FIRST QUARTER 2018 June 4, 2018
Presenters Petter Holland CEO Gunilla Spongh CFO 2
Disclaimer This presentation has been prepared by Corral Petroleum Holdings AB (publ) and/or its subsidiaries and affiliates ( Corral ). The information contained in this presentation is for information purposes only. Among other things, this presentation is intended to be used in connection with a scheduled international conference call for investors and analysts to be held on June 4, 2018 at 3:00 pm CET. The call-in number is US + 1 212 999 6659, UK +44 (0) 20 3003 2666 and Sweden +46 (0) 8 505 204 24 and the meeting code is Corral. The conference call will also be available for replay for a limited time beginning on June 5, 2018 with access information to be posted via the "Press and Notices" heading of the Corral investors section of Preem's website at https://www.preem.se/en/inenglish/investors/corral/results-and-reporting/. The information contained in this presentation is not intended to be used as the basis for making an investment decision. 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MARKET AND MARKET OUTLOOK
Crude oil prices are rising in line with the reduction in global surplus stocks, and a few other things Source: Pira 5
Crude Oil Geopolitical Supply Disruptions Flat Around 3 MBD Key factors impacting market next few months o o Factors pushing crude oil up: US Iran sanctions Generally increased geopolitical risk, in particular Iran /Israel conflict but also Venezuela, Nigeria Low storage levels -- increasing concerns of a tight market Oil demand continue to be strong Factors having a negative impact on crude price: Saudi ramp up Rapid increase in US shale production Poor OPEC compliance / softening of reduction targets. Demand destruction from high oil prices. Source: Pira Source: DNB 6
Products demand DEMAND Strong global demand despite high crude prices o 2018 oil demand growth is forecast to be ~2 MBD (+1.9%), supported by 4% global GDP growth o Lead light product volume growth in 2018 expected to be in: 1. Diesel up 520 kbd (+1.8%) 2. Gasoline up 460 kbd (+1.8%). 3. Jet up 170 kbd (+2.3%) Source: Pira 7
Europe/U.S. Diesel and Gasoline Inventory Levels continue to fall - both are now at 12 year minimum or lower - Source: Pira Source: Pira 8
Products $/bbl 25 Diesel cracks $/bbl 35 Gasoline cracks $/bbl Fuel oil cracks Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0 20 30-5 25-10 15 20-15 10 15-20 -25 5 10 5-30 -35 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5 yr Range (2013-2017) 2017 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5 yr Range (2013-2017) 2017-40 5 yr Range (2013-2017) 2017 2018 5 yr Average (2013-2017) 2018 5 yr Average (2013-2017) 2018 5 yr Average (2013-2017) 9
Projects and Activities Investment in a Vacuum Distillation Unit in Lysekil with a total capital expenditure plan of 1 600 MSEK during the period 2016 to 2018. The project is progressing according to plan. All major mechanical items and works have been contracted. Site groundwork are in its final stages and piping work is progressing well. Investment in a Hydrogen Production Unit in Gothenburg with a total capital expenditure of 635 MSEK is progressing with mechanical completion expected at yearend 2018. Strategic upgrade of IT systems progressing generally as planned with stepwise implementation in 2018 and 2019. We are aware that the ultimate sole shareholder of Corral Petroleum Holdings, Sheikh Mohammed Al-Amoudi, was one of a group of Saudi leading figures detained on November 5, 2017, at the Ritz-Carlton hotel in Riyadh. We are unable to provide further comments other than to say that Corral Petroleum Holdings and its subsidiaries are operating on a normal basis and remain unaffected by this development. The 37 meter vacuum distillation tower is the heart of the new vacuum distillation plant to be completed in 2018. Foundations for new HPU unit equipment under preparation in Gothenburg. HPU plant to be completed late 2018. 10
FIRST QUARTER 2018 FINANCIAL SUMMARY
Refining Margin and Throughput 2008-2018 Refining margin Throughput $/bbl 8,0 7,0 6,0 LTM Mar-18 5.17 10yr 4.74 5yr 4.80 000's bbls 125 000 120 000 115 000 110 000 5,0 4,0 105 000 100 000 95 000 LTM Mar-18 112 217 10yr 113 367 5yr 111 315 3,0 90 000 2,0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 LTM 2018 Refining margin ($/bbl) 10 year average 5 year average 85 000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 LTM 2018 Throughput 10 year average 5 year average 12
Group First Quarter 2018 Results Revenue (MSEK) Comments 62 473 14 % 71 202 Revenue 13 % 18 159 20 609 The increase in sales revenue is primarily a result of higher crude and product prices compared to the same period for 2017. Q1 17 Q1 18 LTM Q1 17 LTM Q1 18 Adjusted EBITDA 3 786-14 % 3 257 Adjusted EBITDA* Adjusted EBITDA for the first quarter of 2018 was 327 MSEK, compared to 1 259 MSEK in the first quarter of 2017. 1 259-74 % 327 Operating loss for the first quarter of 2018 amounted to 22 MSEK, a decrease of 1 204 MSEK, compared to a profit of 1 182 MSEK for the first quarter of 2017. The lower result is mainly due to weaker refining margins and maintenance stop in Lysekil. Q1 17 Q1 18 LTM Q1 17 LTM Q1 18 EBITDA Margin (% of Revenue) 6.9 % 1.6 % 6.1 % 4.6 % *As defined in the Corral Petroleum Holdings AB (publ) report for the first quarter ended 31 March, 2018 13
Supply & Refining Segment Throughput (000 bbls) -4% 116 459-4 % 112 217 30 775 29 478 Q1 17 Q1 18 LTM Q1 17 LTM Q1 18 Average Brent Crude Price ($/bbl) 53,7 24 % 66,8 48,6 18 % 57,4 Q1 17 Q1 18 LTM Q1 17 LTM Q1 18 Weighted Refining Margin($/bbl) 5,49-28 % 3,94 4,92 5 % 5,17 Q1 17 Q1 18 LTM Q1 17 LTM Q1 18 Comments Throughput In early March we had an unplanned shutdown of the Lysekil Vacuum Distillation Unit. We decided to utilize this opportunity by also moving other planned maintenance work on selected units (mainly the Iso-Cracker Unit and fluid catalytic cracker (FCC) Unit), from April into March. These maintenance activities were completed as planned, and all units are now back at full capacity again. Average Brent Crude Price The price of Dated Brent started the first quarter of 2018 at 67 $/bbl and was over 70 $/bbl for a couple of days during the quarter. Geopolitical risks were high during the first quarter and continue to be so which in part is also a result of speculative actors putting their money into the financial oil market. The production cut of crude oil and increased global demand for products continued to reduce global inventory levels. The market structure remained in backwardation where current prices are higher than future prices. Weighted Refining Margin European refining margins were generally weaker during the first quarter of 2018 than during the fourth quarter of 2017. The increased value of refined products did not correspond to the increase in the cost of crude oil. The market, including financial speculators, invested (relatively) more in crude oil than products. The possible overreaction to the tighter supply and demand balance pushed crude oil prices higher, and products lagged behind, even as global products demand increased. 14
Marketing Segment Revenue (MSEK) 23% 19 614 15 935 22% 4 232 5 166 Q1 17 Q1 18 LTM Q1 17 LTM Q1 18 Comments Revenue Sales revenue in the first quarter of 2018 amounted to 5 166 MSEK compared to 4 232 MSEK in the first quarter of 2017, an increase of 934 MSEK. Sales volumes were 13% higher in the first quarter of 2018 compared to the first quarter of the previous year driven by new major contracts within our businessto-business segment as well as our expansion in Norway. EBITDA (MSEK) -2 % 147 144 3 % 687 706 Marketing EBITDA Our Marketing segment reported an EBITDA of 144 MSEK for the first quarter of 2018 compared to 147 MSEK for the first quarter 2017, a decrease of 3 MSEK. The decrease in operating profit is mainly attributable to higher selling expenses due to amortizations from the purchase of YX Bulk AS in Norway. Q1 17 Q1 18 LTM Q1 17 LTM Q1 18 EBITDA Margin (% of Revenue) 4.2% 4.5% 4.7% 3.8% 15
Capital Expenditures Capex by Purpose (MSEK) * Comments 2337 1096 1348 382 135 192 394 479 1106 774 204 331 26 164 48 100 Q1 17 Q1 18 FY 2016 FY 2017 Specific Projects The VDU investment in Lysekil, 182 MSEK Q1 2018 Strategic IT project, 71 MSEK Q1 2018 HPU investment, 78 MSEK Q1 2018 Recurring maintenance Less capex in Q1 2018 vs 2017 due to lower Refining maintenance Regulatory/Environmental and Safety/Risk maintenance same level as Q1 2017 Recurring maintenance Incremental improvements Specific projects *Shown on a gross basis. 16
Cash Flow (MSEK) Q1 18 Q1 17 LTM Q1 18 LTM Q1 17 Profit before taxes -787 934 1 205 128 Adjustments for items not included in cash flow 1 191 565 2 385 4 708 Tax paid -3-2 -5-1 Decrease(+)/Increase(-) in inventories 1 238-66 -928-3 078 Decrease(+)/Increase(-) in operating receivables 161 320-1 044-372 Decrease(-)/Increase(+) in operating liabilities 661-523 1 781 1 479 Changes in working capital 2 059-270 -192-1 971 Cash flow from operating activities 2 461 1 227 3 393 2 863 Cash flow used in investing activities -487-403 -2 431-1 528 1 974 824 962 1 335 Amortization/Raising of loans -2 235-1 017-992 43 Loan expenditure 0 0 0-679 Cash flow used in financing activities -2 235-1 017-992 -636 Comments Cash flow was positively impacted by movements in working capital of 2,059 MSEK for the first quarter of 2018 compared to a negative impact of 270 MSEK for the first quarter in 2017. Cash flow from inventories amounted to 1,238 MSEK in 2018, primarily due to decreasing inventory volume in the first quarter. Cash flow from operating receivables amounted to 161 MSEK for the first quarter of 2018, primarily due to lower volumes sold in March 2018 than in December 2017. Cash flow from operating liabilities in 2018 amounted to 661 MSEK primarily due to higher volumes of unpaid crude oil by the end of March. Cash flow used in financing activities is attributable to (net) repayment of loans under Preem s revolving credit facility as a consequence of the positive cash flow from operating activities. Cash flow for the period -261-193 -30 701 17
Simplified Capital Structure Cap Structure at the end of Q1 2018 Comments MSEK $M USD x Adjusted EBITDA Continued strong focus on paying cash coupons on the 2021 Notes. Cash RCF Other interest bearing liabilities and transaction expenses Total net debt at Preem 2021 Corral Notes Transaction expenses Cash Total 3rd party debt Adj EBITDA USDSEK exch.rate -393-47 -0.1 4 815 576 1.5-247 -30-0.1 4 175 499 1.3 6 367 762 2.0-454 -54-0.1-876 -105-0.3 9 212 1 102 2.8 3256 389 8.36 *Cash and debt figures exclude deeply subordinated debt held by our ultimate shareholder. **Exchange rate (USD/SEK) as of March 31, 2018 18
Liquidity Reserves $M USD 1 356 1 405 1 138 660 695 699 FY 2016 FY 2017 LTM Q1 2018 Average Drawdown Average RCF Availability, Cash and A3 Facility Stable liquidity position Note: Drawdown and availability figures are not IFRS measures and are based on month end values averaged over the course of the year. In part, these values are internal calculations based on variables that are subjectively determined and which may not be comparable in approach to similar calculations of other companies 19
Definitions Adjusted EBITDA means EBITDA adjusted to exclude inventory gains/losses and foreign currency gains/losses Dated Brent Crude is a cargo of North Sea Brent blend crude oil that has been assigned a date when it will be loaded onto a tanker. In this Annual Report, references to the price of Dated Brent Crude are derived from data provided by Platts, a division of McGraw Hill Financial Inc. Gross Refining Margin means the difference between the sales revenue received from the sale of refined products produced by a refinery and the cost of crude oil and (where relevant) other immediate feedstocks processed by it. HVO Diesel is a tall oil based hydrotreated vegetable oil diesel. Hydrogen Production Unit (HPU) is a refinery unit that produces hydrogen for use refinery processes. Marketing EBITDA is not an IFRS measure and consists of the EBITDA of our Marketing & Sales segment which includes the operating profit and the depreciation of our Marketing & Sales segment, as described in Note 4 to our Consolidated Financial Statements Refining Margin is Gross refining margin less variable refining costs, which consist of volume related costs, such as the cost of energy. See Management's Discussion and Analysis of Financial Condition and Results of Operations for further discussion. Vacuum Distillation Unit (VDU) is a secondary processing unit consisting of vacuum distillation columns. Vacuum distillation helps to produce products out of the heavier oils left over from atmospheric distillation. 2021 Notes refers to the (i) 570,000,000 aggregate principal amount of euro-denominated 11.750% / 13.250% senior PIK toggle notes due 15 May 2021, issued by CPH on May 9, 2016, and (ii) SEK 500,000,000 aggregate principal amount of Swedish krona-denominated 12.250% / 13.750% senior PIK toggle notes due 15 May 2021, issued by CPH on May 9, 2016 20
For further information, please contact: Christer Tärndal Head of Group Controlling Tel: + 46-10-450 13 92 Email: christer.tarndal@preem.se