OMV Strategy and 2015 results presentation February 18, 2016 OMV Aktiengesellschaft
Agenda Management presentations 10.30am 11.15am Rainer Seele, Chairman of the Executive Board and CEO 11.15am 11.45am David C. Davies, Deputy Chairman of the Executive Board and CFO 11.45am 12.30pm Q&A session 12.30pm 01.30pm Break…
OMV Aktiengesellschaft Rainer Seele Chairman of the Executive Board and CEO OMV Aktiengesellschaft
Agenda Financial Performance OMV Strategy Outlook 5 OMV Group, Strategy and 2015 results presentation
HSSE: Safety is our top priority Strong safety improvement record LTIR 1 OMV Group 0.7 0.5 0.4 0.3 2012 2013 2014 2015 1 Lost-Time Injury Rate 6 OMV Group, Strategy and 2015 results presentation
Financial performance 2015 Clean CCS EBIT Clean CCS Earnings per share Free cash flow before dividends in EUR bn in EUR in EUR bn 2.2 0.27 3.47 3.52 1.7 1.4 0.1 1.2 0.6 (0.04) 2014 2015 2014 2015 2014 2015 Upstream…
Revised market outlook triggered significant impairments in 2015 OMV Brent oil price assumptions Special charges in 2015 in USD/bbl in EUR bn 3 110 105 105 105 100 90 90 85 85 80 Upstream 80 75 75 70 70 70 65 60 55 55 55…
Agenda Financial Performance OMV Strategy Outlook 9 OMV Group, Strategy and 2015 results presentation
Oil and gas market under pressure 140 Outlook 2016 Longer term outlook 120 Still significant oversupply Potential supply Oil price 100 Brent, 80 Iran crude adding to shortage building up by in USD/bbl 60 imbalance investment cuts…
OMV operating performance since 2011 Clean CCS EBIT in EUR mn Key drivers of business 2,154 1,669 Upstream Significant oil price drop of 50% 139 starting mid-2014 EBIT loss from Libya and Yemen Brent oil price 1 111 99 52 240…
OMV a strong, integrated oil and gas company Upstream Downstream Exploration Development Production Downstream Downstream Gas Oil Restructure and Strong cash Value over volume growth grow volume generator 12 OMV Group,…
Strategic priorities Upstream Lower cost and increase capital efficiency Value over volume Focus on 3 core and selected development areas growth Achieve Reserve Replacement Rate of 100% Long-term strategic partnerships Downstream…
Upstream Lower cost and increase Value over volume growth capital efficiency Focus on 3 core and selected development areas Achieve Reserve Replacement Rate of 100% Long-term strategic partnerships Edvard Grieg (Lundin),…
Upstream activities will be focused Edvard Grieg (Lundin), Norway Urengoy, Russia (source Gazprom) Schnkirchen, Austria Ashtart, Tunisia New Zealand Core regions contribute 50 kboe/d Core region 1 CEE Core region 3 MEA…
Middle East and Russia among the lowest cost upstream regions in the world Northern Russia Middle East Europe Reserves 719 410 remaining 1, 2 42 in bn boe Acquisition cost 2P 3 9 11 in USD/boe 2 43 Finding, development…
Production: Maintain 300 kboe/d, upside from Russia and assumed return of Libya/Yemen OMV production in kboe/d 360 Russia (Achimov IV/V) Libya/Yemen 5-10% Upstream 303 Base CAPEX, 300 Production cumulative 2016-2020…
Significant opportunity: Potential Achimov IV/V participation in Russia Expected production development Asset swap with Gazprom Indicative production Achimov IV/V, in % of plateau Condensate Gas Acquisition of 24.98% stake in areas…
Reduction of Exploration and Appraisal spend E&A expenditure in EUR mn (12)% 693 607 (26)% 450 (33)% 300 2014 2015 2016 2017/18 1 Change of reserve replenishment strategy Review Sub-Saharan Africa positions Focus on…
CAPEX discipline and efficiency Group CAPEX reductions incl. capitalized E&A, in EUR bn Peers 3.8 (28)% (37)% (26)% (13)% 2.8 2.4 2014 2015 2016 2017/18 1 Sustainable reduction of unit CAPEX cost Focus on highly…
Sustainable cost reduction and efficiency improvements Manageable cost reduction 1 and efficiency improvement effects in EUR mn Total sustainable cost reduction target by 2017 New function for cost management and efficiency…
Downstream Gas Restructure Create lean North West and grow European gas sales volume business Divest up to 49% of Gas Connect Austria and invest in non-regulated Nord Stream 2 project Minimize power activities 22 OMV Group,…
Nord Stream 2: Secure gas flows to Baumgarten Nord Stream 2 Twin 1,224-kilometer offshore pipeline system from Russia to Germany Capacity of 55 bcm p.a. Investment partners: Gazprom 50%; E.ON, Shell, OMV, ENGIE and BASF 10%…
Nord Stream 2: Strategic rationale Economically attractive investment Non-regulated, fixed return based on 100% ship or pay Increases security of supply of Austrian gas imports Baumgarten as destination for major volumes…
Downstream Oil Strong cash Maintain strict capital and generator cost discipline Strengthen integrated margin Divest OMV Petrol Ofisi 25 OMV Group, Strategy and 2015 results presentation
Additional cash flow from divestments Gas Connect Austria : OMV Petrol Ofisi: Minority divestment opportune No strategic fit Very stable return asset Market leading position in the largest European growth market yet highly regulated…
Agenda Financial Performance OMV Strategy Outlook 27 OMV Group, Strategy and 2015 results presentation
Outlook 2016 Oil price: Annual average of USD 40/bbl expected Refining margins: Expected to decline from 2015 level Retail volumes: Lower product prices expected to support demand Gas markets: Remain challenging Production: 300…
OMV strategy in a nutshell Focus on cash and costs Achieve sustainable position in Upstream Restructure Downstream Gas Continue to strengthen competitiveness of Downstream Oil 29 OMV Group, Strategy and 2015 results…
OMV Aktiengesellschaft OMV Aktiengesellschaft
David C. Davies Deputy Chairman of the Executive Board and CFO OMV Aktiengesellschaft
Agenda Results Q4/15 Financial priorities and guidance 32 OMV Group, Strategy and 2015 results presentation
Q4/15 Highlights Clean CCS EBIT Q4/15 vs. Q4/14 in EUR mn 545 Average Brent price down by 43% to USD 44/bbl Production at 309 kboe/d, down by 3% (324) Lower oil sales volumes, mainly in Yemen and Libya 20 (53) 187 Strong…
Results in Q4/15 Clean CCS net income attributable in EUR mn Q4/15 Q4/14 to stockholders 1 EBIT (1,729) (532) n.m. in EUR mn Financial result 18 (70) n.m. Profit from ordinary activities (1,711) (602) 184% Taxes 403 154 162%…
Special items and CCS effect Q4/15 in EUR mn Q4/15 Q4/14 in EUR mn Clean CCS EBIT 187 545 187 CCS gains/(losses) (155) (296) (155) Clean EBIT 32 249 (2) Personnel related costs (2) (12) Unscheduled depreciation (1,493) (699)…
Cash flow 2015 in EUR mn 2015 2014 in EUR mn Net income (1,255) 527 n.m. (669) Depreciation and (400) 5,159 3,167 63% amortization 5,159 (2,874) (39) Other (669) (433) 55% (530) Sources of funds 3,234 3,262 (1)% (569)…
Agenda Results Q4/15 Financial priorities and guidance 37 OMV Group, Strategy and 2015 results presentation
Financial priorities Cash Achieve broadly neutral free cash flow after dividends 2015 dividend EUR 1.00 per share 1 Dividend Maintain dividend policy of long-term payout ratio of 30% of net income Strong investment grade…
Integrated business model provides cash and bottom line resilience Sources of funds Clean CCS NOPAT in EUR bn in EUR bn 3.6 3.5 3.0 3.3 3.2 2.2 2.0 1.9 1.7 +6% 1.5 (22)% 2015 vs. 2011 2015 vs. 2011 2011 2012 2013 2014…
Resilience of OMVs Upstream portfolio in difficult times Approx. 90% of current production is operating cash 90% flow 1 positive at USD 30/bbl USD 30/bbl USD 31-50/bbl USD 50/bbl Sensitivity based calculation for the…
Oil price needed to be free cash flow neutral after dividends substantially reduced FCF after dividends break-even oil price in USD/bbl Neutral free cash flow after dividends at USD 55/bbl in 2017 (30)% 100 (20)% Headroom for…
CAPEX guidance further reduced and contingencies planned Group CAPEX in EUR bn (27)% Group CAPEX 2016 to be reduced 5.2 (28)% by EUR 1.4 bn vs. 2014 3.8 (13)% E&A 1 expenditure stepwise 4.4 2.8 reduced to EUR 0.45 bn in…
Significant cost reductions achieved in 2015 Impact 2015 vs. 2014 Upstream Reduced by USD 3.4/boe: 2015 from - 20 % production costs USD 16.6/boe to USD 13.2/boe 1 Downstream direct Further reduction on top of recent - 4% cash…
Healthy balance sheet in a challenging environment Gearing ratio Strong investment grade credit rating in % Moodys: A3, stable outlook (under review, along with 100 80 other oil and gas companies 1) 60 Fitch Ratings: A-, stable…
Sensitivities on OMV Group Operating 2016 impact in EUR mn EBIT cash flow Brent oil price (+USD 1/bbl) +40 +35 OMV indicator refining +100 +80 margin (+USD 1/bbl) EUR-USD (USD appreciates +180 +160 by 10 US cents) Note:…
Financial priorities in a nutshell Focus on cash flow Grow dividend as earnings improve Maintain strong balance sheet 46 OMV Group, Strategy and 2015 results presentation
Q&A OMV Aktiengesellschaft
Break OMV Aktiengesellschaft
Johann Pleininger Member of the Executive Board responsible for Upstream OMV Aktiengesellschaft
OMV Upstream asset base 2,824 Key figures 2015 Clean EBIT 2,154 2,086 in EUR mn 1,669 OMV produced an average of 303 kboe/d and its 139 proven reserves amounted to 1,028 mn boe 2011 2012 2013 2014 2015 Around two thirds…
Key priorities for Upstream Value over volume growth Rigorous spending discipline on CAPEX, OPEX, and E&A 1 Cash Group-wide cost reduction and capital efficiency program management Focus on highly profitable barrels Portfolio…
OMV Upstream has taken decisive actions to adjust to current market environment in EUR bn 1 (44)% Rephased and optimized long-term Reduced capital 2.7 delivery projects 1.9 1.5 expenditure Cut of non-committed CAPEX Focus on…
Focus on cost reduction and capital efficiency Reductions of EUR 1 bn vs. 2014 in EUR bn (20)% 4.7 Achievements 2015 3.7 CAPEX excl. E&A OPEX savings of EUR 90 mn Headcount reduced by 9% 1 Office costs reduced by 12% E&A…
Upstream activities will be focused Edvard Grieg (Lundin), Norway Urengoy, Russia (source Gazprom) Schnkirchen, Austria Ashtart, Tunisia New Zealand Core regions are mid-term self-funding and contribute 50 kboe/d Core…
Core 1 CEE counter natural decline rates at reasonable costs Beating the decline at reasonable costs Production in Romania and Austria, OPEX in USD/boe in kboe/d up to (23)% (4)% 1 204 202 190-200 16 12 Field development…
Neptun Deep Black Sea Romania ExxonMobil (Operator, 50%), OMV Petrom (50%) Domino-1 discovery in 2012: ROMANIA Neptun RUSSIA Deep UKRAINE 70.7 meters of net gas pay, preliminary estimate 1.5-3 tcf BULGARIA GEORGIA TURKEY…
Core 2 North Sea deliver development projects and optimize portfolio Aasta Hansteen Schiehallion Edvard Grieg Gudrun Gullfaks Ramp up production with declining in kboe/d production costs OPEX in USD/boe 100 (35)% 24 48 50 37…
Core 3 MEA deliver Nawara, pursue growth opportunities in Middle East OMV stays committed to Libya and Yemen Production in kboe/d OPEX in USD/boe 60 Upside of 40 USD 7/boe 15 11 23 0 Shuwaihat 5 well, UAE 2014 2015 2016…
Target growth opportunities in the United Arab Emirates and Iran United Arab Emirates North West Offshore Ongoing appraisal activities in the Shuwaihat sour gas and Abu Dhabi condensate field Exploration Activity Agreement with…
Reserve replenishment: OMV to focus on acquisitions in low-cost areas Proved reserves in mn boe 1,028 I Reserve Replacement Rate (RRR) of 100% II III Reserve replenishment through I Acquisitions in low-cost areas II…
Acquisitions: Achimov IV/V Long-term stable production, high reserve additions Russia offers significant reserves growth potential remaining reserves of 410 bn boe 1 Costs along the entire upstream value chain are among the lowest in…
Exploration: Reduce risk exposure in exploration portfolio E&A expenditures in EUR mn 693 (60)% Reduce exposure to high-risk, deep-water, long lead-time drilling Near-field 35% Focus on low-cost, near-field opportunities…
Production: Maintain 300 kboe/d, upside from Russia and assumed return of Libya/Yemen OMV production 300 kboe/d stable portfolio until end of in kboe/d decade 1 360 Minimize decline and ramp-up Upside potential development…
Upstream priorities in a nutshell Cash management Portfolio focus Reserve replenishment Strategic partnership 67 OMV Group, Strategy and 2015 results presentation
Manfred Leitner Member of the Executive Board responsible for Downstream OMV Aktiengesellschaft
Downstream Oil and Downstream Gas: two fundamentally different sides of a coin 2 20 Downstream Oil: Successfully 0 0 restructured into a 2011 2012 2013 2014 2015 strong cash generator 2 20 Downstream Gas: 0 0…
Agenda Downstream Oil Downstream Gas Downstream in a nutshell 70 OMV Group, Strategy and 2015 results presentation
OMVs Downstream Oil business has caught up with international majors (27)% Downstream Oil rolling ROACE 1 Assets restructured Net assets, in EUR 2011 2015 (17)% OPEX reduced Clean cash costs/ refined product sales, in EUR/t 2011…
Downstream Oil has become the cash engine for OMV Group Strong free cash flow contribution even in times of low refining margins in EUR bn annual cash Cash flow from contribution divestments from operations of EUR 0.7 bn Free…
Mid-term outlook for European oil downstream environment remains challenging Further refinery closures required to rebalance the market 1 Europe, in mn t 60 up to (10)% Declining demand and growing import 40 volumes Strongest…
Restructuring process of Downstream Oil results in superior integration of the business Equity crude in % of refining capacity Best in class capacity Upstream utilization of OMV refineries 24 25 Refinery utilization 2, in % 7 2014…
Optimization of retail network and sharpened brand positioning Throughput per station, in mn liters +15% Highly efficient retail network with focus on: Optimal brand positioning Two brand strategy in Austria and Romania increase…
High value petrochemical products as superior alternative to gasoline USD 3/bbl higher refining margins Refining indicator and petrochemical margin, in USD/bbl 12 Petrochemicals Fuels 8 4 Contract with Borealis extended: Offtake…
OMV Petrol Ofisi only cause for structural action in Downstream Oils portfolio On the one hand, Turkey is the single on the other hand, OMV Petrol largest growth market in Europe Ofisi has limited integration within Oil product…
Downstream Oil will continue to improve its competitive position Cash Robust free cash flow generation focus Divestment of OMV Petrol Ofisi HSSE Superior Selective retail and petrochemical investments integration to increase…
Agenda Downstream Oil Downstream Gas Downstream in a nutshell 79 OMV Group, Strategy and 2015 results presentation
Mid-term outlook for European gas downstream environment remains challenging Contracted supply largely Export potential to Europe exceeds demand sufficient to cover 2020 demand substantially EU 28, in bcm in bcm 523 Supply…
Europe will be swing market for LNG Global liquefaction capacity Especially destination-flexible US LNG expected to swing increasing by almost 50%, between Europe/ Asia depending on best pricing, in bcm in bcm Europe +190 590…
Decisions on asset portfolio taken Restructure gas Takeover of 100% of EconGas serves as the basis for sales business all OMV gas sales activities Divestment of Wind Park Dorobantu (Romania) in progress Minimize power exposure…
Gas sales business pivotal to market OMVs increasing supply portfolio North West Europe: Austria and Romania: 2 Growing supply position Stable supply position North West Europe 4 Increase market share to Keep market leader…
Nord Stream 2 engagement secures gas flows to Baumgarten and for Gas Connect Austria Nord Stream 1+2 Project with attractive, non-regulated return OMV share: 10% Total project investments (100%) of EUR 10 bn incl. financing…
Downstream Gas aims to turn around the business by restructuring stringently Create efficient basis for gas sales business Minimize power exposure Restructure Reduce exposure in regulated transport business Increase utilization…
Agenda Downstream Oil Downstream Gas Downstream in a nutshell 86 OMV Group, Strategy and 2015 results presentation
Downstream priorities in a nutshell Cash focus Superior integration Operational excellence Restructure Downstream Gas and position for future 87 OMV Group, Strategy and 2015 results presentation
OMV Aktiengesellschaft Rainer Seele Chairman of the Executive Board and CEO OMV Aktiengesellschaft
OMV in 2020 Sustainable resource base with improved profitability Cash: Broadly free cash flow neutral after dividends Production: 360 kboe/d including upside from Russia and Libya/Yemen Reserve Replacement Rate: 100% Downstream…
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