Mol Hungarian Oil & Gas Plc Class A · BET:MOL
Mol Hungarian Oil & Gas Plc Class A — MOL Group — Investor Presentation (February 2020)
84 slides from Mol Hungarian Oil & Gas Plc Class A's investor presentation, February 2020
Slide 1: MOL Group Investor Presentation February 2020
MOL GROUP INVESTOR PRESENTATION February 2020
Slide 2: 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 2019 (USD MN) UPSTREAM DOWNSTREAM CONSUMER GAS 1,052 866 471 187
Slide 3: 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 MONTENEGRO ANGOLA UPSTREAM DOWNSTREAM CONSUMER SERVICES 3
Slide 4: Agenda
AGENDA THE MOL GROUP EQUITY STORY SUPPORTING SLIDES Q4 2019 RECAP (LINK TO Q4 2019 RESULTS) DOWNSTREAM CONSUMER SERVICES EXPLORATION AND PRODUCTION FINANCIALS, GOVERNANCE AND OTHERS 4
Slide 5: The MOL Group Equity Story
THE MOL GROUP EQUITY STORY
Slide 6: Delivering Today, Ready to Deliver Tomorrow
DELIVERING TODAY, READY TO DELIVER 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 7: 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 8: 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 Increasing Fresh Corner penetration (45%+), rising non
Slide 9: 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 to 120-130 mboepd through 2023, including ACG Strong cost discipline with an E&P cost base fit for the bottom of the cycle Generating USD 700mn annual simplified FCF at USD
Slide 10: Gas Midstream: Stable, Non-Cyclical Cash Flow
GAS MIDSTREAM: STABLE, NON-CYCLICAL CASH FLOW DELIVERING TODAY Regulated domestic transmission business Profitable international transit business spanning 6 regional countries Recent years saw significant pipeline and trade infrastructure developments as well as efficiency improvements READY TO DELI
Slide 11: Robust Financial Framework Supports Strategic Transformation
ROBUST FINANCIAL FRAMEWORK SUPPORTS STRATEGIC TRANSFORMATION DELIVERING TODAY 2019: Strong delivery with EBITDA (USD 2.44bn) slightly ahead of the upgraded guidance Clean CCS EBITDA at USD 2.4-2.6bn in 2020, gradually rising to USD 2.8-3.0bn by 2023 – based on MOL mid-term base macro framework Exist
Slide 12: Sustainable: Transforming to Low Carbon World
SUSTAINABLE: TRANSFORMING TO 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 Sustainability Index Strong sustaina
Slide 13: MOL Group 2030: Delivering Today, Ready to Deliver Tomorrow
MOL GROUP 2030: DELIVERING TODAY, READY TO DELIVER TOMORROW TODAY TOMORROW Significantly reducing motor fuel yield FROM FUELS Becoming the leading CEE chemicals company TO CHEMICALS FROM FUEL Becoming a true consumer goods retailer TO CONSUMER RETAILING Leading the revolution of transport in CEE GOO
Slide 14: MOL 2030: Tracking Progress in 2017-19
MOL 2030: TRACKING PROGRESS IN 2017-19 – WE ARE DELIVERING INTERIM TARGETS 2017-2019 STATUS DS2022 EFFICIENCY DELIVERED USD 110MN IN 2018, DOWNSTREAM EFFICIENCY ADDED USD 40MN IN 2019 ENTER NEW CHEMICAL POLYOL PROJECT ON SCHEDULE, ON BUDGET, REACHED 50% COMPLETION, PRODUCT LINE(S) CONSTRUCTION START
Slide 15: Downstream
DOWNSTREAM 15
Slide 16: Integrated Downstream Model in CEE
INTEGRATED DOWNSTREAM MODEL IN CEE 11 COUNTRIES 5 19 SALES OF mtpa REFINED PRODUCTS AND 1.11mtpa PETROCHEMICALS EMPLOYEES 9,400 16
Slide 17: 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, 2019 (%) 16 6.1 Mtpa 8.9% 2.4% 9.4% 14 8.1 Mtpa 8.1% 12 11.5 4.5 Mtpa 10.0% LPG 10.6 10 9.1 Naphta 2.3% NCI 8 18.4% 19.0% Motor gasoline 3.5%4.2% 6 Middl
Slide 18: Significant Upside Potential from IMO 2020
SIGNIFICANT UPSIDE POTENTIAL FROM IMO 2020 LANDLOCKED REFINERIES: 45% MIDDLE DISTILLATES, NO MATERIAL FUEL OIL GROUP REFINERY YIELD, 2019 (%) PRODUCT FORWARDS (USD/BBL)1 Diesel HFO Brent-Ural 8.9% 2.4% 9.4% 8.1% 15.1 0.0 14.8 10.0% LPG 13.0 12.2 Naphta 11.0 2.3% 10.1 18.4% 19.0% Motor gasoline -0.4
Slide 19: Deep Downstream Integration
DEEP DOWNSTREAM INTEGRATION MARKET LEADING POSITION WITH STRONG CUSTOMER RELATIONS IN CEE MARKET SHARE (%)1 DOWNSTREAM INTEGRATION (FUELS)2 ~24% CRUDE INTAKE: • Russian: 66% • Seaborne: 26% ~85% ~39% • Own Refining production: 8% ~80% ~37% captive ~45% market <10% 10-20% 20-40% 40+% Retail own marke
Slide 20: Petrochemicals in MOL's Integrated Downstream Value Chain
PETROCHEMICALS IN MOL’S INTEGRATED DOWNSTREAM VALUE CHAIN MOL PETROCHEMICAL VALUE CHAIN Capacity HDPE 420 kt OLEFINS (ETHYLENE, PROPYLENE, LDPE 285 kt C4 STREAM) Refining Ethylene PP 535 kt Petchem 890 kt Internal feedstock1: Butadiene 130 kt SSBR 60 kt ~2.1 Mt in 2019 AROMATICS2 350 kt LDPE4: 220 k
Slide 21: 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 CO2 price 4.0-4.5 Wage pressure in CEE 6.9 ~1.5 R&M Potential upside 12+
Slide 22: Proven Efficiency Track Record
PROVEN EFFICIENCY TRACK RECORD GRADUALLY INCREASING FOCUS ON GROWTH AND TRANSFORMATION PROGRAM SCOPE FINANCIALS 3 200+ 0 0 0 500 150 years Actions Enabler1 Operational2 Large USD mn USD mn program actions actions projects3 EBITDA4 CAPEX 3 300+ 0 0 8 500 1,200 years Actions Enabler1 Operational2 Larg
Slide 23: Downstream to Continue to Deliver Net Efficiency Gain
DOWNSTREAM TO CONTINUE TO DELIVER NET EFFICIENCY GAIN AND VISIBLE CONTRIBUTION FROM THE FIRST ROUND OF STRATEGIC, TRANSFORMATIONAL PROJECTS BY 2023 CLEAN CCS EBITDA EVOLUTION (USD MN) Consumer Services Ref. margin: -2.0 USD/bbl Petchem margin: -150 EUR/t ~320 1,600+ 1,530 250 940 ~400 358 350 1,200+
Slide 24: Downstream Strategy Is Built on Four Pillars
DOWNSTREAM STRATEGY IS BUILT ON FOUR PILLARS FUEL TO PETCHEM VALUE CHAIN EXTENSION Program Eiger’s fuel Polyol conversion options Program Eiger’s Steam cracker diversification opportunities capacity expansions Compounding FUEL TO Drivers PETCHEM Results VALUE CHAIN Decreasing fuel EXTENSION demand R
Slide 25: Fuel to Petchem: Significant Shift in Yields by 2030
FUEL TO PETCHEM: SIGNIFICANT SHIFT IN YIELDS BY 2030 AND BEYOND PETCHEM FEEDSTOCK, OTHER HIGH-VALUE PRODUCTS TO INCREASE BY 1-2 MN TONS GROUP REFINERIES’ YIELD (Mt) NON-FUEL YIELD INCREASE ROADMAP 2015 2030 Short-to-mid term opportunities, shifting 500-700kt: Utilizing existing flexibility to produc
Slide 26: Value Chain Extension in Chemicals: Polyol
VALUE CHAIN EXTENSION IN CHEMICALS: POLYOL EARLY R&D, MARKETING EFFORTS TO SUPPORT GRADUAL PRODUCTION RAMP-UP PRODUCTION RAMP-UP OF THE POLYOL PLANT MARKET OPPORUNITIES OF POLYETHER POLYOL Propylene-glycol 100% Polyol capacity • CASE (1) VALUE ADDED • Rigid foam • Flexible foam 2021 2022 2023 Mid-cy
Slide 27: How to Pick the Right Product/Market?
HOW TO PICK THE RIGHT PRODUCT/MARKET? REPLICATING THE DOWNSTREAM SUCCESS STORY WITH STRONG CEE FOCUS INVESTMENT LOGIC VAST OPPORTUNITIES TO EXPAND ALONG THE PETCHEM VALUE CHAIN Crude oil (naphtha) based chemistry and feedstock integration Attractive end-user markets (Demand) Polyethylenes Limited re
Slide 28: Naphtha-Based Propylene Chemistry
NAPHTHA-BASED PROPYLENE CHEMISTRY ENTERING THE POLYURETHANES VALUE CHAIN Petchem feedstock Basic chemicals Intermediates / pre-polymers Polymers nitro- benzene MDI/PMDI benzene propylene Polyurethanes naphtha propylene polyols -oxide (PUR) nitro- toluene TDI toluene PUR FORMULATORS OLEFIN „SYSTEM HO
Slide 29: 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 & INTERIOR Improving life expectancy and population
Slide 30: 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 31: 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+ 1.200 1.000 ~100 800 600 400 200 0 2003 2004 2005 2006 2007
Slide 32: Sustainability: First Steps Towards Decarbonization
SUSTAINABILITY: FIRST STEPS TOWARDS DECARBONIZATION Strategic partnership for solvent-based recycling SOLVENT RECLYING Cooperation started in 2018 Acquisition of German recycled plastic compounder COMPOUNDING Closing expected by end of 2019 Proprietary technology to recycle used tires since 2013 Exp
Slide 33: Efficiency by 2022, Projects Ramp Up by 2023
EFFICIENCY BY 2022, PROJECTS RAMP UP BY 2023 STRATEGIC PROJECTS REQUIRE USD 3BN+ TOTAL CAPEX INCREMENTAL EBITDA POTENTIAL BY 2023 (USD MN) STRATEGIC CAPEX PROJECTION (2019-23, USD MN) 110 600 3,500 Polyol ~500 175 150 3,000 Other strategic ~500 2,500 1,240 600 100 220 2,000 750 55 1,500 50 1,000 780
Slide 34: Diversified Project Pipeline Supports Transformation by 2030
DIVERSIFIED PROJECT PIPELINE SUPPORTS TRANSFORMATION BY 2030 <20% PROBABILITY 100% CAPEX UNDER CONSIDERATION (USD BN) THINK ASSESS SELECT DEFINE IMPLEMENT Fuels to Petchem 5.5 Aromatic Unit Revamp Base Oil and Wax production strategy MPC SC2 Metathesis MOL Blending Intensification alternative crudes
Slide 35: Transformation Program of INA R&M
TRANSFORMATION PROGRAM OF INA R&M DELAYED COKER RECEIVED FID IN Q4 2019 COMPLEX UPGRADE OF THE RIJEKA RIJEKA REFINERY REFINERY Continuing the upgrade of the refinery USD via the installation of a Delayed Coker 100+ (DC) unit enabling full conversion and TRANSFORM SISAK INTO AN INDUSTRIAL Average yea
Slide 36: Crude Diversification Continues
CRUDE DIVERSIFICATION CONTINUES TARGETING 33% SEABORNE SUPPLY BY 2022 ADRIATIC PIPELINE ACCESS ESTABLISHED CRUDE DIVERSIFICATION1 Increased pipeline capacity: 6Mtpa = SN Ural 97% (Friendship pipeline) Seaborne Increased 3% 16% 33% pipeline capacity: 14Mtpa = MOL+SN 2011 2019 2022 ENHANCING FEEDSTOCK
Slide 37: Consumer Services
CONSUMER SERVICES 37
Slide 38: 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 COUNTRIES MARKE
Slide 39: Three Strategic Goals with Upgraded Targets
THREE STRATEGIC GOALS WITH UPGRADED TARGETS STRATEGIC GOALS STATUS STRATEGIC TARGETS Upgraded EBITDA target of USD 600mn+ by 2023 Becoming a true consumer EBITDA: USD 471mn 1. RETAIL goods retailer Upgraded non-fuel margin contribution target of Non-fuel margin: 29% of total 35% by 2023 margin in 20
Slide 40: Market-Driven Tailwind Likely to Slow Down
MARKET-DRIVEN TAILWIND LIKELY TO SLOW DOWN INCREASING MARKET SHARE MAY DRIVE FURTHER GROWTH IN FUEL MARGIN 4.5% TOTAL MOL GROUP FUEL VOLUME (BN LITERS) POSITIVE MID-TERM OUTLOOK +14% Volume 8 5.55 5.71 5.98 CEE markets may grow further albeit at a lower 6 5.24 2.05 pace than in the previous years 1.
Slide 41: Significant Upside Remains in Non-Fuel Margin
SIGNIFICANT UPSIDE REMAINS IN NON-FUEL MARGIN NON-FUEL MARGIN CONTRIBUTION TO RISE CLOSE TO 35% BY 2023 NON-FUEL SALES (MN USD) FRESH CORNER ROLLOUT (SITES) 1,400 +39% 1,400 1,200 1,200 1,000 1,000 800 800 600 1,098 1,238 600 1,250 890 990 877 400 400 687 200 200 447 248 0 0 23 2016 2017 2018 2019 2
Slide 42: Strengthening Control over the Supply Chain
STRENGTHENING CONTROL OVER THE SUPPLY CHAIN BUILDING UP OWN LOGISTICS AND FOCUSING ON ACTIVE SUPPLIER MANAGEMENT RESULTS OF LOGISTICS OPERATIONS SUPPLIER CONTRIBUTION OF NON-FUEL MARGIN (%) 94.6% 97.7% 20 Ambition: to close gap until 3.5 100 20% (FMCG retailer 3.0 74.5% benchmark) in next years 80 2
Slide 43: Coffee Is the Biggest Contributor to Non-Fuel Margin Growth
COFFEE IS THE BIGGEST CONTRIBUTOR TO NON-FUEL MARGIN GROWTH COFFEE HELPS TO BUILD THE FRESH CORNER BRAND AND EXPERIENCE IN DEVELOPING GASTRO OFFERS SHARE OF COFFEE OF TOTAL CONSUMER GOODS COFFEES SOLD/SITE IN TOP5 MARKETS MARGIN (%) ’000 cups/site/year 20 +18% 15 CZ 37 44 51 10 18.7 17.2 2017 2018 2
Slide 44: What Will Be the Next Coffee?
WHAT WILL BE THE NEXT COFFEE? COFFEE WITH ~30% SALES CAGR; FURTHER POTENTIAL IN GROCERY AND NON-COFFEE GASTRO 2019 NON-FUEL SALES AND MARGIN BREAKDOWN (%) 2017-2019 SALES CAGR OF GROCERY AND GASTRO (USD MN) Grocery 100% 100% +12% Grocery 16% Gastro coffee 31% 181 202 Gastro non-coffee 161 6% Nonfood
Slide 45: Gradual Build-up of Mobility Services Goes According to Plan
GRADUAL BUILD-UP OF MOBILITY SERVICES GOES ACCORDING TO PLAN Alternative fuels (EV charging) Fleet management Car sharing Public transport Future plans Strategic aims Build capabilities Connect MOL Develop Exploring are to develop to manage the brand and capabilities and additional only high future
Slide 46: Early Benefit from Advanced Analytics in Hungary
EARLY BENEFIT FROM ADVANCED ANALYTICS IN HUNGARY IMPLEMENTATION ON OTHER MARKETS IS IN PROGRESS Workforce Grocery Pricing Digital Signage Efficiency Optimization Measurement Optimizing human Improving grocery Margin increase through resource need at service margin through location- product display o
Slide 47: ~USD 1.5bn Simplified FCF in 2019-23
~USD 1.5BN SIMPLIFIED FCF IN 2019-23 UPGRADED EBITDA TARGETS TO YIELD HIGHER SIMPLIFIED FREE CASH FLOW IN 2019-2023 EBITDA IN STRATEGIC ACTIONS EBITDA AND FCF IN 2019-2023 (MN USD) DRIVERS 2014-2018 100 50 Increasing gross margin 150 contribution of consumer goods Product & shelf from 27% in 2018 to
Slide 48: Exploration and Production
EXPLORATION AND PRODUCTION
Slide 49: Production in 8 Countries
PRODUCTION IN 8 COUNTRIES RUSSIA Reserves: 26.2 MMboe CEE TOTAL Production: 4.9 mboepd Croatia, Hungary KAZAKHSTAN Reserves: 159.6 MMboe Reserves: 23.5 MMboe Production: 71.7 mboepd PAKISTAN o/w CEE offshore Reserves: 14.5 MMboe Reserves: 8.2 MMboe Production: 8.1 mboepd Production: 6.1 mboepd OTHER
Slide 50: Production to Increase to 120-130 mboepd Post-ACG
PRODUCTION TO INCREASE TO 120-130 MBOEPD POST-ACG AFTER SEVERAL YEARS OF STRONG INTERNAL DELIVERY PRODUCTION (MBOEPD) COMMENT International CEE 120-130 2019: production came in again slightly ahead of the 113 107 111 111 guidance level 2020-23: the ACG assets will add around 20 mboepd to production
Slide 51: Key Projects in 2020-23
KEY PROJECTS IN 2020-23 CEE INTERNATIONAL CAPEX: USD 1bn+ CAPEX: USD 700mn+ Number of wells to be drilled: 100+ Number of wells to be drilled: 100+ HUNGARY PAKISTAN: Maintain and extend production plateau, Unconventional and shallow gas exploration exploration drillings Production optimization UK: C
Slide 52: MOL to Acquire 9.57% Stake in Azerbaijan's Super-Giant Field
MOL TO ACQUIRE 9.57% STAKE IN AZERBAIJAN’S SUPER-GIANT FIELD A SIGNIFICANT STEP TOWARDS RESERVES REPLACEMENT AND TRANSFORMING TO INTERNATIONAL E&P DEAL SUMMARY USD 1.57bn transaction value includes Chevron’s 9.57% interest in ACG, 8.9% in the BTC pipeline and related midstream assets The transaction
Slide 53: Transaction Rationale: What Is the Deal Bringing for MOL?
TRANSACTION RATIONALE: WHAT IS THE DEAL BRINGING FOR MOL? THE RIGHT ASSET, THE RIGHT SIZE, THE RIGHT PARTNERS, THE RIGHT COUNTRY THE ASSET A major step towards the 2030 strategic targets of transforming MOL E&P into an international platform Further strengthen the resilient, integrated business mode
Slide 54: PSA Regime/Profile
PSA REGIME/PROFILE ACG PSA SCHEME HIGHLIGHTS Investing Government Original PSA signed in 1994 companies Signature Latest amendment in 2017 with the expiry date Bonus of 2049 ACG shareholders have access to own Gross Production entitlement production OPEX Limit of 100% of revenues per quarter Recover
Slide 55: Upgrading Our SFCF Guidance to USD 700mn
UPGRADING OUR SFCF GUIDANCE TO USD 700MN (FROM USD 500MN+) AT USD 60/BBL BRENT PRICE AND INCLUDING THE ANNUALIZED CONTRIBUTION OF THE ACQUISITION PRICE REALIZATION, EBITDA, SIMPLIFIED FCF1 (USD/BOE) 71 70 64 Brent price 60 52 54 Realized HC price 44 Unit EBITDA Unit Simplified FCF 24 20 15 18 15 7 1
Slide 56: The E&P Segment Remains a Core Cash Engine of MOL
THE E&P SEGMENT REMAINS A CORE CASH ENGINE OF MOL EBITDA, CAPEX AND FCF (USD BN)1 KEY MESSAGES Brent @ 70 Acquisitions2 2017-2019 post tax FCF (USD ~1.7 bn) USD/bbl +USD Current portfolio comfortably covers the ACG/BTC ~0.9 bn transaction and contributes to the Brent @ 60 EBITDA 6.2 2.8 dividend poo
Slide 57: Financials, Governance and Others
FINANCIALS, GOVERNANCE AND OTHERS 57
Slide 58: 2019: Meeting the Upgraded Guidance
2019: MEETING THE UPGRADED GUIDANCE WITH THE ESSENTIAL FUNDAMENTAL BUILDING BLOCKS IN PLACE 2019 2019 2020 TARGETS RESULTS TARGETS RESILIENT GROUP CLEAN UPGRADED TO INTEGRATED CCS EBITDA USD 2.44 BN ~USD 2.5 BN ~USD 2.4 BN BUSINESS MODEL GROUP CAPEX USD 1.9-2.1 BN USD 2.08 BN USD 1.9-2.1 BN (ORGANIC
Slide 59: 2019 Recap and 2020 Guidance
2019 RECAP AND 2020 GUIDANCE STRONGER OIL PRICE AND INTERNAL DELIVERY LED TO EBITDA OUTPERFORMANCE IN 2019 EBITDA GENERATION AND OUR GUIDANCE EVOLUTION IN 2019-2020 (USD MN)1 2019 EBITDA beat vs the original 2,687 -380 ~2,500 guidance was driven by higher oil prices ~2,300 and strong internal perfor
Slide 60: Normalized EBITDA to Approach USD 3bn by 2023
NORMALIZED EBITDA TO APPROACH USD 3BN BY 2023 ALL THREE SEGMENTS TO VISIBLY INCREASE THEIR CONTRIBUTION EBITDA GUIDANCE CLEAN CCS EBITDA (USD BN) COMMENTS FOR 2020-23E (USD BN) 2.8-3.0 2020: EBITDA guidance includes time- 2.7 2.4-2.6 proportional contribution from 2.5 2.4 2.4 acquisitions 2.2 1.3 20
Slide 61: New Assets to Add to Annual Sustain Capex from 2020
NEW ASSETS TO ADD TO ANNUAL „SUSTAIN” CAPEX FROM 2020 SUSTAIN CAPEX (USD BN) 1.7 1.3 1.3 1.2-1.3 0.9 1.1 0.4 1.0 1.0 0.3 0.7 0.3 0.4 0.6 0.4 0.7 0.4 0.4 0.4 0.2 0.2 0.1 0.1 0.1 0.1 2014 2015 2016 2017 2018 2019 2020-23E Average Organic US Organic DS Organic CS Organic GM Organic C&O (incl. intersegm
Slide 62: USD 3bn+ Downstream Strategic Capex in 2019-2023
USD 3BN+ DOWNSTREAM STRATEGIC CAPEX IN 2019-2023 INCLUDING SOME CAPEX RELATED TO THE 2ND INVESTMENT CYCLE OF MOL 2030 STRATEGIC/TRANSFORMATIONAL CAPEX (USD BN) 0.78 0.00 0.75 0.09 0.10 0.60 2nd Investment cycle 0.20 0.50 (?) 0.50 (?) INA Delayed Coker (DS2022) 0.25 Other strategic (DS2022) 0.69 0.35
Slide 63: Robust Simplified Free Cash Flow in 2015-2019
ROBUST SIMPLIFIED FREE CASH FLOW IN 2015-2019 TRANSFORMATIONAL CAPEX REDUCES FCF FROM 2019 SIMPLIFIED FCF (USD BN) 1.4 1.4 1.2 1.2 0.5 0.2 1.0 0.4 1.0 0.5 0.8 0.7 0.7 0.3 0.4 0.2 0.2 0.3 0.2 0.2 0.3 0.2 0.2 0.2 0.2 0.2 0.1 -0.5 2014 2015 2016 2017 2018 2019 Upstream Consumer Services C&O (incl. inte
Slide 64: Acquisitions to Further Boost FCF until 2023
ACQUISITIONS TO FURTHER BOOST FCF UNTIL 2023 FURTHER SOLIDIFYING THE FINANCIAL FRAMEWORK FINANCIAL FRAMEWORK: CASH FLOW GENERATION AMBITIONS, 2019-23 (USD BN)1 MOL 2030 13.0-14.0 -5.7-6.2 ACG will visibly add to the cash earnings (EBITDA) as well as to the post-tax FCF pool in the 2020-23 period… …w
Slide 65: Strong Cash Flows Allow for Increased Dividends
STRONG CASH FLOWS ALLOW FOR INCREASED DIVIDENDS STEADILY RISING BASE DPS, COMPLEMENTED BY SPECIAL DIVIDEND IN 2018 AND 2019 DIVIDEND PER SHARE1 (HUF) 3.6% 3.5% 3.0% 2.9% Dividend 2.5% 2.9% 3.3% 3.0% +1% +2% +1.5% +1.5% yield2 ? ? Special dividend Regular dividend BASE DPS: +10% 48 CAGR IN 2014-19 43
Slide 66: Sources and Applications of Cash
SOURCES AND APPLICATIONS OF CASH SOURCES AND APPLICATIONS OF CASH, 2012-19 (USD MN)1 180 -613 348 78 716 115 546 557 162 354 738 579 402 205 270 196 383 164 202 575 350 473 302 261 427 2 687 37 2 524 2 477 2 447 2 435 2 308 322 164 2 183 2 153 111 2 079 1 689 1 211 1 258 1 290 1 034 1 011 1 037 2012
Slide 67: Balance Sheet to Remain Robust Post-ACG Completion
BALANCE SHEET TO REMAIN ROBUST POST-ACG COMPLETION PRO-FORMA NET DEBT TO EBITDA (X) MOL 2030 2.5 ACG transaction will lift pro-forma leverage to around 1.4- 1.5x upon completion, still well within our comfort zone 2.0 (tolerance range of 1.0-2.0x on a forward-looking basis under „normal” circumstanc
Slide 68: Ample Financial Headroom
AMPLE FINANCIAL HEADROOM FROM DIVERSIFIED FUNDING SOURCES AVERAGE MATURITY OF 4.0 YEARS Reported cash & cash equivalents Medium term loan Undrawn facilities Senior Unsecured Bonds Long term loan (multilaterals) 2,500 2,000 373 USD mn 1,500 952 427 1,000 28 67 730 500 1,191 843 515 175 9 22 0 17 18 1
Slide 69: Full Investment Grade Rating Achieved
FULL INVESTMENT GRADE RATING ACHIEVED FOLLOWING S&P UPGRADE IN NOVEMBER 2017 HISTORICAL FOREIGN LONG TERM RATINGS FFO ADJUSTED NET LEVERAGE (3Y AVG. 2016-2018) PKN Orlen, BBB- 0.44 MOL, BBB- 0.89 Bashneft, BBB- 1.16 OMV, A- 1.38 Total, AA- 1.64 Tupras, BB- 2.14 Repsol, BBB 2.39 ENI, A- 2.42 0.0 0.5
Slide 70: 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 71: The History of INA & MOL, 2003-2019
THE HISTORY OF INA & MOL, 2003-2019 STORYLINE SHAREHOLDER AGREEMENTS UNDER THE FASHA, MOL DELEGATES FIVE OUT OF 1ST SHAREHOLDER RIGHTS AGREEMENT (SHA): MOL AND THE GOVT OF CROATIA SIGN THE GAS NINE MEMBERS TO THE SUPERVISORY BOARD MOL ALLOWED TO NOMINATE TWO MEMBERS 1ST AMENDMENT MASTER AGREEMENT (G
Slide 72: 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 73: Shareholder Structure
SHAREHOLDER STRUCTURE1 MUFG Treasury shares UniCredit Bank AG 7.0% 3.4% 1.3% ING Bank N.V. 4.9% Foreign investors (mainly institutional) 33.9% OTP Bank Plc. 4.9% Free-float OmanOil (Budapest) Limited 7.1% 46.2% 10.0% Maecenas Corvini Foundation2 7.1% Domestic institutional 1.2% 4.0% 15.2% Domestic p
Slide 74: Solid, Consistent EBITDA Generation
SOLID, CONSISTENT EBITDA GENERATION RESILIENT INTEGRATED BUSINESS MODEL IN A HIGHLY VOLATILE ENVIRONMENT EXTERNAL ENVIRONMENT* VS MOL CLEAN CCS EBITDA (USD MN) 100% 800 85% 600 70% 55% 400 40% 200 25% 10% 0 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4
Slide 75: 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 76: MOL First Ever Scenario Analysis
MOL FIRST EVER SCENARIO ANALYSIS IN COOPERATION WITH: ENTER TOMORROW PUTS MOL ON THE RIGHT TRACK SCENARIO ANALYSIS MOL 2030 SCOPE 1,2,3 GHG EMISSIONS (tonnes) MOL Group teamed up with sustainability advisory firm Quantis to conduct its first ever scenario analysis CPS NPS The scenario was completed
Slide 77: 2030 Strategy Reduces the Footprint
2030 STRATEGY REDUCES THE FOOTPRINT ADDITIONAL STEPS REQUIRED TO REACH SCENARIOS ANALYSIS OF THE RESULTS FURTHER STEPS Transformational strategy sets MOL’s total footprint on 2030 footprint vs 2023 peak: ~5.8 million tonnes reduction the right path Further steps required to achieve: Decrease in foot
Slide 78: Strong ESG Ratings
STRONG ESG RATINGS TOP POSITIONS ACROSS LEADING ESG1 RESEARCH, RATING AND INDEX HOUSES SUSTAINABILITY OF 2030 STRATEGY RELATIVE RATING2 VS INDUSTRY PEERS TOP 10% TOP 20% TOP 2%3 MOL selected as one of the 10 companies MOL SCORE 70 AA5 83 in Sustainalytics’ “10 ENVIRONMENTAL 75 7.6 84 for 2019” thema
Slide 79: MOL Group Refinery and Petchem Margins
MOL GROUP REFINERY AND PETCHEM MARGINS MOL GROUP REFINERY MARGIN1 (USD/bbl) PETROCHEMICALS MARGIN (EUR/t)2 900 9.0 8.0 800 7.0 700 6.0 600 5.0 500 4.0 400 3.0 2.0 300 1.0 200 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2014-2019 range 2019 2020 201
Slide 80: Resilient, Integrated Business Model Strengthened
RESILIENT, INTEGRATED BUSINESS MODEL STRENGHTENED NO CHANGE IN MOL’S MID-TERM BASE MACRO FRAMEWORK AND ASSUMPTIONS KEY MACRO ASSUMPTIONS EBITDA SENSITIVITY TO KEY EXTERNAL DRIVERS Sensitivity Est. Clean CCS EBITDA % of Group impact (USD mn) EBITDA 2019 8Y 2016 2017 2018 2019 2019-23E AVG +/- 50 USD/
Slide 81: Top Management Incentive Schemes
TOP MANAGEMENT INCENTIVE SCHEMES FOR EXECUTIVE MEMBERS**, AROUND 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
Slide 82: Gas Midstream: Non-Cyclical Cash Flow
GAS MIDSTREAM: NON-CYCLICAL CASH FLOW GAS MIDSTREAM EBITDA (HUF BN, USD MN) FACTS & FIGURES Domestic natural gas transmission system 70 300 256 250 252 operator 60 223 250 213 Regulated business (asset base and return) 50 194 189 187 200 with continuous regulatory scrutiny 40 150 Nearly 6,000km pipe
Slide 83: 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 84: Presentation Manual
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