENCY AND NON-FUEL FOCUS INCREMENTAL EBITDA CONTRIBUTION BY ACTION (USD MN) 22 Butadiene 20 sales Energy portfolio Key areas: efficiency 18 Strengthen market position 16 Group Fuel 100+ margin ACTIONS Energy efficiency 14 LU
Slide 38: Crude Diversification Continues
CRUDE DIVERSIFICATION CONTINUES TARGETING 33% SEABORNE SUPPLY BY 2021 ADRIATIC PIPELINE ACCESS ESTABLISHED CRUDE DIVERSIFICATION1 Increased pipeline capacity: 6Mtpa = SN 97% Ural Seaborne Increased 3% 20%+ 33% pipeline capacity: 14Mtpa = MOL+SN 2011 2018 2021 ENHANCING FEEDSTOCK FLEXIBILITY Majority
Slide 39: Consumer Services
CONSUMER SERVICES
Slide 40: 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 41: USD 500mn+ EBITDA in 2023 from a More Diverse Portfolio
USD 500MN+ EBITDA IN 2023 FROM A MORE DIVERSE PORTFOLIO TRANSFORMATION FROM A FUEL RETAILER TO A LEADING CEE CONSUMER SERVICES BRAND EBITDA (USD mn) New Consumer Goods businesses USD 500mn+ 5 Consumer Goods (CG) 4 Mobility services* 3 2 Mileage demand - Alternative fuels 1 Mileage demand - Fossil fu
Slide 42: 2030 Fossil Fuel Volume and Margin at ~2016 Levels
2030 FOSSIL FUEL VOLUME AND MARGIN AT ~2016 LEVELS MOL GROUP’S RETAIL FUEL SALES VOLUME PROJECTION MOL GROUP’S RETAIL FUEL MARGIN PROJECTION (bn liters) USD mn ~6bn +20-30%1 -20-30% ~USD 700mn 2016 2018 2020 2022 2024 2026 2028 2030 2016 2021-2023 avg. 2030 1. Including acquistions 42
Slide 43: New EV Charging Business
NEW EV CHARGING BUSINESS VISION: BECOME BEST CEE ALT. FUEL PROVIDER & EARN AT LEAST SAME MARGIN/KM AS ON FOSSIL FUELS EARNING AT LEAST SAME MARGIN EVCH INSTALLATION SCHEDULE (~ FIGURES) AS ON FOSSIL FUELS EV chargers (closing pcs) - Right axis Transactions (’000) - Left axis Strategic aim is to deve
Slide 44: Scaling Up Mobility Services
SCALING UP MOBILITY SERVICES USD 30MN INCREMENTAL MOBILITY EBITDA IN 2021 FROM 3 SOURCES Public transport Car sharing Fleet mgmt. and AV* Connect MOL brand and Build capabilities to manage Develop public transport shared cars in customers’ the future connected car capabilities with new minds (buildi
Slide 45: Boost Consumer Goods EBITDA with Proficient FMCG Capabilities
BOOST CONSUMER GOODS EBITDA WITH PROFICIENT FMCG CAPABILITIES Place- Promo- Store Product Pricing ment tion format Unique Offers Space Margin Brand Smart investment allocation maximization management Right range, in line Spaceman tool to One-to-one reward Promotional Increasing Fresh Corner with mar
Slide 46: ~USD 1.2bn Simplified FCF in 2019-23
~USD 1.2BN SIMPLIFIED FCF IN 2019-23 SUFFICIENT BOTH FOR INORGANIC INVESTMENTS AND FUNDING DIVIDENDS EBITDA STRATEGIC ACTIONS EBITDA AND FCF (2019-2023) DRIVERS (2014-2018) 100 50 Increasing gross margin contribution of 100 Product & shelf mgmt. consumer goods from 27% in 2018 to 30%+ One-to-one rew
Slide 47: Exploration and Production
EXPLORATION AND PRODUCTION
Slide 48: 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 49: Production in 8 Countries
PRODUCTION IN 8 COUNTRIES RUSSIA Reserves: 47.2 MMboe CEE TOTAL Production: 5.6 mboepd Croatia, Hungary KAZAKHSTAN Reserves: 237 MMboe Reserves: 23.5 MMboe Production: 71.4 mboepd PAKISTAN o/w CEE offshore Reserves: 9.4 MMboe Reserves: 9.4 MMboe Production: 8.3 mboepd Production: 6.0 mboepd OTHER IN
Slide 50: Maintain Production at 100-110 mboepd Through 2023
MAINTAIN PRODUCTION AT 100-110 MBOEPD THROUGH 2023 STABLE FOR LONGER - THE LONGEVITY OF OUR MATURE PORTFOLIO WILL EXCEED EXPECTATIONS PRODUCTION PROFILE (MBOEPD) Full commercial turnaround 120 112 Raise capacity to 55 mboepd by 2020, 107 ~110 ~105-110 104 ~100-105 SHAIKAN en route to up to 110 mboep
Slide 51: Strong Cost Discipline
STRONG COST DISCIPLINE REMAINS IN OUR DNA EVEN IN A HIGH OIL PRICE ENVIRONMENT COST CONTROL STABILIZATION SUSTAIN & CONTROL IMPLEMENTED DIRECT PRODUCTION COST (USD/BOE) KEY MESSAGES -15% E&P’s cost base became fit for a Keep flat 7 30 USD/bbl oil price environment Cost discipline remains in our 2015
Slide 52: At Least USD 500mn Simplified FCF at USD 60/bbl
AT LEAST USD 500MN SIMPLIFIED FCF @ USD 60/BBL PROVEN TRACK RECORD OF GENERATING CASH FLOW EVEN AT LOW OIL PRICES (2016) PRICE REALIZATION, EBITDA, SIMPLIFIED FCF1 (USD/BOE) 72 70 Brent price 60 52 54 44 Realized HC price Unit EBITDA Unit Simplified FCF 25 15 18 13 7 1 2015A 2016A 2017A 2018 9M 2019
Slide 53: ~350 MMboe Gap to Reach 500 MMboe Reserves by 2023
~350 MMBOE GAP TO REACH 500 MMBOE RESERVES BY 2023 BIGGEST ORGANIC REPLACEMENT POTENTIAL IS NORWAY, INORGANIC STEPS ALSO REQUIRED RESERVES GAP MOL Group 2P reserves (MMboe) 514 500 459 A Largest potential for organic ~350 reserve replacement is Norway 356 MMboe Smaller replacement in CEE B Inorganic
Slide 54: Norway Is the Biggest Organic Opportunity
NORWAY IS THE BIGGEST ORGANIC OPPORTUNITY A THIRD OF NORWAY RESOURCES TO BE DE-RISKED IN THE NEXT 12 MONTHS NET RISKED RESOURCE POTENTIAL OF NORWEGIAN WELLS KEY MESSAGES (MMBOE) Well-timed entry to Norway in 2015 450 Current MOL Group 2P Valuable exploration portfolio built around 400 reserves the M
Slide 55: Inorganic Deals Required for Reserves Target
INORGANIC DEALS REQUIRED FOR RESERVES TARGET MOL CONSTANTLY SCREENS THE MARKET FOR THE RIGHT OPPORTUNITIES OUR VALUE FRAMEWORK How can we generate value at USD 80/bbl? 2 Assets with restructuring potential RUSSIA Swaps in Norway post-discovery 4 Strong G2G relations What assets are we pursuing? 1 CO
Slide 56: Current Assets to Generate USD 2bn+ FCF in 2019-2023
CURRENT ASSETS TO GENERATE USD 2BN+ FCF IN 2019-2023 FUNDING RESERVE REPLACEMENT AND ADDING TO THE DIVIDEND POOL EBITDA, CAPEX AND FCF (USD BN)1 KEY MESSAGES Brent @ 70 USD/bbl +USD USD 1.2bn post-tax free cash flow to be ~0.9 bn achieved in 2017-2018, above guidance Brent @ 60 EBITDA USD/bbl Curren
Slide 57: Financials, Governance and Others
FINANCIALS, GOVERNANCE AND OTHERS
Slide 58: Another Strong Year in the Making
ANOTHER STRONG YEAR IN THE MAKING WITH THE ESSENTIAL FUNDAMENTAL BUILDING BLOCKS IN PLACE 2018 2017 Q1-Q3 2018 TARGETS RESILIENT GROUP CLEAN UPGRADED TO INTEGRATED CCS EBITDA USD 2.45 BN USD 2.0 BN ~USD 2.4 BN BUSINESS MODEL GROUP CAPEX USD 1.04 BN USD 713 MN USD 1.1-1.3 BN (ORGANIC) FINANCIAL DISCI
Slide 59: 2017-18 Recap: More EBITDA and FCF
2017-18 RECAP: MORE EBITDA AND FCF, NO TRANSFORMATIONAL CAPEX STRONG OIL MACRO, GOOD INTERNAL DELIVERY = EBITDA, FCF ABOVE NORMALIZED GUIDANCE EXPECTED CASH FLOW GENERATION IN 2017-181 (USD BN) 4.6-5.0 4.9 -2.1 Last two years turned out to be stronger In-line sustain capex, hardly than the original,
Slide 60: First Investment Cycle to Boost EBITDA from 2022-23
FIRST INVESTMENT CYCLE TO BOOST EBITDA FROM 2022-23 UPGRADED CASH FLOW PROFILE FOR 2019-21 ON STRONGER E&P AND CONSUMER SERVICES NEW NORMALIZED EBITDA GUIDANCE CLEAN CCS EBITDA (USD BN) FOR 2019-23E (USD BN) 2.4-2.6 2.3 2.5 2.4 ~2.4 2.2-2.4 2.2 ~2.2 2.0-2.2 0.7 0.9 0.7 1.6 Q3 1.2 0.7 1.4 1.2 1.2 Q2
Slide 61: Annual Sustain Capex to Stay Around USD 1bn
ANNUAL „SUSTAIN” CAPEX TO STAY AROUND USD 1BN STRONG DISCIPLINE MAINTAINED ACROSS THE SEGMENTS SUSTAIN CAPEX (USD BN) 1.7 1.3 1.2 0.9 1.1 1.0 1.0-1.1 1.0 0.7 0.7 0.3 0.4 0.4 0.7 0.5 0.3 0.4 Q1-Q3 0.7 0.4 0.1 0.1 0.1 0.1 0.1 2013 2014 2015 2016 2017 2018E 2019-23E Average Organic US Organic DS Organi
Slide 62: Simplified FCF Generation to Remain Robust
SIMPLIFIED FCF GENERATION TO REMAIN ROBUST ABOVE MID-CYCLE FCF IN THE LAST FEW YEARS SIMPLIFIED FCF (USD BN) 1.4-1.5 1.4 1.1 1.2 1.2 0.0 0.5 1.3 1.2-1.3 0.2 0.9 1.0 0.5 0.8 0.7 Q1-Q3 1.3 0.3 0.2 0.2 0.2 0.3 0.2 0.1 0.2 0.2 0.2 0.2 0.2 0.0 2013 2014 2015 2016 2017 2018E 2019-21E 2022-23E Average Aver
Slide 63: Sources and Applications of Cash
SOURCES AND APPLICATIONS OF CASH SOURCES AND APPLICATIONS OF CASH, 2012-17 (USD MN)1 180 -613 348 546 557 354 738 579 402 205 270 196 164 202 350 575 473 302 427 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 64: Robust Balance Sheet Can Fund E&P Reserves Replacement
ROBUST BALANCE SHEET CAN FUND E&P RESERVES REPLACEMENT ~USD 1.4bn post-dividend FCF in 2017-18… E&P needs to find 350mn boe new reserves to reach the 500mn boe 2P target by 2023 …leads to material deleveraging and building up further balance sheet flexibility Inorganic steps (M&A) are needed and may
Slide 65: Ample Financial Headroom
AMPLE FINANCIAL HEADROOM FROM DIVERSIFIED FUNDING SOURCES AVERAGE MATURITY OF 3.4 YEARS Reported cash & cash equivalents Senior Unsecured Bonds Medium term loan Long term loan (multilaterals) Undrawn facilities 2,000 1,500 USD mn 410 868 642 1,000 1,259 510 500 38 712 868 500 9 0 2 17 18 15 18 141 5
Slide 66: Full Investment Grade Rating Achieved
FULL INVESTMENT GRADE RATING ACHIEVED FOLLOWING S&P UPGRADE IN NOVEMBER 2017 HISTORICAL FOREIGN LONG TERM FFO ADJUSTED FFO ADJUSTED NET LEVERAGE NET LEVERAGE HISTORICAL FOREIGN LONG TERM RATINGS RATINGS (3Y AVG. 2015-2017) (3Y AVG. 2015-2017) MOL Fitch MOL Moody's MOL S&P PKN, BBB- 0.58 BBB+ Baa1 MO
Slide 67: Strong Cash Flows Allow for Increased Dividends
STRONG CASH FLOWS ALLOW FOR INCREASED DIVIDENDS 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 ? ? Special dividend BASE DPS: +10% Regular dividend ?? CAGR IN 2014-18 43 Base DPS @8-10% 130
Slide 68: FCF Covers DS Transformation, Dividends in 2019-23
FCF COVERS DS TRANSFORMATION, DIVIDENDS IN 2019-23 OIL PRICE, IMO HOLD UPSIDE TO CASH FLOWS IN THE NEXT 5 YEARS UPSIDE POTENTIAL TO NEXT 5-YEAR CASH FLOW GENERATION AMBITIONS, 2019-23 (USD BN)1 CASH FLOWS 11.5-12.5 -5.0-5.5 Oil price at USD IMO upside in 70/bbl in 2020-21 6.5-7.0 -3.0 2019-23 -1.5 2
Slide 69: MOL 2030 Works With or Without INA
MOL 2030 WORKS WITH OR WITHOUT INA FOCUS ON SECURING RETURN ON INVESTMENT REALITIES AND PRIORITIES STRONG REGIONAL ASSET BASE MOL 2030 strategy can be and will be executed with or Low-cost E&P in Croatia* (both onshore and without INA off-shore) Good geographical fit and untapped efficiency upside i
Slide 70: The History of INA & MOL, 2003-2018
THE HISTORY OF INA & MOL, 2003-2018 STORYLINE SHAREHOLDER AGREEMENTS UNDER THE FASHA, MOL DELEGATES FIVE 1ST SHAREHOLDER RIGHTS AGREEMENT (SHA): MOL AND THE GOVT OF CROATIA SIGN THE GAS OUT OF NINE MEMBERS TO THE MOL ALLOWED TO NOMINATE TWO MEMBERS 1ST AMENDMENT MASTER AGREEMENT (GMA) AND AN SUPERVI
Slide 71: MOL-Croatia Arbitration Status
MOL-CROATIA ARBITRATION STATUS UNCITRAL ARBITRATION ICSID ARBITRATION (CROATIA VS. MOL) (MOL VS. CROATIA) INITIATED GOVERNMENT OF CROATIA MOL BY WHEN 17 JANUARY 2014 26 NOVEMBER 2013 PCA (PERMANENT COURT OF ARBITRATION), GENEVA ICSID (INTERNATIONAL SETTLEMENT OF INVESTMENT FORUM UNDER UNCITRAL (UNIT
Slide 72: Shareholder Structure
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 9.8% MUFG 0.6% UniCredit Bank AG 3.0% ING Bank N.V. 4.1% Foreign
Slide 73: 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) 800 100% 700 85% 600 70% 500 400 55% 300 40% 200 25% 100 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
Slide 74: 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 75: Transforming MOL to Adapt to Circular Economy
TRANSFORMING MOL TO ADAPT TO CIRCULAR ECONOMY PLASTICS RECYCLING: A GREAT OPPORTUNITY TO COMPLEMENT THE PETCHEM PRODUCT MIX AVOIDED EMISSIONS CIRCULAR ECONOMY Legislation and changing end-user behavior provides an opportunity in recycling Avoided emissions: biofuels, semi- commodity petchem products
Slide 76: 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 77: Strong ESG Ratings
STRONG ESG RATINGS LEADING POSITIONS ACROSS LEADING ESG1 RESEARCH/RATING HOUSES RELATIVE RATING2 VS TOP 15% TOP 22% TOP 2%3 INDUSTRY PEERS MOL SCORE 64 AA5 83 674 ENVIRONMENTAL 72 6.4 84 72 (LEADER) SOCIAL 71 7.7 84 63 (LEADER) GOVERNANCE 546 4.8 80 63 (OUTPERFORMER) Continuous monitoring of and res
Slide 78: 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 2018 2013 2014 2015 2016 2017 2018 MOL Group refinery margin Complex refinery margin (MOL+SN) OLD petchem margin NEW MOL Gro
Slide 79: Resilient, Integrated Business Model, Less Exposed to Oil Macro
RESILIENT, INTEGRATED BUSINESS MODEL, LESS EXPOSED TO OIL MACRO SLIGHTLY ALTERED MACRO ASSUMPTIONS FOR 2019-23: HIGHER OIL PRICE, MORE CONSERVATIVE PETCHEM MARGIN KEY MACRO ASSUMPTIONS EBITDA SENSITIVITY TO KEY EXTERNAL DRIVERS Sensitivity Est. Clean CCS EBITDA % of Group impact (USD mn) EBITDA 2017
Slide 80: Top Management Incentive Schemes
TOP MANAGEMENT INCENTIVE SCHEMES FOR 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, operational and i
Slide 81: 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 transmission system 70 300 operator 256 250 252 213 223 60 194 250 Regulated business (asset base and return) 50 with continuous regulatory scrutiny 200 141 40 Nearly 6,000km pipe
Slide 82: 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