Repsol Sa · BME:REP
Repsol Sa — Investor Presentation (September 2018)
47 slides from Repsol Sa's investor presentation, September 2018
Slide 1: Investors Update
Investors Update Delivering value growth through the cycle September 2018
Slide 2: Disclaimer
Disclaimer ALL RIGHTS ARE RESERVED © REPSOL, S.A. 2018 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 value growth through the cycle
2018-2020 Delivering value growth through the cycle 1. Company overview 2. Upstream update 3. Downstream update 4. Low carbon business 5. Financing 6. Conclusions and key targets 7. Historic data book
Slide 4: Company overview
1 Company overview
Slide 5: Repsol: A unique, Integrated Global Position
Repsol: A unique, Integrated Global Position Company overview Core businesses: Upstream and Downstream ~700 kboe/d production ~2.4 billion boe proved reserves1 1 Million bpd refining capacity ~2.6 Million tons of base chemicals2 capacity Upstream Downstream Both ~4,700 service stations 1. As of 31/1
Slide 6: A successfully-navigated journey delivering value and resilience
A successfully-navigated journey delivering value and resilience Company overview Successful performance in Upstream doubled in size Downstream lower part of the and cash positive as of leads the EU industry commodity cycle 2017 0.9x1 Net Debt / EBITDA Reset cost base Maintained rating & built Redep
Slide 7: Delivering value growth through the cycle
Delivering value growth through the cycle Company overview 1. Increasing shareholder returns 2. Growing our portfolio profitably • Dividend per share 8% p.a. growth with full buyback of shares • Growth across all value-creation metrics, at any oil price • Dividend target fully covered at $50/bbl • D
Slide 8: Increasing shareholder returns
Increasing shareholder returns Company overview Dividend per share based on disbursement year €/share CAGR +8% 0.80 0.80 0.95 1.00 0.90 Buybacks 0.27 0.19 2016 2017 2018 2019 2020 Historic cash dividend Historic scrip dividend Scrip dividend + buybacks 7 Note: Dividends in 2018-2020 include scrip op
Slide 9: Growing our portfolio profitability
Growing our portfolio profitability Company overview At $50/bbl flat Brent CFFO at $50/bbl CAGR: +12% 0.3 0.1 6.5 € Billion 0.2 0.3 0.6 0.4 4.6 UPSTREAM DOWNSTREAM +€1.0B +€0.8B Expand & 2017 CFFO1 New fficiency and E International Profitability Low carbon Corporation 2020 CFFO a
Slide 10: Strategic Plan fully funded at $50/bbl
Strategic Plan fully funded at $50/bbl Company overview Sources of cash Uses of cash Net Debt / EBITDA evolution € Billion 20.8 20.8 GNF Downstream Expand and Industry Avg. divestment 3.8 4.0 1.1x Low carbon business Capex 0.9x 4.2 Dividend & Buybacks >€4B 1.6 Financing costs1 CFFO @50 17.0 0.8x 0.7
Slide 11: Portfolio Capex: Downstream activated as a new growth engine
Portfolio Capex: Downstream activated as a new growth engine Company overview Core portfolio Capex in line with historical levels Balanced investments across businesses 2018-2020 Capex breakdown 2018-2020 Capex breakdown by business € Billion € Billion Downstream Expand Downstream and 4 and Low c
Slide 12: Our cash flow priority
Our cash flow priority Company overview 2018-2020 Priorities for cash At $50/bbl With a more favorable scenario Downstream Core Sustainable Expand Organic Dividends Additional Portfolio dividend and new project & Buybacks Low carbon acceleration Buybacks CAPEX growth business While maintaining finan
Slide 13: Key metrics to 2020 @ $50/Bbl Brent flat
Key metrics to 2020 @ $50/Bbl Brent flat Company overview Production CFFO EPS DPS 2.6% CAGR +€1.9B growth +€0.6/share growth 8% CAGR CAGR DPS paid kboe/d 2.6% € Billion EPS on year €/share €/share CAGR +8% 750 CAGR +12% CAGR +12% 695 0.8 1.0 6.5 2.0 4.6 1.4 0.2 2017 2020 20171 2020 20171 2020 2017 2
Slide 14: Upstream update
—_ REPSOL ve I Sah act pan i Upstream update
Slide 15: Core regions in the portfolio
Core regions in the portfolio Upstream North America Europe, Africa & Brasil Unconventional portfolio, operatorship and High margin barrels, key development valuable midstream positions projects from exploration succes 174 Kboe/d 139 Kboe/d 72% 12% 78% 2% / 40% Latin America SouthEast Asia Regional
Slide 16: Strategy summary
Strategy summary Upstream 1. Sustainable scale 2. Access-advantaged • 750 kboe/d with focused diversification • Strong relationships in core positions • Strong pipeline of development projects • Proven lower cost of supply through successful • Unconventionals complement exploration to exploration an
Slide 17: 2020 production growth
2020 production growth Upstream Pipeline of Repsol’s short-cycle projects… …delivering ~95 kboe/d new production LIBYA DUVERNAY YME • Early • Fast track • Production ramp-up Production from short-cycle projects production development MARCELLUS with FO in 2020 • Increase to 2 development rigs +95 kbo
Slide 18: 2020+ Repsol's projects with competitive returns
2020+ Repsol's projects with competitive returns Upstream Mid and long-term projects with attractive Repsol's new projects have competitive returns and phased developments full-cycle IRR and NPV breakeven Alaska (US) Duvernay (Canada) • Advanced appraisal stage • 3 areas in advanced IRR of new proje
Slide 19: Exploration strategy
Exploration strategy Upstream Technical Commercial Government related Key Exploration • Basin knowledge • Preferred JV partner, deal • Preferential government advantages • G&G Technical Specialties making and operator interaction (imaging, structure, carbonates) capabilities • Government trust North
Slide 20: 2018-2020 Capex breakdown: focus on core assets
2018-2020 Capex breakdown: focus on core assets Upstream ~60% of Capex allocated to growth Increased development Capex – still leaner and focused on core plays than peers – and focused exploration intensity 2018-2020 Exploration & Development Capex (%) Development Intensity ($/boe) +29% €8.0B €
Slide 21: New efficiency and digitalization program
New efficiency and digitalization program Upstream Successful cost efficiency program delivered New efficiency and digitalization program1 to $1.6B, above $1.3B target deliver $1.0B/year in FCF by 2020 $ Billion $ Billion/year 1.6 Illustrative examples 1.0 Illustrative examples Production increase
Slide 22: Key target metrics to 2020
Key target metrics to 2020 Upstream Production growth: 2.6% CAGR by 2020 Cash Flow growth: +50% 2017-2020 Production CFFO kboe/d +8% € Billion +1 750 3 695 2 2017 2020 2017 2020 All while keeping FCF breakeven below $50/bbl Data under $50/bbl Brent and HH at $3/Mbtu 21 Note1: 2017 CFFO norma
Slide 23: Downstream update
3 Downstream update
Slide 24: World-class position
World-class position Downstream Refining Chemicals • 1 Mbpd of refining capacity Commercial • High performing integrated and regional • Highly competitive EU 1Q in Solomon NCM1 • More than 4,700 service stations leader benchmark and fully invested for IMO2 • LPG leader in Spain • Capability for more
Slide 25: Strategy summary
Strategy summary Downstream Refining Chemicals Marketing LPG Lubricants Trading Sustain Grow Grow Sustain Grow Grow • Energy efficiency • Energy efficiency • TwP1 • Customer-centric • Maintain leadership • Maximize value • IMO readiness • Digitalization and • Digitalization and digitalization in Spa
Slide 26: Solid historical performance & positive outlook
Solid historical performance & positive outlook Downstream Leading European R&M integrated profit Repsol's assets are fully invested for IMO Repsol position of the total EU coking $/bbl Repsol Leader in EU coking 25% capacity (while only 6% of total distillation) >$2.5/bbl Repsol Repsol Middle Disti
Slide 27: Refining: top quartile position among European peers
Refining : top quartile position among European peers Downstream (1) 5 refineries optimized as a single system Top quartile position among European peers CORUÑA BILBAO Product Yield % FCC Equivalent 100% TARRAGONA Diesel/Gasoil 40-45% 1Q 2Q 3Q 4Q Gasoline 10-15% 80% Naphta 10-12% 60% Kerosene 4-7% C
Slide 28: Chemicals
Chemicals Downstream Iberian Peninsula petrochemical sites Dynasol Joint Venture Panjin, China Santander, Spain Alava, Spain Tarragona Houston, USA Altamira, Production capacity (Thousand tons) Mexico Madrid, Spain Base petrochemicals 2.603 Nanjing, China Puertollano Ethylene 1.214 Mexico City, Prop
Slide 29: Petrochemical growth in value niches
Petrochemical growth in value niches Downstream WORLD Chemical Key target products Rationale POSITION strategic goals • Strong global demand growth forecast (4-4.5% p.a.) Global scale in 1-3 PO-polyols • Established Sales & Marketing position #12 higher value products • Proprietary proven production
Slide 30: Asset-light internationalization focused on two key areas
Asset-light internationalization focused on two key areas Downstream Commercial Hinterland Commercial LatAm Global Trading Leverage refining logistics and Leverage Trading and Marketing Leverage Repsol Trading capabilities and Expansion trading & marketing capabilities to capabilities and knowledge
Slide 31: Key target metrics to 2020
Key target metrics to 2020 Downstream Cash Flow growth: +27% by 2020 ROACE: > 18% in 2018-2020 CFFO ROACE ROACE 22 18-20 € Billion +0.7 % 20 > 18% 3.2 2.5 2017 2020 2017 2020 Avg. Capital Employed 9.6 11.3 (€ Billion) Downstream to generate more than €1B FCF per year in 2018-2020 Note: Downstream me
Slide 32: Low carbon business
4 Low carbon business
Slide 33: Ambition to develop a new operated business
Ambition to develop a new operated business Low carbon business Repsol is swapping a €5-6B exposure to a medium … To an operated and synergistic position in low carbon businesses through GNF… carbon businesses Gas • Non-operated • Operated business with full synergies Natural • No synergies exploite
Slide 34: Roadmap by 2025
Roadmap by 2025 Low carbon business Wholesale Gas Retail G&P Low carbon generation Top Leverage our industrial self consumption as the Strong brand and ~10M clients base with Technical capabilities and experience in capability largest gas consumer in Spain direct contact managing large scale project
Slide 35: Viesgo: strengthening Repsol's position as a multi-energy supplier
Viesgo: strengthening Repsol’s position as a multi-energy supplier Low carbon business Transaction data Generation assets acquired Valued at €750 million 699 Hydro 2,350 MW installed capacity MW ~ 750,000 retail customers Combined 1,648 IRR > 10% cycle MW Advancements on Strategic Plan objectives Af
Slide 36: Key targets for Energy Transition and New Capabilities
Key targets for Energy Transition and New Capabilities Low carbon business €2.5B invested in Emissions reduction Leaner with digital savings of low carbon business -3% Kt/GJ CO2 €0.3B/year by 2020 Capital Employed Emissions intensity reduction Pre-tax FCF savings -3% € Billion % € Billion €1.0 ROE
Slide 37: Financing
5 Financing
Slide 38: Strong liquidity position
Strong liquidity position Financing 14 12 10.4 9.8 10 1.5 Term deposits w/ immed.availab. ** 7.9 8.0 8 0.3 Operating committed 7.3 Credit Lines 2.1 6.2 Structural committed Credit Lines 6 4.2 4 2.7 5.9 Cash & Equivalents 2 2.7 2.5 2.0 1.5 1.2 0.1 0.6 0 Liquidity as of June 2018 * 2019 2020 2021 2022
Slide 39: Conclusions & Key targets
6 Conclusions & Key targets
Slide 40: Conclusions Strategy Update 2018-2020
Conclusions Strategy Update 2018-2020 Conclusions & key targets Position of strength: Business momentum and financial robustness Superior shareholder return across the cycle: Dividend growth path and high TSR upside Strong value growth with a double engine model: Upstream and Downstream Upstream pat
Slide 41: 1H18 results and 2018 outlook
1H18 results and 2018 outlook Conclusions & key targets Main variables & company targets 70.0 70.6 3.0 2.9 ~7.0 6.9 1.2 1.21 2018 Budget 1H 18 2018 Budget 1H 18 2018 Budget 1H 18 2018 Budget 1H 18 Brent (USD/Bbl) Henry Hub (USD/Mbtu) Exchange rate (USD/€) Refining margin indicator ~715 724 Upstream
Slide 42: Key metrics to 2020 @ $50/Bbl Brent flat
Key metrics to 2020 @ $50/Bbl Brent flat Conclusions & key targets Production CFFO EPS DPS 2.6% CAGR +€1.9B growth +€0.6/share growth 8% CAGR CAGR DPS paid kboe/d 2.6% € Billion EPS on year €/share €/share CAGR +8% 750 CAGR +12% CAGR +12% 695 0.8 1.0 6.5 2.0 4.6 1.4 0.2 2017 2020 20171 2020 20171 20
Slide 43: Historic data book
7 Historic data book
Slide 44: Environment and Repsol group
Environment and Repsol group Historic data book MACRO ENVIRONMENT International References Unit 2015 2016 2017 Spreads vs. Brent ($/bbl) 2015 2016 2017 Brent ($/Bbl) 52.4 43.7 54.2 Maya - Brent (13.8) (11.6) (9.7) WTI ($/Bbl) 48.8 43.5 50.9 Ural - Brent (0.5) (1.2) (0.9) Henry Hub ($/MBtu) 2.7 2.5 3
Slide 45: Upstream
Upstream Historic data book Production Proven reserves Main figures (M€) 2015 2016 2017 Kboe/d Mboe Adjusted Net Income (925) 52 632 2015 2016 2017 2015 2016 2017 EBIT (1,107) (87) 1,009 Europe 29 52 51 51 62 59 Latin America 302 342 348 1.480 1.525 1.490 EBITDA 1,611 2,072 3,507 North America 139 1
Slide 46: Downstream
Downstream Historic data book Downstream Assets Refining capacity Refining (kbbl/d) Converson index (%) Businesss Unit 2015 2016 2017 Spain 896 63 Refining Bilbao (Petronor) 220 63 Distillation utilization % 86.7 86.0 93.2 Tarragona 186 44 Spain % 88.9 88.0 93.6 Coruña 120 66 Peru % 67.6 68.9 89.8 P
Slide 47: Investors Update
Investors Update Delivering value growth through the cycle September 2018