MOL GROUP. Fixed Income Investor Presentation May 2014

Transcription

1 MOL GROUP Fixed Income Investor Presentation May

2 MOL AT A GLANCE USD 6.2bn USD 2.2bn almost MARKET CAPITALIZATION EBITDA GENERATION IN /3 from Upstream, ~50% from international operation EMPLOYEES IN 40 COUNTRIES 16% NET GEARING (2013) STRONG BALANCE SHEET BBB- INVESTMENT GRADE RATED BY FITCH MOL s rating is higher than Hungary; BB at S&P Overview 2

3 MOL IS AN INTEGRATED OIL AND GAS COMPANY Operating through the whole value chain UPSTREAM Growth DOWNSTREAM Efficiency & restructuring FINANCIALS Stability Production in 8 countries Exploration in 13 countries 96 mboepd production at end of Q MMboe SPE 2P reserves at the end of Refineries with 417 mboepd nameplate capacity 2 Petrochemical plants 19 Mtpa sales 1,900+ filling stations 3 16% Net gearing (2013) 1.02x Net debt to EBITDA EUR 4.0bn available liquidity CAPEX should be financed from operating CF Overview (1) Already excluding 49% of Baitex LLC, which was sold at the end of Q (2) 2013 year-end SPE-2P, 2P reserves of North Sea assets not included yet, to be booked in 2014 (3) Including the recently published agreement about acquiring 208 service stations from eni Group 3

4 WHICH IS MORE AND MORE UPSTREAM DRIVEN & INTERNATIONAL Majority of revenue and EBITDA generated outside of Hungary EBITDA * GENERATION BY SEGMENT (USD MN) REVENUE GENERATION BY COUNTRY (2013) Rest of the World 19% ~75% generated outside of Hungary Hungary 27% Upstream Syria Downstream Gas midstream Other CEE** 41% Croatia 13% Overview * Excluding special items ** including: ITA 11%; AUR 9%; SLK 8%; CZR 6%; ROM 6% 4

5 OVERVIEW OF OPERATIONS 5

6 UPSTREAM: EXISTING RESERVE BASE ENSURES STRONG PROFITABILITY Growing production from 2H 2014, >75% to come from the high return, lower risk CEE region RESERVES (SPE 2P) END 2013** Reserve PRODUCTION 2014 Q1* life 16y 23% 7% 4% 6% Hungary Russia Kazakhstan 576 MMboe 36% 24% Croatia Syria Other 7% 38% 6% 6% 43% Hungary Croatia Russia Pakistan 96 mboepd Other Existing reserve base ensures strong cash generation Healthy reserve base: ~16 years 2P reserves life Minimizing decline rate below 5% in the lower risk, strong cash generator CEE region Lowest unit production cost among European peers Upstream *Already excluding contribution of 49% of Baitugan field, divested at the end of Q **SPE 2P reserves at the end of Not containing 28MMboe 2P reserves of North Sea acquisition, closed in Q Reserves and production of non-consolidated projects are not highlighted. 6

7 SIZEABLE EXPLORATION POTENTIAL WITH INTERNATIONAL FOCUS Exploration activity in 13 countries, key projects in late appraisal phase RECOVERABLE RESOURCE POTENTIAL* + 2P RESERVES, MMBOE Exploration successes are the basis of long-term growth Outstanding, ~60% exploration success rate in the last 5 years Still sizeable prospects in the core CEE region but even greater international potentials: CIS, Kurdistan R.I. Above 100% Reserve Replacement Ratio targeted in 3 years average CEE KRI CIS Other Total 2P reserves + Recoverable Resource Upstream *Working Interest (unrisked). 7

8 mboepd CEE: MINIMALIZE DECLINE RATE TO LOW SINGLE DIGIT LEVEL Croatia: Back to production growth by 2015 HUNGARY+CROATIA (349 MMboe) - PRODUCTION OUTLOOK POS high Unique know-how and infrastructure Several ongoing development projects to mitigate production decline as much as possible ~2018 Active exploration programs on existing license areas and looking for new licences Unrisked exploration upside Production CROATIA WORK PROGRAM Ongoing development projects to turn back production to growth path by 2015 EOR project implementation on Ivana and Zutica fields with ~30 MMboe incremental production Medimurje project to target 7 MMboe natural gas reserve infrastructure development to be finished in 2015 Offshore gas production expected to be stabilized around mboepd for the coming years (i.e. IKA JZ development project) Upstream Production 2013: 80 mboepd II Reserves: SPE 2P 2013: 349 MMboe 8

9 mboepd KURDISTAN R.I.: ACCELERATED DEVELOPMENT TO ENHANCE CASH GENERATION Export started from Shaikan, Commercial production to start on Akri-Bijeel by H2 KURDISTAN REGION OF IRAQ Commercial discoveries (Bijell, Bakrman, Shaikan) Accelerated work programs to enhance cash-flow generation as soon as possible Reserve bookings in the next two years from two blocks First export from Shaikan in January 2014, commercial production to start on Akri-Bijeel by H2 Phased development program submitted for Akri-B. PRODUCTION OUTLOOK - WORK PROGRAM (SH/AB) POS high / Exploration and appraisal program 2013/ Start of Field development and commercial production Upstream ~2018 MOL net production: ~20-25 mboepd in * Akri (unrisked) Shaikan Recoverable resource potential (unrisked, Working Interests based w fully diluted share): 250 MMboe * Unrisked, Entitlement share based on fully diluted working interest. 9

10 mboepd NORTH SEA: SIZEABLE SHORT/MID-TERM PRODUCTION WITH ABOVE AVG UNIT PROFITABILITY Expected peak production of mboepd in NORTH SEA (28 MMboe*) OVERVIEW OF MAIN PRODUCING ASSETS Block W.I. Broom 29% Operating shareholder Enquest (63%) Other partner Ithaca (8%) Cladhan 33% TAQA (53%) Sterling (14%) Catcher 20% Scolty&Crathes 50% Premier Oil (50%) Enquest (40%) Cairn Energy (30%) Ithaca (10%) Majority of asset portfolio already in development or production phase Further 9 MMboe** 2C contingent resource and 10 MMboe P50 unrisked prospective resource Practically only oil production (97%) implying over USD 70/boe EBITDA on life cycle basis PRODUCTION OUTLOOK - WORK PROGRAM POS high Development Broom Cladhan Production Upstream Catcher FDP Unrisked exploration upside Production S.&C. (opt.) Sanction & FDP * To be booked in 2014; ** MOL estimate 10

11 mboepd ORGANIC* PRODUCTION POTENTIAL GROWTH IN 5 YEARS With major contributions from Middle East and North Sea areas with high unit EBITDA PRODUCTION OUTLOOK* (RISKED, ENTITLEMENT BASED) BY 2015 APPROXIMATELY 10% PRODUCTION GROWTH* ~30% Accelerated field development projects in CEE with growth in CRO Ramp up of production in Kurdistan in Akri Bijeel and Shaikan fields 80 Initial phase on North Sea assets APPROXIMATELY 30% INCREASE BY ~2018* Kurdistan production target mboepd** North Sea assets to peak around 18 mboepd 2013 North Sea 2014 ZMB+Baitugan 49%* CIS/Asia 2017 Middle East/Africa 2018 CEE Both have over USD 70/boe unit profitability on lifecycle basis To offset the decline on maturing CEE fields Upstream *Russian ZMB field was divested in early August 2013 while 49% stake of Russian Baitugan in Q thus excluded from the projected production figures as well as the comparison basis year of 2013 **Unrisked, Entitlement share based on fully diluted working interest 11

12 GOING FORWARD: ACTIVE M&A TO STEP INTO A NEW LEAGUE Focusing on value creation over volume growth, targeting a balanced portfolio KEY PRINCIPLES AND GOALS RIGOROUS CAPITAL DISCIPLINE IMPROVING OVERALL RISK PROFILE OF THE PORTFOLIO FOCUSED GEOGRAPHICAL DIVERSIFICATION ESTABLISH NEW STRATEGIC PARTNERSHIPS (E.G. WINTERSHALL, TPAO) POTENTIAL FARM OUTS (PARTIAL) ALSO POSSIBLE TO SHARE RISKS AND OPTIMIZE PROJECTS FINANCING CRITICAL CAPABILITIES FOR SUCCESSFUL M&A HUMAN CAPITAL REVITALIZING STAFF AND ORGANIZATION CAPABILITIES TO SELECT GOOD ITEMS AND MANAGE INTEGRATIONS RESISTANT TO DEAL FEVER AND FINANCIAL READINESS NORTH SEA NEW REGIONS IN ORDER TO Enhance shallow offshore experience and create a new hub Decreasing average political risk profile of MOL Group s upstream portfolio Access to upcoming UK Exploration Bid Rounds with further value creation MIDDLE EAST / PAKISTAN /CIS TRADITIONAL CORE REGIONS WITH Notable technical know-how Well established strategic partnerships Major projects in Kurdistan R. of Iraq Excellent relationship with local communities Upstream 12

13 DOWNSTREAM: MAXIMIZE FREE CASH GENRATION WITH CEE CITADEL MODEL Integrated operation on the landlocked CEE market with efficiency improvement in the focus KEY STRENGTH Complex, diesel geared refineries Bratislava Integrated petrochemical units to handle surplus gasoline/naphtha pool Rijeka Danube Strong land-locked market presence 20% motor fuel market share in the CEE; market leader in 4 countries Sisak Region-wide Logistics, Wholesale and Retail network serve the market - above 55% end-user share REFINERY CAPACITY & COMPLEXITY REFINERY YIELD 2014E 2013 FIGURES Refinery Mtpa thbpd NCI MOL Group Danube Bratislava Rijeka Sisak % 4% 3% 6% 3% 9% LPG 52% over 80% white prd. 20% Naphtha Motor Gasoline Middle Distillates Fuel Oil Bitumen Other Other chemical prds Mt refined product & petrochemical sales Retail: (1) FS w. 3.5 Mtpa sales Petchem: 1.3 Mt ext. sales Downstream (1) Including the recently published agreement about acquiring 208 filling stations from eni Group 13

14 Downstream MOL DELIVERS TOP QUARTILE PERFORMANCE IN TOUGH ENVIRONMENT However, still significant gap to pre-crisis level profitability, less efficient units below break even REFINERY MARGIN (URAL-MED, USD/BBL) CLEAN CCS-BASED DS EBITDA (MN USD) % % CLEAN CCS-BASED DS* UNIT EBITDA (USD/BBL) Source: Company flash reports, MOL Strategy Research; Note: MOL Group figures include INA data from Q *excluding Petchem 14

15 Cost Revenue USD 400MN EFFICIENCY IMPROVEMENT WAS DELIVERED BY 2013 >USD 100mn is still due in 2014 NDSP BREAKDOWN BY YEARS (MN USD) NDSP BREAKDOWN BY CATEGORIES (%) Σ USD mn Σ USD 400mn 8% 19% SCM-driven improvement Sales strategy Revenue increase USD mn % Other costs Σ USD 150mn 15% 15% 22% Production flexibility improvement Maintenance management Energy management Cost decrease USD mn NDSP total 15

16 CONTINUATION OF MODEST DEMAND INCREASE IS EXPECTED IN 2014 as the regional economic recovery continues REGIONAL MOTOR FUEL DEMAND (YOY CHANGE %) GDP AND MOTOR FUEL GROWTH (2014E, YOY CHANGE %) 6% 2,5% % 0% 1,5% Market (mn kt) -3% -6% 0,5% -9% Q Q Q Q Q Q Q Q F -0,5% 1 GDP GDP Core market demand CEE demand Forecast -1,5% Following deep demand drop in recent years Core 3 and CEE reached the bottom in early 2013 Growth already started and expected to continue in 2014 Core3: Hungary, Slovakia, Croatia Source: MOL estimates Modest GDP growth (1.5%<) is expected in the core countries Motor fuel growth will lag behind GDP up-lift, still moderate demand increase is realistic (~0.5% in Core3, ~1% in CEE) Similarly to previous years consumption will be driven by gasoil Source: MOL Downstream 16

17 USD BN CAPEX PLANNED FOR 2014 WITH UPSTREAM FOCUS Downstream spending to peak in due to ongoing growth projects Upstream Balance between early cash generation CEE and creation of mid-long term growth potential: Kurdistan Region of Iraq; Russia and Kazakhstan, North Sea 52% CAPEX % 2% 3% Exploration Downstream Strict control on sustain CAPEX Selective profitable growth investments (50%) LDPE4 in Slovnaft Butadiene and S-SBR in MOL Gas Midstream Contingency, C&O 22% Growth 52% 26% Maintenance ORGANIC CAPEX SHOULD BE FINANCED FROM OPERATING CASH-FLOW CAPEX Up to USD 2bn CAPEX per annum in the next three years Adequate flexibility: maintenance CAPEX & key growth projects could be covered by USD ~1bn 17

18 FINANCIAL OVERVIEW 18

19 CONSERVATIVE FINANCIAL POLICY CAPEX and small acquisitions should be financed from operating cash flow OPERATING CASH-FLOW VS CAPEX AND DIVIDENDS (MN USD) INA Pearl Organic Inorganic Dividends paid Operating CF Financials 19

20 CONTINUOUSLY STRENGTHENING FINANCIAL POSITION Indebtedness indicators at a 6-year low NET DEBT TO EBITDA (X) GEARING (%) 3,5 3 2,5 2 1,5 1 0,5 0 Threshold of net debt to EBITDA 1,96 1,66 1,72 1,44 1,38 0, KEEP COVENANTS IN THE SAFETY ZONE IMPROVING GEARING POSITION WELL BELOW INTERNAL LIMITS OF NET DEBT TO EBITDA ~ 2.0X, NET GEARING ~ 30% Financials 20

21 Financials MOL HAS SUFFICIENT LIQUIDITY FOR ACQUISITIONS EUR 4 bn total available liquidity as of Q DRAWN VERSUS UNDRAWN FACILITIES (EUR MILLION) TOTAL AVAILABLE LIQUIDITY (EUR MILLION) 21

22 FROM DIVERSIFIED FUNDING SOURCES Cost rationalization keeping diversification in mind RECENT EVENTS MID- AND LONG-TERM COMMITTED FUNDING PORTFOLIO USD 545m Revolving Credit Facility extended from 2016 to 2017 MOL prepaid the EIB project loan (value USD 158m) taken in MOL prepaid the EBRD loan taken in 2009, as consequence of the MMBF divestment EUR 200m Revolving Credit Facility concluded for Slovnaft December 2013 OUTSTANDING SENIOR AND HYBRID BONDS FIXED VS FLOATING INTEREST RATE PAYMENT OF TOTAL DEBT Issuer Ccy Volume (m) Volume (EURm)* Issue date Maturity date Coupon MOL Plc EUR Oct Oct % MOL Plc EUR Apr Apr % MOL Group Finance S.A. guaranteed by MOL Plc USD Sep Sep % Magnolia Finance Ltd EUR Mar-2006 Perpetual 4% till Mar-2016 then 3m EURIBOR +550bps Financials *based on FX rates as of 31 March

23 EUR M HEALTHY MATURITY PROFILE REFINANCING SECURED FOR 3 YEARS NO CONCENTRATED REFINANCING NEED Financials 0 Reported cash&cash equivalents Long term loan (multilaterals) Medium term loan Senior Unsecured Bonds Undrawn facilities *as of

24 CREDIT RATING ABOVE SOVEREIGN RATING AT FITCH, IN LINE WITH THAT AT S&P FFO/NET DEBT* HISTORICAL FOREIGN LONG TERM RATINGS MOL S&P Hungary S&P MOL Fitch Hungary Fitch : INTERMEDIATE financial risk assessment range by S&P *Funds from operation, adjusted. S&P might have additional adjustments. Keep FFO/Net Debt ratio in its current healthy zone Maintain current investment grade rating at Fitch and aiming upgrade at S&P Financials BBB- (negative outlook) by Fitch Ratings BB (stable outlook) by Standard & Poor s 24

25 Financials IMPROVING SPREAD PERFORMANCE VERSUS REPHUN & PEER S BONDS USD - MOL/REPHUN SECONDARY PERFORMANCE MOL/REPSOL (EUR) SECONDARY PERFORMANCE EUR - MOL/REPHUN SECONDARY PERFORMANCE MOL/OMV (EUR) SECONDARY PERFORMANCE 25

26 BENCHMARKING MOL WITH RATED PEERS Business Profile Assessment MOL PKN Repsol Tupras OMV Revenues (FY 2013) $mn EBITDA Margin (%) % 9,6% 3,6% 11,2% 2,6% 10,2% 2P Reserves Mmboe 576 n/a 1,515 (1P) n/a Production (FY 2013) mboepd 103 n/a 346 n/a 288 Cost of Production $/boe <10 n/a n/a n/a 14,0 F&D Costs $/boe 25 (1P) n/a 21 (1P) n/a 36 (1P) Large Refineries # Refining Capacity mboepd Segment Breakdown EBITDA Gas 11% R&M 20% E& P 69% Petchem 40% R&M 60% Gas 24% R&M 13% LNG 16% E&P 47% Downstream 100% R&M 30% G&P 2% E&P 68% Geographic Breakdow n Revenue Reserves per region 2P* PAK 3% Other 31% KAZ 6% Other 8% RUS 23% HUN 27% Other CRO CEE 13% 29% CRO 36% HUN 24% Baltics 9% Other 21% CZE 11% DE 16% na POL 43% Other 21% OECD 16% EU 10% AFRN-AM 9% 3% Asia 3% ESP 53% South America 85% Turkey 100% na Rest of Europe 34% NW EU, Africa & AU 24% RoW 6% Austria 35% Rest of TUR CEE 16% 9% Austria 9% ME & Caspian 4% Romania 63% Financials Moody's Long Term -- Baa3 Baa3 Ba1 A3 S&P Foreign Issuer BB -- BBB Fitch Credit BBB- BBB- BBB- BBB- A- Where available, OMV only reports 1P; Rating data from Bloomberg, as of 14 May 2014 Source: Internal data and company reports 26

27 PEER COMPARISON: MOL IS ESPECIALLY STRONG ON SUPPLEMENTARY RATIOS And everywhere reaches at least the intermediate range FFO / DEBT 3 years average DEBT / EBITDA 3 years average Eni (A) 51,10% Eni 1,17 BG energy (A-) 52,36% BG energy 1,39 Repsol (BBB-) 27,77% Financial Risk Assessment Ratio: : Modest Repsol 2,57 Noble energy (BBB) MOL (BB) 35,10% 42,86% : Intermediate : Significant Noble energy MOL 1,76 2,32 Tullow (BB) 38,61% Tullow 1,4 0% 25% 50% 75% 100% 125% 0 0,5 1 1,5 2 2,5 3 CFO / DEBT 3 years average FOCF AND DCF / DEBT 3 years average Eni BG energy Repsol Noble energy MOL Tullow 22,39% 43,82% 49,81% 36,18% 49,46% 60,90% 20,00% 15,00% 10,00% 5,00% 0,00% -5,00% -10,00% -15,00% -20,00% Tullow MOL Noble energy FOCF / Debt Repsol BG energy Eni DCF / Debt 0% 20% 40% 60% 80% 100% 120% Data from: Standard and Poor s Global Credit Portal, adjusted ratios 27 3 years average data ( ) where available, at BG Energy, Eni and Repsol ( ) Financials

28 FINANCIALS BUSINESSES MOL GROUP KEY GOALS AND MESSAGES AN INTERNATIONAL OIL & GAS COMPANY ~$6.2BN MARKET CAP. $2.2BN EBITDA: 2/3 FROM UPSTREAM, ~50% OUTSIDE HUNGARY PROVEN TRANSFORMATION TRACK RECORD OF THE MANAGEMENT INTEGRATED MODEL WITH UPSTREAM FOCUS UPSTREAM: STRONG PROFIT GENERATION OF LEGACY ASSETS ORGANIC GROWTH WITH IMPROVING UNIT EBITDA UPSTREAM: INORGANIC GROWTH FOCUSED ON DELIVERING A BALANCED PORTFOLIO DOWNSTREAM: AMONG THE BESTS WITH INTEGRATED OPERATION OF COMPLEX ASSETS KEY FOCUS IS ON EFFICIENCY IMPROVEMENT STRONG BALANCE SHEET HAS TOP PRIORITY CAPEX SHOULD BE FINANCED FROM OPERATING CF DECREASING INDEBTEDNESS: LOWEST NET GEARING AT A 6-YEAR LOW INVESTMENT GRADE RATED BY FITCH (BBB-) AND BB+ RATED BY S&P Summary 28

29 APPENDIX 29

30 SHAREHOLDER STRUCTURE As of 31 March 2014 DIVERSIFIED SHAREHOLDER STRUCTURE Foreign investors (mainly institutional) 25.3% Hungarian State 24.7% CEZ MH B.V. 7.3% OmanOil (Budapest) Limited 7.0% OTP Bank Plc. 5.4% Magnolia Finance Limited 5.7% ING Bank N.V. 5.0% Crescent Petroleum 3.0% Dana Gas PJSC 1.4% UniCredit Bank AG 3.9% Credit Agricole 2.0% Domestic institutional investors 2.4% Domestic private investors 4.3% MOL Nyrt. (treasury shares) 2.4% Appendix Please note, that the data above does not fully reflect the ownership structure in MOL s share register. Registration in the share register is not mandatory. In order for shareholders to exercise their rights as shareholders of MOL they must be registered in the share register. According to the Articles of Association no shareholder or shareholder group may exercise more than 10% of the voting rights. 30

31 KEY ITEMS OF TAXATION Positive effect vs level Revenue based Crisis tax abolished from 2013 ~HUF 30bn negative effect p.a. in Profit based Robin Hood nominal tax rate is 31% only energy related part of the profit affected (~70%), thus implied RH tax rate is cca. 22% only the Hungarian operation of certain companies are affected (i.e: MOL Plc., while gas transmission (FGSZ) or petrochemicals (TVK) are not subject of the tax) CIT tax rate is 19% HUNGARY Croatia & Slovakia: CROATIA & SLOVAKIA 20% CRO & 22% SVK CIT rates applicable in 2014 Group level tax payments in the last 3 years: HUF bn Special crisis tax CANCELLED end 2012 (HUN) Robin Hood (HUN) Corporate income tax Sum Appendix 31

32 MOL INVESTOR RELATIONS Reporting Calendar and Important Links CONTACT Address: Hungary, 1117 Budapest, Október huszonharmadika u. 18. Phone: investorrelations@mol.hu DATE EVENT 1 August 2014 Release of H1 results 6 November 2014 Release of III. quarter results INFO CONTENT MOL Investor Relations Latest Investor Presentation MOL Group Financial Results Regulated Information LINK Appendix 32