74 slides from Mol Hungarian Oil & Gas Plc Class A's investor presentation, August 2016
Slide 1: MOL Group Investor Presentation August 2016
MOL GROUP INVESTOR PRESENTATION AUGUST 2016
Slide 2: Agenda
AGENDA 1 Investment case 2 Q2 2016 recap 3 Downstream overview 4 Upstream overview 5 Financials and other 6 Appendix 2
Slide 3: Investment Case
INVESTMENT CASE
Slide 4: On Track to Deliver
ON TRACK TO DELIVER WITH THE ESSENTIAL FUNDAMENTAL BUILDING BLOCKS 2015 YTD 2016 Target GROUP CLEAN USD 2.5 BN USD 1.09 BN USD 2 BN+ CCS EBITDA RESILIENT INTEGRATED BUSINESS MODEL GROUP CAPEX Cut by USD 0.2bn to USD 1.3 BN USD 432 MN (ORGANIC) UP TO USD 1.1bn FCF FINANCIAL USD 1,040 MN USD 595 MN PO
Slide 5: 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% 800 700 85% 600 70% 500 55% 400 300 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 6: MOL Group in Brief
MOL GROUP IN BRIEF INTEGRATED OIL & GAS COMPANY Upstream Downstream Gas Midstream CEE International R&M Retail Petchem CAPITAL MARKETS OVERVIEW BUSINESS/ASSETS OVERVIEW Tickers: MOL HB; MOLB.BU Countries of operation: 33 Main listings: Budapest, Warsaw Number of employees: 25,000 Number of shares: 1
Slide 7: Mid-Term Focus/Strategy
MID-TERM FOCUS/STRATEGY SUSTAIN STRONG EBITDA, FCF GENERATION AND DIVIDENDS STRONG BALANCE SHEET AND AMPLE LIQUIDITY HIGH QUALITY, LOW-COST ASSET BASE RESILIENT INTEGRATED BUSINESS MODEL ALLOWS MOL TO ABSORB EXTERNAL SHOCKS, GENERATE SOLID CASH FLOWS THROUGH THE CYCLE CONFIDENT TO BE ABLE TO GENERAT
Slide 8: Strong Balance Sheet and Liquidity
STRONG BALANCE SHEET AND LIQUIDITY MAJORITY OF THE STRONG FCF IN 2009-2015 AVAILABLE LIQUIDITY (30.06.2016) WAS INVESTED INTO DELEVERAGING USD 3.9bn 4.0 ROBUST BALANCE SHEET TO WITHSTAND 0.7 EXTREME OIL MACRO SCENARIOS 3.0 0.1 SUBSTANTIAL (USD 3.9BN) LIQUIDITY, 2.0 ENHANCED BY THE EUR 750MN EUROBOND
Slide 9: At Least USD 2.0bn Group EBITDA in 2016...
AT LEAST USD 2.0BN GROUP EBITDA IN 2016... RESILIENT, INTEGRATED BUSINESS MODEL ABSORBS EXTERNAL SHOCKS CLEAN-CCS EBITDA (USD MN) 2,970 2,739 2,524 2,304 2,477 2,183 719 2,000+ 1,926 2,407 1,854 1,594 1,167 1,650 577 Q2 2016 682 874 350 669 697 Q1 2016 428 510 345 258 263 253 213 -214 -215 -111 -105
Slide 10: ...At Conservative Macro Assumptions
...AT CONSERVATIVE MACRO ASSUMPTIONS EBITDA SENSITIVITY TO KEY EXTERNAL DRIVERS Sensitivity1 Est. Clean CCS EBITDA % of Group impact (USD mn) EBITDA 2015 KEY MACRO ASSUMPTIONS H1 5Y 2014 2015 2016E +/- 50 USD/Mcm 2016 AVG Gas Price (NCG2) ~10 0.5% Brent crude 98.9 52.4 39.8 35-50 97 (USD/bbl) +/- 10
Slide 11: Organic Capex Further Cut to Up to USD 1.1bn
ORGANIC CAPEX FURTHER CUT TO „UP TO USD 1.1BN” CAPEX VS OPERATING CASH FLOW1 (USD MN) Operating Cash flow Organic US Organic GM 2,500 Inorganic Group Organic DS Organic C&O (incl. intersegment) 2,277 2,000 580 1,599 1,560 11 1,500 1,368 1,211 301 591 132 1,198 886 0 Up to 1,100 164 1,000 556 670 711
Slide 12: Sustainable FCF Generation
SUSTAINABLE FCF GENERATION SOURCES AND APPLICATIONS OF CASH (USD MN) 180 984 -549 284 830 666 521 407 579 197 196 310 205 270 550 200 11 421 2 970 456 420 302 2 739 132 2 524 350 2 477 164 2 308 2 183 2 000 1 588 1 689 1 236 1 211 1 258 1 034 1 100 2010 2011 2012 2013 2014 2015 2016E Clean CCS EBITD
Slide 13: Downstream: Benign Macro Remains for Now
DOWNSTREAM: BENIGN MACRO REMAINS FOR NOW BUT GRADUALLY NORMALIZING FROM THE 2015 PEAKS Petchem: integrated margins remained very supportive in 2016 ytd, holding upside risk for the year Refining: margin normalisation in progress in 2016; diesel cracks depressed ytd; gasoline counter-cyclically weak
Slide 14: Over USD 1bn Free Cash Flow Delivered in 2015
OVER USD 1BN FREE-CASH FLOW DELIVERED IN 2015 ADDED USD 210MN FROM INTERNAL IMPROVEMENT ALREADY NEXT DOWNSTREAM PROGRAM (NXDSP) – USD 500MN EBITDA UPLIFT DELIVERY ON TRACK OVER USD 1BN FCF FROM DS 1,650 (OVER 1.3BN EXCLUDING GROWTH CAPEX) 570 1,330 640 USD ~500MN EBITDA 160 ~140 874 210 IMPROVEMENT
Slide 15: E&P: Significantly Reducing Opex & Capex
E&P: SIGNIFICANTLY REDUCING OPEX & CAPEX TO ALIGN COST BASE WITH CURRENT OIL PRICES TOTAL OPEX EX-ROYALTY PRODUCTION (MBOEPD) CAPEX (USD mn) (USD mn) Rest CEE Inorganic ~-60% - 80-100 ~105-110 104 104 Organic 1,411 98 525 26 23 25 21 830 670 119 0 500-600 80 79 81 886 670 711 77 2013 2014 2015 2016
Slide 16: E&P: Aiming for Self-Funding at USD 35/bbl
E&P: AIMING FOR SELF-FUNDING @ 35 USD/BBL EBITDA, CAPEX & CASH FLOWS (USD MN) Opex cut vs. the 2015 base macro impact @ 50 USD/bbl oil price ~80-100 Potential shortfall caused by low oil price environment (35 – 50 USD bbl vs. ~50 USD/bbl in 2015) ~30-40% adjustment macro impact @ of organic CAPEX ~8
Slide 17: Increasing Distribution to Shareholders
INCREASING DISTRIBUTION TO SHAREHOLDERS 2% SHARE CANCELLATION IMPROVES SHAREHOLDERS’ TOTAL RETURN RISING TREND IN DIVIDEND STREAM AND DPS (+17% IN 2016) IMPROVING YIELDS - GROWING IMPORTANCE IN INVESTMENT STORY ONE OF THE VERY FEW INTEGRATEDS WHO CAN INCREASE DPS IN 2015.... ...AND CAN COMFORTABLY C
Slide 18: Simpler Shareholder Structure
SIMPLER SHAREHOLDER STRUCTURE AS OF 31 JULY 2016 DANA GAS SOLD ITS STAKE IN 2015 INCREASING FREE FLOAT THE 6M SHARES FROM MAGNOLIA MIGRATED TO TREASURY SHARES IN MARCH 2016 2016 AGM DECIDED ON 2% SHARE CANCELLATION MOL Investment Ltd. (treasury shares) Domestic private investors 5.3% 3.5% Domestic i
Slide 19: SD & HSE Awareness and Commitment
SD & HSE AWARENESS AND COMMITMENT NEW „SUSTAINABILITY PLAN 2020” GOVERNANCE SD PLAN 2020 Sustainable Development Committee of MAIN OBJECTIVE: achieve and maintain an Board of Directors since 2006; Group CEO internationally acknowledged leading position permanent member (top 15%) in sustainability pe
Slide 20: Q2 2016 Recap
Q2 2016 RECAP On track to deliver 2016 targets
Slide 21: Free Cash Flow Generation Continued in Q2
FREE CASH FLOW GENERATION CONTINUED IN Q2 FINANCIAL HIGHLIGHTS Strong Clean CCS EBITDA of HUF 160bn (USD 577mn) in Q2 2016, bringing H1 EBITDA to HUF 305bn (USD 1.09bn). MOL is confident it will comfortably meet its USD 2bn+ annual guidance Downstream EBITDA rose quarter-on-quarter on seasonality, b
Slide 22: Q2 2016: Seasonally Strong, Slightly Down YoY
Q2 2016: SEASONALLY STRONG, SLIGHTLY DOWN YOY RECORD-HIGH DOWNSTREAM EBITDA DELIVERY IN H1 SIMPLIFIED FCF* (HUF bn) SEGMENT CLEAN CCS EBITDA (HUF bn) +7% +69% -10% +11% 104 98 204 179 83 160 157 54 152 144 62 62 49 42 47 127 93 116 10 19 8 -12 -10 -13 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Slide 23: Clean CCS EBITDA Up 11% QoQ, Down 10% YoY
CLEAN CCS EBITDA UP 11% QOQ, DOWN 10% YOY RESILIENT DESPITE LOWER OIL PRICE, SOFTER REFINING GROUP EBITDA QoQ (HUF bn) COMMENTS Downstream 10.9 Strong volumes seasonality 1.9 helps QoQ (motor fuels +23%) 23.3 160.1 5.0 Retail EBITDA jumps QoQ 6.4 Upstream 144.4 Uptick in oil prices supports results
Slide 24: DS: Only Slightly Weaker Q2 CCS EBITDA YoY
DS: ONLY SLIGHTLY WEAKER Q2 16 CCS EBITDA YOY INTEGRATED DOWNSTREAM VALUE CHAIN SHOWS ITS STRENGTH CLEAN CCS EBITDA YoY (HUF bn) COMMENTS 138 127 Contracting motor fuel crack 116 21 Retail 14 9 7 spreads affected refining 32 23 Petchem 46 1 8 Refining and retail benefit from 5% CEE demand growth 46
Slide 25: E&P: Volumes, Cost Control Remain Crucial
E&P: VOLUMES, COST CONTROL REMAIN CRUCIAL TO MITIGATE/OFFSET NEGATIVE PRICE IMPACT US EBITDA QoQ (HUF bn) COMMENTS 3 49 1 Higher oil prices partly 1 1 offset by lower gas prices 6 40 (primarily in Croatia) 42 Lower exploration 8 expenses on reduced activty HUF mn Lower opex EBITDA Prices FX Volumes
Slide 26: Production Remained Strong in Q2
PRODUCTION REMAINED STRONG IN Q2 ON TRACK TO MEET UPPER END OF 105-110 MBOEPD GUIDANCE RANGE FOR FY 2016 QUARTERLY PRODUCTION BY COUNTRY COMMENTS Q2 2016 vs. Q1 2016 (-1%) +7% -1% 112.1 ~112.0 UK: -1.9 mboepd QoQ on 110.8 Cladhan and Scott decline 108.3 3.4 2.8 3.3 Other 103.3 103.6 3.3 4,1 100.5 3,
Slide 27: New Upstream Program on Track
NEW UPSTREAM PROGRAM ON TRACK SELF FUNDING AND VALUE CREATING BUSINESS AT 45-50 USD/BBL OIL PRICE 2016 YTD TARGET Material CEE onshore growth PRODUCTION on Production Optimization Mboepd 105-110 111.5 Higher UK volumes YoY production growth fully liquids-driven USD 80-100 mn opex UNIT OPEX reduction
Slide 28: Downstream Overview
DOWNSTREAM OVERVIEW
Slide 29: CEE Stronghold
CEE STRONGHOLD RECORD HIGH RESULTS DELIVERED IN 2015 DEEP DOWNSTREAM INTEGRATION ENSURES EXTENDED MARGIN CAPTURE IN LANDLOCKED MARKETS PETCHEM & RETAIL ACCOUNTED FOR ~50% OF HISTORIC HIGH USD 1.65BN CLEAN CCS DS EBITDA PEAK MARGINS MAY RETREAT FROM 2015 LEVELS… … TO BE PARTLY OFF-SET BY NXDSP MEASUR
Slide 30: Over USD 1bn Free Cash Flow Delivered in 2015
OVER USD 1BN FREE-CASH FLOW DELIVERED IN 2015 ADDED USD 210MN FROM INTERNAL IMPROVEMENT ALREADY NEXT DOWNSTREAM PROGRAM (NXDSP) – USD 500MN EBITDA UPLIFT DELIVERY ON TRACK OVER USD 1BN FCF FROM DS 1,650 (OVER 1.3BN EXCLUDING GROWTH CAPEX) 566 1,330 640 USD ~500MN EBITDA 160 ~140 874 210 IMPROVEMENT
Slide 31: Deep Downstream Integration
DEEP DOWNSTREAM INTEGRATION GUARANTEES EXTENDED MARGIN CAPTURE IN LANDLOCKED MARKETS DOWNSTREAM INTEGRATION (FUELS)(1) 23% CRUDE INTAKE: • Russian: 45% 75% • Seaborne: 18% 89% • Own Refining 79% production: 32% 7% captive Retail 39% market2 own 11% market Petrochem KEY STRENGTHS HIGHLIGHTS & FIGURES
Slide 32: DS Performance Well Above Peers in 2015
DS PERFORMANCE WELL ABOVE PEERS IN 2015 KEY REFINING ASSETS IN TOP QUARTILE REFINERY NELSON COMPLEXITY OF CLEAN CCS-BASED DS UNIT EBITDA2 THE PEER GROUP1 (USD/BBL) 16 19 Average 6.1 Mtpa Average 14 17 8.1 Mtpa MOL Group 11.5 15 12 4.5 Mtpa MOL excl. INA 10.6 13 10 9.1 2.2 Mtpa 11 NCI 8 9 6.1 6 7 4 5
Slide 33: Key Enablers of Delivering Downstream 2017
KEY ENABLERS OF DELIVERING DOWNSTREAM 2017 STRATEGIC GOALS Next Normalized Wholesale Retail DS CCS Downstream GOALS free cash fuel volume 2017 EBITDA Program fuel volume flow USD 150% 5.4 Bnlpa USD ~900 USD 500mn of own mn 1.3 - 1.4 bn CCS EBITDA production sales improvement PILLARS ASSETS MARKET PE
Slide 34: USD 350mn Asset & Efficiency Improvement
USD 350MN ASSET & EFFICIENCY IMPROVEMENT ADDITIONAL USD 150MN TARGETED FROM GROWTH PROJECTS EFFICIENCY IMPROVEMENT GROWTH PROJECTS’ CONTRIBUTION 2 1 (CUMULATIVE, MN USD) (MN USD) 20% Production 350 1. Availability & 80% USD ~60MN maintenance DELIVERED IN 2015 cost revenue 2. Production flexibility a
Slide 35: Production Roadmap
PRODUCTION ROADMAP 1 TARGETS UPTIME INCREASE, ENERGY EFFICIENCY & YIELD IMPROVEMENT A 97% 96.0% 96% HSE 95% 94.7% Operational Availability Optimize maintenance costs and increase operational 94% availability of MOL Group assets 2014 2015 2016 2017 2018 Maintenance Efficiency Move up one quartile ene
Slide 36: Growing Contribution Through Volume Increase
GROWING CONTRIBUTION THROUGH VOLUME INCREASE 1 B CENTRAL REGION: SALES AND MARGIN GROWTH 1 Sales volume growth 2 Margin revenue growth TRADING BELT: 150% SALES TO NEW MARKETS / NEW CUSTOMERS OWN PRODUCED FUELS 3 Stabilize market +50% 4 Extend market reach ADDITIONAL FOCUS PRODUCTS Focus on aromatics
Slide 37: Conceptual Change in Retail
CONCEPTUAL CHANGE IN RETAIL 1 TO IMPROVE FINANCIAL CONTRIBUTION C GROUP RETAIL NETWORK RETAIL TARGETS Growing number of retail stations (network optimization and M&A): 2014 1 750 312 # of fuel stations Slovnaft Czech Republic 2015 1 861 Slovnaft Slovakia 253 2017 > 2 000 Austria 537 Hungary 205 Sign
Slide 38: Boost Retail Cash Flow Contribution
BOOST RETAIL CASH FLOW CONTRIBUTION C 1 2 THROUGH NETWORK GROWTH AND NON-FUEL MARGIN GROWTH RETAIL FREE CASH FLOW GENERATION BY 2017 (MN USD)1 EBITDA / FS 119 123 (th USD) - ~20% local currency weakening vs USD… - … partly off-set by 4% ~30-50 growth of main retail ~80 markets ~40 20 300 250-270 223
Slide 39: Deeply Integrated Petrochemical Portfolio
DEEPLY INTEGRATED PETROCHEMICAL PORTFOLIO PETCHEM VALUE CHAIN PP CAPACITIES IN EUROPE (2015 KTPA) Capacity LyondellBasell 2390 420 kT HDPE Borealis 1885 Total Petrochemicals 1120 Naphtha SABIC Europe 950 Gasoil INEOS 755 LPG Braskem 545 285 kT LDPE MOL Group 535 SIBUR 500 Repsol 490 Basell Orlen 400
Slide 40: Extending the Petrochemicals Value Chain
EXTENDING THE PETROCHEMICALS VALUE CHAIN 2 TO INCREASE PROFITABILITY LDPE4 Butadiene Synthetic rubber New 220 ktpa capacity LDPE New 130 ktpa capacity Entering the synthetic unit replaces 3 old ones at Butadiene Extraction Unit rubber business with a Slovnaft (BDEU) at the site of MOL Japanese joint
Slide 41: ~15% Seaborne Crude Supply to Danube Refinery in 2015
~15% SEABORNE CRUDE SUPPLY TO DANUBE REFINERY IN 2015 FIRST CARGO PROCESSED IN BRATISLAVA IN 2016 ADRIATIC PIPELINE ACCESS ESTABLISHED Increased The reliable operation of pipeline capacity: Friendship 1 pipeline restored 6Mtpa = SN Potentially able to fully cover Danube and Bratislava refineries cru
Slide 42: Upstream Overview
UPSTREAM OVERVIEW
Slide 43: Aiming for Value Creation at <50/bbl
AIMING FOR VALUE CREATION AT <50/BBL AND SELF-FUNDING EVEN AT USD 35/BBL OIL PRICE REVISED PORTFOLIO TO DELIVER ~105-110 MBOEPD IN 2016-17 AND ~110-115 MBOEPD IN 2018 SUCCESSFULLY REVERSED PRODUCTION DECLINE VIA PRODUCTION INTENSIFICATION IN HIGH-MARGIN CEE DIRECT PRODUCTION COST EXPECTED TO BE AT U
Slide 44: Production Activities in 8 Countries
PRODUCTION ACTIVITIES IN 8 COUNTRIES RUSSIA Reserves: 72 MMboe CEE TOTAL Production: 7 mboepd Croatia, Hungary KAZAKHSTAN Reserves: 288 MMboe Reserves: 60 MMboe Production: 81 mboepd PAKISTAN o/w CEE offshore Reserves: 11 MMboe Reserves: 14 MMboe Production: 7 mboepd Production: 10 mboepd OTHER INTE
Slide 45: Revised Portfolio with ~105-110 mboepd in 2016-17
REVISED PORFOLIO WITH ~105-110 MBOEPD IN 2016-17 GROWING TO 110-115 MBOEPD IN 2018 MID-TERM PRODUCTION PROFILE STABLE CONTRIBUTION FROM HIGH- (MBOEPD) MARGIN CEE OPERATIONS 120 ~110-115 Positive cash generation even at ~105-110 ~105-110 104 USD 30/bbl oil price 100 98 Reversed production decline and
Slide 46: Significantly Reduced Opex and Capex
SIGNIFICANTLY REDUCED OPEX AND CAPEX TO ALIGN COST BASE WITH CURRENT OIL PRICES TOTAL OPEX EX-ROYALTY (USD mn) CAPEX (USD mn) inorganic - 80-100 1,410 organic 520 ~-15-30% 830 688 119 0 500-600 890 688 711 2015 2016 target 2013 2014 2015 2016 target Total cost reduction of USD 80-100 mn targeted ~15
Slide 47: Exploration Portfolio Expanded in Norway
EXPLORATION PORTFOLIO EXPANDED IN NORWAY EXPLORATION POTENTIAL (RRP1) MMBOE 130 160 95 1,220 835 CEE CIS WEU (North Sea) MEA Exploration portfolio and resource base were enlarged in 2015 by additions in Norway and Pakistan Still noteworthy potential in CEE nearfield opportunities 1 Recoverable resou
Slide 48: CEE: Positive Cash Flows, Rising On-shore Production
CEE: POSITIVE CASH FLOWS, RISING ON-SHORE PRODUCTION ON THE BACK OF COMPREHENSIVE PRODUCTION OPTIMIZATION PROGRAM HUNGARY AND CROATIA (117+172 MMBOE) Hungary CRO onshore CRO offshore Employed a systematic approach to identify improvement 100 0% potential in both surface and subsurface 80 Production
Slide 49: CEE Prod. Optimization Brings Further Success
CEE PROD. OPTIMIZATION BRINGS FURTHER SUCCESS CEE OIL PRODUCTION FURTHER UP BY 3% QOQ, +20% YOY History of onshore production Total onshore hydrocarbon Oil production (mbpd) since the acquisition of INA production (mboepd) Crude oil Total +22% +4% 60 +10% -1% 50 15 50 40 40 10 30 Hungary 30 20 20 5
Slide 50: CEE: Comprehensive Production Optimization
CEE: COMPREHENSIVE PRODUCTION OPTIMIZATION WELL PERFORMANCE IMPROVEMENT ALS optimisation GOALS Field development Fracking strategy on portfolio Maximize extraction of level - reserve transfer Well workovers profitable barrels Well intervention Stabilise production in Hungary RESERVOIR PERFORMANCE Re
Slide 51: 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) 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 52: KRI - Shaikan: World Class Oil Discovery
KRI - SHAIKAN: WORLD CLASS OIL DISCOVERY DEVELOPMENT DEPENDS ON REGULARITY AND AMOUNT OF PAYMENTS SHAIKAN HIGHLIGHTS (GROSS FIGURES) Ongoing commercial production from two facilities with a nameplate capacity of 40 mboepd Stabilized pipeline export of production from Fishkabour to Ceyhan Development
Slide 53: 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 - Baitugan (72 MMBOE) A shallow, compact field with developed infrastructure ensures low unit costs thus stable cash-flow generation Ongoing intensive development program on Baitugan block
Slide 54: 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) First oil achieved on Cladhan in Dec 2015 Drilling programme commenced successfully on Scott Scolty & Crathes on schedule, under budget with first oil anticipated in H1 2017 Ope
Slide 55: 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 Further extended presence through the farm-in to new licenses and the 2015 APA round award
Slide 56: Financial Overview
FINANCIAL OVERVIEW
Slide 57: Operating Cash Flows Cover Organic Capex
OPERATING CASH FLOWS COVER ORGANIC CAPEX CONSERVATIVE FINANCIAL POLICY AND STRATEGY CAPEX VS OPERATING CASH FLOW Operating Cash flow Organic US Organic GM Inorganic Group Organic DS Organic C&O (incl. intersegment) 2,500 2,277 2,000 580 1,599 1,560 11 1,500 1,368 1,211 301 591 132 1,198 886 0 1,100
Slide 58: Strong Balance Sheet and Liquidity
STRONG BALANCE SHEET AND LIQUIDITY DRAWN VERSUS UNDRAWN FACILITIES AVAILABLE LIQUIDITY (30.06.2016) (30.06.2016) USD 3.9bn Medium term loan Long term loan 4.0 3.5 0.7 Senior Unsecured Bonds Outstanding short term loans 3.0 0.1 7 000 6 000 650 2.5 5 000 2.0 3136 2165 3.1 4 000 1.5 mUSD 3 000 200 1.0
Slide 59: Sufficient Liquidity for Acquisitions
SUFFICIENT LIQUIDITY FOR ACQUISITIONS FROM DIVERSIFIED FUNDING SOURCES AVERAGE MATURITY OF 3.39 YEARS1 2,500 Reported cash & cash equivalents Medium term loan Undrawn facilities 2,000 Senior Unsecured Bonds Long term loan (multilaterals) 1,500 1,550 1,000 41 122 7 500 833 782 41 2 833 802 683 0 500
Slide 60: Credit Rating Profile
CREDIT RATING PROFILE EQUAL RATING TO SOVEREIGN AT FITCH, ONE NOTCH BELOW AT S&P HISTORICAL FOREIGN LONG TERM FFO/DEBT RATINGS 60% MOL, S&P Hungary, S&P MOL Fitch Hungary, Fitch modest A+ 50% A A- 40% intermediate BBB+ BBB 30% significant BBB- BB+ 20% aggressive BB 10% BB- 0% 2010 2011 2012 2013 201
Slide 61: Key Items of Taxation
KEY ITEMS OF TAXATION HUNGARY CIT TAX RATE IS 19% PROFIT BASED ’ROBIN HOOD’ WITH AN IMPLIED TAX RATE OF 22% Only energy related part of the profit affected (~70%), nameplate tax rate is 31% Only the Hungarian operation of certain companies are affected (i.e: MOL Plc., while gas transmission (FGSZ) o
Slide 62: Executive Incentive Schemes
EXECUTIVE INCENTIVE SCHEMES ON THE TOP LEVEL, MORE THAN TWO THIRD OF TOTAL REMUNERATION IS VARIABLE AND PERFORMANCE DRIVEN SHORT TERM INCENTIVES Maximum opportunity between 0.85x and 1x of base salary depending on executive Pay-out linked to yearly performance based on financial, operational and ind
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Slide 64: Appendix
APPENDIX
Slide 65: North Sea Region UK & Norway
NORTH SEA REGION UK & NORWAY North Sea (UK) – Entry in 2014 Norway – Entry in 2015 Operating Other Blocks W.I. shareholder partner(s) Dana (21%), Nexen Scott 22% Apache (10%), (42%) Maersk (5%) Nexen Endavour Rochelle 15% (41%) (44%) Enquest Broom 29% Ithaca (8%) (63%) Cladhan 33% TAQA (65%) Sterlin
Slide 66: MOL's Assets in Kurdistan Region of Iraq
MOL’S ASSETS IN KURDISTAN REGION OF IRAQ ENTRY IN 2007 AMONGST THE FIRST ONES Block W.I. Operator Shaikan 20% GKP (75%) Khor Mor 10% Pearl Chemchemal 10% Petroleum 66
Slide 67: Kazakhstan
KAZAKHSTAN MOL Group block [J mot Group block (exit planned) |_| = Rozhkovsky Production Licence Chinarevskoye field = 8 SDSL So Ee ES SRS ST z » MOLGROUP me") Ongoing 3D seismic processing — Condensal te Kazakhstan Risen oil pipeline Q1 2016 A Drilled exploration well —— Gas pipeline Al Discovery a
Slide 68: Russia
RUSSIA MATJUSHKINSKY BAITUGAN 68
Slide 69: Pakistan
PAKISTAN es Rie SSSELIMESA AS T SUT ro MOL Group exploration licence (bold if operated) Discovery well drilled in 2015 Exploration well drilled in 2015 Development well drilled in 2015 Pakistan aa 2016 | M01 Group existing dev. & prod. lease = MOL Group planned dev. & prod. lease [-_] MoL Group lice
Slide 70: MOL Group Specific Refinery Margins
MOL GROUP SPECIFIC REFINERY MARGINS 10 9.4 MOL Group refinery margin 8.8 8.6 9 8.2 8.2 Complex refinery margin (MOL+SN) 7.7 7.8 7.6 8 7.4 7.3 7.4 7.4 7.1 6.8 6.5 6.7 6.6 7 6.3 5.9 6.3 6.0 6.2 6.2 6.2 6.5 7.0 5.8 5.8 6 5.6 5.5 5.3 5.5 5.6 5.3 5.4 5.4 5.2 5.5 5.7 5.0 5.2 5.0 5.0 5 4.4 4.6 4.6 4.9 4.8
Slide 71: New Retail Concept
NEW RETAIL CONCEPT Check out MOL Group’s new retail concept: 71
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Slide 73: 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 74: More info at www.molgroup.info
MORE INFO AT WWW.MOLGROUP.INFO CONTACT: PHONE: +36 1 464 1395 E-MAIL: INVESTORRELATIONS@MOL.HU