40 slides from Mol Hungarian Oil & Gas Plc Class A's earnings presentation, May 7, 2021
Slide 1: First Quarter 2021 Results
FIRST QUARTER 2021 RESULTS 7 MAY 2021
Slide 2: 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 3: Agenda
AGENDA 1 HIGHLIGHTS OF THE QUARTER 4 2 KEY GROUP QUARTERLY FINANCIALS 9 3 DOWNSTREAM QUARTERLY RESULTS 16 4 CONSUMER SERVICES QUARTERLY RESULTS 20 5 UPSTREAM QUARTERLY RESULTS 24 6 SUPPORTING SLIDES 30 3
Slide 4: Highlights of the Quarter
HIGHLIGHTS OF THE QUARTER
Slide 5: Strong Q1 despite third wave, restrictions
STRONG Q1 DESPITE THIRD WAVE, RESTRICTIONS 2020 Q1 2021 2021 RESULTS RESULTS GUIDANCE GROUP CLEAN USD 2.05 BN USD 664 MN ~USD 2.3 BN CCS EBITDA GROUP CAPEX USD 1.41 BN USD 281 MN USD 1.7-1.9 BN (ORGANIC) SIMPLIFIED FCF* USD 636 MN USD 383 MN USD 0.4-0.6 BN OIL & GAS 120 MBOEPD 117 MBOEPD ~110 MBOEPD
Slide 6: Rising commodity prices supports Q1 earnings
RISING COMMODITY PRICES SUPPORTS Q1 EARNINGS PETCHEM MARGINS SOAR TO AN ALL-TIME HIGH DURING MARCH 2021 EXTERNAL ENVIRONMENT* VS MOL CLEAN CCS EBITDA (USD MN) 100% 800 85% 600 70% 55% 400 40% 200 25% 10% 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q
Slide 7: Strong Q1 despite third wave restrictions, seasonality
STRONG Q1 DESPITE THIRD WAVE RESTRICTIONS, SEASONALITY FINANCIAL HIGHLIGHTS Clean CCS EBITDA came in at USD 664mn in Q1 2021, 7% higher YoY reflecting the stronger oil macro, record high petchem margin Group-level simplified FCF (Clean CCS EBITDA less organic capex) rose 17% YoY to USD 383mn on high
Slide 8: ESG: Improved climate and GHG disclosure
ESG: IMPROVED CLIMATE AND GHG DISCLOSURE SAFETY HIGHLIGHTS ESG TRANSPARENCY MOL Group published its 2020 Integrated Annual Report 1.5 1.7 Reporting consistent with leading ESG reporting frameworks, 1.3 1.4 1.1 1.1 standards, reporting based on materiality 2016 2017 2018 2019 2020 Q1 21 TRIR for own
Slide 9: Key Group Quarterly Financials
KEY GROUP QUARTERLY FINANCIALS
Slide 10: CCS EBITDA rose 7% YoY, improving macro
CCS EBITDA ROSE 7% YOY, IMPROVING MACRO STRONG UPSTREAM, CONSUMER SERVICES AND PETROCHEMICALS CONTRIBUTION SEGMENT CLEAN CCS EBITDA (USD mn) COMMENTS +7% +43% Upstream 664 Materially better oil and gas prices supported Q1 2021 earnings, while 622 610 ACG contribution also boosted volumes and support
Slide 11: Seasonally lower organic capex in Q1, flat YoY
SEASONALLY LOWER ORGANIC CAPEX IN Q1, FLAT YOY ALL STRATEGIC PROJECTS CONTINUED, BUT EXPERIENCED SOME UNAVOIDABLE SLOWDOWN TOTAL GROUP CAPEX (USD mn) TOTAL GROUP CAPEX (USD mn) 1,824 +1% 1,824 862 153 862 1,498 490 490 1 493 1 296 305 297 101 2 1 16 430 167 190 254 201 216 126 136 59 80 50 296 305 2
Slide 12: Simplified FCF increased YoY, in line with EBITDA growth
SIMPLIFIED FCF INCREASED YOY, IN LINE WITH EBITDA GROWTH ALL SEGMENTS GENERATED SIGNIFICANT POSITIVE SIMPLIFIED FCF SIMPLIFIED FCF* (USD mn) COMMENTS +17% n.a. Group-level simplified FCF (Clean CCS EBITDA less organic capex) 383 rose YoY to USD 383mn on higher EBITDA and flat capex Upstream 329 218
Slide 13: Net income, EPS jumped on higher EBITDA and inventory gains
NET INCOME, EPS JUMPED ON HIGHER EBITDA AND INVENTORY GAINS Q1 2021 EARNINGS (USD mn) – BELOW THE EBITDA LINE ITEMS 0 Cash tax: USD 47mn 665 109 Deferred tax: USD -8mn Consumer Services 115 405 Downstream 254 774 28 3 39 0 369 344 Upstream 307 305 11 Other Clean CCS CCS EBITDA excl. Special items DD
Slide 14: Operating cash flow hit by increase in NWC
OPERATING CASH FLOW HIT BY INCREASE IN NWC NET WORKING CAPITAL LARGE INCREASE IN Q1 OPERATING CASH FLOW IN Q1 2021 (USD mn) 804 106 51 405 670 344 281 134 Profit Before Tax DD&A Income tax paid Other Operating CF before WC Change in WC Operating CF Organic CAPEX COMMENTS Operating Cash Flow before W
Slide 15: Net debt to EBITDA decreased slightly in Q1
NET DEBT TO EBITDA DECREASED SLIGHTLY IN Q1 NET DEBT TO EBITDA (x) GEARING (%) 2.0 30 28 28 27 25 25 1.61 25 1.44 1.48 1.5 1.38 21 1.31 20 20 19 17 16 0.97 1.0 15 0.79 0.82 12 0.74 0.65 10 0.5 0.41 5 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1 2021 2011 2012 2013 2014 2015 2016 2017 2018
Slide 16: Downstream Q1 2021 Results
DOWNSTREAM Q1 2021 RESULTS
Slide 17: Lower refinery volumes weigh on Downstream EBITDA YoY
LOWER REFINERY VOLUMES WEIGH ON DOWNSTREAM EBITDA YOY STRONG PETCHEM CONTRIBUTION QUARTERLY CLEAN CCS EBITDA (USD mn) TOTAL PRODUCT SALES (kt) Petchem R&M Total petrochemicals products 3rd party sales Own production -14% +91% 295 254 -8% -15% 51 5,103 4,914 4,445 4,518 202 4,178 191 387 3,862 362 17
Slide 18: Record high petchem margin
RECORD HIGH PETCHEM MARGIN REFINERY MARGINS DOWN YOY, YET RECOVERING FROM MID-2020 LOWS REFINING MARGIN1 (USD/bbl) COMMENTS Refining margins were higher throughout Q1 due to better Ural pricing and 8.0 -61% 8 gasoline crack spread 7.0 7.0 6.9 6.5 6.7 6.7 7 6.4 6.3 6.5 7.3 6.2 5.8 5.8 The integrated
Slide 19: R&M EBITDA under pressure and petchem rises
R&M EBITDA UNDER PRESSURE AND PETCHEM RISES RECORD HIGH PETCHEM MARGINS COMPENSATED LOWER REFINERY VOLUMES, MARGINS DOWNSTREAM CLEAN CCS EBITDA YoY, Q1 2021 VS. Q1 2020 (USD mn) COMMENTS 363 R&M price and margin impact was negative YoY driven by USD 3.8/bbl drop in the headline 295 109 54 refinery m
Slide 20: Consumer Services Q1 2021 Results
CONSUMER SERVICES Q1 2021 RESULTS
Slide 21: Highest ever Q1 EBITDA despite third wave, restrictions
HIGHEST EVER Q1 EBITDA DESPITE THIRD WAVE, RESTRICTIONS HIGHER MARGINS, STRONG COST CONTROL QUARTERLY EBITDA (USD mn) EBITDA YoY, Q1 2021 VS. Q1 2020 (USD mn) +30% +23% 115 109 7 5 5 11 88 183 128 111 115 104 88 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 EBITDA Q1 2020 Fuel volume Non-fuel marg
Slide 22: Sales volumes impacted by third wave, travel restrictions
SALES VOLUMES IMPACTED BY THIRD WAVE, TRAVEL RESTRICTIONS SURGING PREMIUM FUEL SALES AND PRICE OPTIMIZATION CONTINUE TO SUPPORT FUEL MARGINS TOTAL VOLUMES SOLD (mn litres) FUEL THROUGHPUT/SITE (mn litres) -6% 0.71 0.70 0.68 0.65 0.65 1 589 1 482 4Y CAGR: 1 300 1 330 +0.3% 1 182 1 218 Q4 2019 Q1 2020
Slide 23: Higher non-fuel margin despite restrictions
HIGHER NON-FUEL MARGIN DESPITE RESTRICTIONS YOY NON-FUEL MARGIN RISE VS A “NORMAL” NOT FULLY COVID IMPACTED Q1 2020 NON-FUEL MARGIN (USD MN) NON-FUEL MARGIN / SITE (’000 USD) +15% 34.9 30.6 30.6 28.4 4 YEAR CAGR: +16.3% 19.1 79.4 68.7 67.5 65.1 60.9 56.6 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 20
Slide 24: Upstream Q1 2021 Results
UPSTREAM Q1 2021 RESULTS
Slide 25: EBITDA jumps in Q1 on rebounding oil and gas prices
EBITDA JUMPS IN Q1 ON REBOUNDING OIL AND GAS PRICES QUARTERLY EBITDA (ex-spec) (USD mn) REALIZED HYDROCARBON PRICES +66% +70% 68.8 70 67.8 65 64.6 63.2 61.9 63.3 61.1 60 64.8 57.6 55 52.1 60.2 58.8 58.4 50.3 307 47.5 48.2 47.4 264 50 45.2 185 212 43.4 43.0 44.2 181 45 49.6 112 42.8 40 36.2 40.8 37.9
Slide 26: Unit free cash flow soars above USD 20/boe
UNIT FREE CASH FLOW SOARS ABOVE USD 20/BOE EXISTING BARRELS CONTINUE TO GENERATE SUBSTANTIAL CASH AND VALUE QUARTERLY PRICE REALIZATION, EBITDA, FCF (USD/boe) 70 63 61 60 Brent price 50 50 45 47 43 44 Realized HC price 38 40 37 33 28 29 31 30 24 Unit EBITDA 20 20 20 17 Unit FCF* 11 10 22 16 13 11 8
Slide 27: Sharply higher oil and gas prices in the driving seat in Q1
SHARPLY HIGHER OIL AND GAS PRICES IN THE DRIVING SEAT IN Q1 POSITIVE ACG-RELATED TECHNICAL ADJUSTMENT AND HIGHER RECEIVABLES COLLECTION ALSO ADDED TO EBITDA UPSTREAM EBITDA QoQ, Q1 2021 VS. Q4 2020 (USD mn) COMMENTS 291 307 Large positive price impact, as Brent jumped by 37 16 100 1 6 17 38% (+USD 1
Slide 28: Production is 117 mboepd in Q1 2021
PRODUCTION IS 117 MBOEPD IN Q1 2021 MAINLY DRIVEN BY LOWER NET ENTITLEMENT PRODUCTION AT ACG AND NATURAL DECLINE IN CEE, UK QUARTERLY PRODUCTION BY COUNTRY (mboepd) COMMENTS 126.9 Q1 2021 QoQ (vs. Q4 2020): 125.4 8.9 KRI: +1.1 mboepd 117.3 9.1 116.8 2.3 2.4 112 ACG: -5.0 mboepd, as higher oil prices
Slide 29: Unit opex remained at very competitive level in Q1 2021
UNIT OPEX REMAINED AT VERY COMPETITIVE LEVEL IN Q1 2021 UNIT OPEX (USD/boe) COMMENTS Group (incl. JVs/associates) 7.9 Group-level unit opex (direct production cost), including JVs and 8.0 7.5 Fully consolidated subs. associates, increased slightly QoQ, but stayed at a competitive level of -6% 7.5 7.
Slide 30: Supporting Slides
SUPPORTING SLIDES
Slide 31: Upstream: Operational Update (1)
UPSTREAM: OPERATIONAL UPDATE (1) Hungary Croatia Exploration: Exploration: Shallow gas program successfully continued; Kótpuszta-3 well was Permitting and drilling preparation activities in progress for drilling 2 tested in January 2021 with positive result exploration wells in Drava-02 block Komádi
Slide 32: Upstream: Operational Update (2)
UPSTREAM: OPERATIONAL UPDATE (2) Pakistan Kurdistan Region of Iraq Production (net to MOL) was at 7.2 mboepd in Q1 2021, 4% lower QoQ Shaikan production reached 4.4 mboepd in Q1 2021 (net to MOL) as a result and 13% down YoY, due to base decline of the successful recompletion workover of SH-12 well
Slide 33: Upstream capex by region and by type
UPSTREAM CAPEX BY REGION AND BY TYPE ORGANIC CAPEX BY REGION AND BY TYPE (USD mn) HUN CRO KRI PAK UK NOR AZE OTHER Total – Q1 2021 Total – Q1 2020 EXP 6.4 0.1 0.0 0.5 0.0 16.5 0.0 0.0 23.5 35.9 DEV 6.0 4.0 0.1 0.1 0.5 0.0 44.1 4.0 58.8 35.6 Other 2.0 3.3 0.4 0.1 0.3 0.0 0.2 0.0 6.3 5.7 Total – Q1 20
Slide 34: Gas Midstream: Key Financials
GAS MIDSTREAM: KEY FINANCIALS EBITDA (USD mn) ORGANIC CAPEX (USD mn) -33% +14% 24 23 71 71 45 48 43 42 7 8 5 3 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 KEY FINANCIALS (USD mn) COMMENTS EBITDA fell by 33% YoY in Q1 2021 to USD 48mn, as both trans
Slide 35: Sustainability indicators
SUSTAINABILITY INDICATORS CO2 under ETS (mn t) HC Spill above 1bbl (m3) Tier1 PSE 5.0 100 88.5 5 2.0 1.7 1.7 4.0 1.5 1.5 1.4 1.5 80 64.1 4 1.5 60 3 1.0 37.3 2.0 2.0 40 2 1.0 1.0 0.5 20 7.3 4.7 8.2 1 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q4 20
Slide 36: Macro indicators
MACRO INDICATORS BRENT (USD/bbl) MOL REFINERY MARGIN (USD/bbl) HUF/USD (Q avg.) 120 10 MOL Group Complex 320 100 8 300 280 80 6 260 60 4 240 40 2 220 20 0 200 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3
Slide 37: Consolidated statement of profit or loss
CONSOLIDATED STATEMENT OF PROFIT OR LOSS YoY Q4 2020 Q1 2021 Q1 2020 Income Statement (HUF mn) FY 2020 Ch % 1 017 769 1 105 107 1 119 510 (1) Net sales 4 011 022 (15 719) 10 852 66 747 (84) Other operating income 55 687 1 002 050 1 115 959 1 186 257 (6) Total operating income 4 066 709 720 350 828 8
Slide 38: Consolidated statement of financial position
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 Dec Balance Sheet (HUF mn) 31 Mar 2021 Ch % 2020 Assets Equity and Liabilities Non-current assets Equity Property, plant and equipment 3 217 802 3 217 991 0 Share capital (7) 78 143 78 249 0 Intangible assets 413 715 389 768 6 Retained earnings and oth
Slide 39: Consolidated statement of cash flow
CONSOLIDATED STATEMENT OF CASH FLOW Q4 2020 Q1 2021 Q1 2020 YoY Ch % Cash Flow (HUF mn) FY 2020 (16 386) 104 297 (63 507) n.a. Profit / (loss) before tax (40 657) Adjustments to reconcile profit before tax to net cash provided by operating activities 144 497 121 106 98 070 23 Depreciation, depletion
Slide 40: External parameters
EXTERNAL PARAMETERS Q4 2020 Q1 2021 Q1 2020 YoY Ch % Macro figures (average) FY 2020 44.2 61.1 50.1 22 Brent dated (USD/bbl) 41.7 44.7 59.6 48.4 23 Ural Blend (USD/bbl)(11) 41.9 0.1 (1.3) (2.2) (42) Urals-Brent spread (USD/bbl) (0.4) 13.9 18.1 10.7 68 CEGH gas price (EUR/MWh) 10.1 397 560 466 20 Pre