CONTENT I. EXECUTIVE SUMMARY II. UPSTREAM OPERATION III. DOWNSTREAM OPERATION IV. FINANCIALS V. APPENDIX KEY UPSTREAM PROJECTS 2
I. EXECUTIVE SUMMARY 3
KEY GOALS AND MESSAGES CURRENT PORTFOLIO* TO DELIVER 125 135 MBOEPD W. IMPROVING UNIT EBITDA GROWTH UPSTREAM OVER USD 1BN CAPEX SPENDING P.A. TO DERISK AND DEVELOP 1.5 BBOE TOTAL RESERVE AND RESOURCE POTENTIALS ACTIVE M&A TO…
UPSTREAM-DRIVEN, INTEGRATED COMPANY REGION EBITDA 2013 KEY DATA GROWTH DRIVERS & COMPETITIVE ADVANTAGE 576 MMboe SPE 2P reserves1 Around 10% production increase by 2015 960 MMboe Recoverable Organic production may increase by 30% in…
ORGANIC* PRODUCTION MAY INCREASE BY 30% IN 5 YEARS with major contributions from Middle East and North Sea areas with high unit EBITDA PRODUCTION OUTLOOK* BY 2015 AROUND 10% PRODUCTION (RISKED, ENTITLEMENT BASED) GROWTH* 140 30%…
ACTIVE M&A TO STEP INTO A NEW LEAGUE Targeting a more balanced portfolio in terms of country risk, with more focus on exploration NORTH SEA Enhance shallow offshore experience and create a new hub Pursuing opportunities to further…
KURDISTAN R.I.: ACCELERATED DEVELOPMENT TO ENHANCE CASH GENERATION Export started from Shaikan, Commercial production to start on Akri-Bijeel in November 2014 KURDISTAN REGION OF IRAQ Commercial discoveries (Bijell, Bakrman,…
AKRI-BIJEEL: PHASED, 4+1 RIG FIELD DEVELOPMENT PROGRAM To keep pace and flexibility parallel 2014 2015 2016 - 2017 FDP Phase I implementation FDP revision Phase I operation Phase II definition Phase II implementation Finishing…
NORTH SEA: A STRATEGIC STEP TO CREATE NEW HUB Entering an attractive new region with stability and economic incentives STRATEGIC CONSIDERATIONS Strategic step to enhance offshore experience and create a new hub Shifting average…
SIZEABLE SHORT/MID-TERM PRODUCTION WITH ABOVE AVG. UNIT PROFITABILITY New hub with cca. 9 mboped production in 2015 and 20-22 mboepd on peak (2018-2019) NORTH SEA (42 MMboe*) OVERVIEW OF MAIN PRODUCING ASSETS Majority of asset…
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)…
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 (%) 600 USD 500-550mn SCM-driven 500 8% improvement Revenue increase Sales…
CONTINUOUSLY STRENGTHENING FINANCIAL POSITION Indebtedness indicators at a 6-year low NET DEBT TO EBITDA (X) GEARING (%) 3.5 50 Limit of net debt to EBITDA 45 3 40 36 2.5 35 33 31 1.96 30 28 2 1.72 25 1.66 1.44 1.38 25 1.5 20…
USD 1.6-1.9BN CAPEX PLANNED FOR 2014 WITH UPSTREAM FOCUS Downstream spending to peak in 2014-15 due to ongoing growth projects Upstream Downstream Balance between early Strict control on sustain CAPEX cash generation 43% Selective…
MANAGEMENT HAS PROVEN TRACK RECORD IN TRANSFORMATION Continuity and experience are top priorities Stable, proved executive management team difficult portfolio and cost management decisions (Gas business, CAPEX cuts in 2009)…
MANAGEMENT INCENTIVE PROGRAMS On the top level around 70% of the compensation is variable Annual target setting and evaluation based on corporate, organizational and individual SHORT TERM INCENTIVES targets to focus managerial…
II. UPSTREAM OPERATION 18
UPSTREAM: SPEED UP ORGANIC DEVELOPMENTS AND RENEW THE ASSET BASE CURRENT PORTFOLIO* TO DELIVER AROUND 125-135 MBOEPD AT PEAK WITH IMPROVING UNIT EBITDA; OVER 10% GROWTH ALREADY IN 2015 ABOVE 100% RESERVE REPLACEMENT RATIO IS…
PRODUCTION ACTIVITIES IN 8 COUNTRIES Provide a good basis for the next years Production* Q1-Q3 2014: CEE total Russia 96 mboepd Croatia, Hungary Reserves**: 576 MMboe Reserves**: 130 MMboe Reserves: 348 MMboe Production*: 8 mboepd…
960 MMBOE* EXPLORATION POTENTIAL OF CURRENT ASSETS to secure organic mid-term growth CEE onshore & offshore Russia 140 150 Matjushkinsky, Baitugan**, Hungary, Croatia, Romania Yerilkinskiy** Kazakhstan 135 Fedorovskoye, North…
ORGANIC* PRODUCTION MAY INCREASE BY 30% IN 5 YEARS with major contributions from Middle East and North Sea areas with high unit EBITDA PRODUCTION OUTLOOK* BY 2015 AROUND 10% PRODUCTION (RISKED, ENTITLEMENT BASED) GROWTH* 140 30%…
OVER USD 1BN ORGANIC CAPEX SPENDING TARGETED P.A. to derisk and develop 1.5 BBoe total reserve and resource potentials GEOGRAPHICAL BREAKDOWN OF CAPEX SPENDING KEY INTERNATIONAL PROJECTS OF THE COMING YEARS Unrisked RRP Working…
KURDISTAN R.I.: ACCELERATED DEVELOPMENT TO ENHANCE CASH GENERATION Export started from Shaikan, Commercial production to start on Akri-Bijeel in November 2014 KURDISTAN REGION OF IRAQ Commercial discoveries (Bijell, Bakrman,…
FIRST VISIBLE BARRELS STABILIZE GROUP PRODUCTION LEVEL Unit profitability of export will be above group level due to PSC Shaikan: Export quality production with 20- 40 mboepd capacity in 2014; 40mboepd in 2015 Bijell EWT to deliver…
NORTH SEA: A STRATEGIC STEP TO CREATE NEW HUB Entering an attractive new region with stability and economic incentives STRATEGIC CONSIDERATIONS Strategic step to enhance offshore experience and create a new hub Shifting average…
SIZEABLE SHORT/MID-TERM PRODUCTION WITH ABOVE AVG. UNIT PROFITABILITY New hub with cca. 9 mboped production in 2015 and 20-22 mboepd on peak (2018-2019) NORTH SEA (42 MMboe*) OVERVIEW OF MAIN PRODUCING ASSETS Majority of asset…
CEE: MINIMALIZE DECLINE RATE TO LOW SINGLE DIGIT LEVEL Croatia: Stable production in 2015 HUNGARY+CROATIA (349 MMboe*) - PRODUCTION OUTLOOK 80 POS Unique know-how and infrastructure high 60 Several ongoing development projects to…
HUNGARY: MITIGATE THE DECLINE TO 5% FROM EXISTING FIELDS Along with several efficiency improvement measures to maximize cash-flow HUNGARY (140 MMboe) 75 years E&P experience with more than 40 years EOR/EGR technological knowledge…
KAZAKHSTAN: ENTERING FIELD DEVELOPMENT PHASE IN 2014 Start of early production is expected in 2H 2016 KAZAKHSTAN (37 MMboe) FED: Significant discoveries on a 200 MMboe* reserve field To enter in development phase in 2014 after 7…
RUSSIA: STILL A CORE COUNTRY AFTER PORTFOLIO RESTRUCTURING Intensive work program continues on existing fields RUSSIA (130 MMboe*) Portfolio restructured after monetizing ZMB field and 49% in Baitugan and Yerilkinsky Baitugan block…
PAKISTAN: INCREASING PROFITABILITY BY IMPROVING LIQUID TO GAS RATIO More focus on condensate rich exploration blocks with higher interests PAKISTAN (18 MMboe) 15 years of operatorship experience on 100 mboepd potential (100%) TAL…
ACTIVE M&A TO STEP INTO A NEW LEAGUE Targeting a more balanced portfolio in terms of country risk, with more focus on exploration NORTH SEA Enhance shallow offshore experience and create a new hub Pursuing opportunities to further…
III. DOWNSTREAM OPERATION 34
DOWNSTREAM: MAXIMIZE FREE CASH GENRATION WITH CEE CITADEL MODEL FOCUSED, INTEGRATED PORTFOLIO ON THE LANDLOCKED CEE MARKET WITH TWO LARGEST ASSETS AMONG THE MOST COMPLEX IN EUROPE CONTINUOUS EFFICIENCY IMPROVEMENT IN THE FOCUS:…
TWO LARGEST ASSETS AMONG THE BESTS IN EUROPE Integrated operation in adjacent markets KEY STRENGTH Complex, diesel geared refineries Integrated petrochemical units to handle surplus gasoline/naphtha pool Bratislava Strong…
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)…
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 (%) 600 500-550 mn USD SCM-driven 500 8% improvement Revenue increase Sales…
2013: IMPROVED PERFORMANCE DESPITE WORSENING CONDITIONS A clear evidence to the success of our efficiency improvement program NDSP DELIVERY 2012 VS 2013 (MN USD) +15 -235 +250 670 Brent-Ural spread: -0.4 USD /bbl 700 Gasoline…
EXTERNALS: NO MAJOR CHANGE IS EXPECTED IN THE ENVIRONMENT However, some improvement on the diesel side DOWNSTREAM MACRO REGIONAL DEMAND PREPARED FOR A PERSISTENTLY SLOW, BUT GRADUAL INCREASE OF CEE CHALLENGING REFINING MACRO…
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% 4% 2.5% 2.0 3.9 2.0 2% Market 0% (mn…
RETAIL ACQUISITIONS REINFORCES OUR COMPETITIVE POSITION WITHIN THE DOWNSTREAM SUPPLY RADIUS DOWNSTREAM SUPPLY RADIUS ACQUISITIONS HIGHLIGHTS Premium network of 169 Eni acquisition stations incl. 40+ stations next to highways and in…
EXTENDING THE PETROCHEMICALS VALUE CHAIN Increase profitability LDPE4 Butadiene S-SBR New 220 ktpa capacity LDPE New 130 ktpa capacity Entering into the synthetic unit replaces 3 old ones at SN; Butadiene Extraction Unit rubber…
IMPROVE SECURITY OF SUPPLY AND INCREASE CRUDE DIVERSITY Friendship 1 Restore the reliable operation of Friendship 1 pipeline Potentially able to fully cover Danube and Increase pipeline Bratislava refineries crude supply via cap. to…
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IV. FINANCIAL OVERVIEW 46
STRONG BALANCE SHEET HAS TOP PRIORITY CONSERVATIVE FINANCIAL POLICY: CAPEX SHOULD BE FINANCED FROM OPERATING CASH FLOW 16% NET GEARING & 0.8 NET DEBT TO EBITDA RATIO ARE AT A 5-YEAR LOW (YEAR-END 2013) USD 1.6-1.9BN CAPEX (2014)…
CONSERVATIVE FINANCIAL POLICY CAPEX should be financed from operating cash flow OPERATING CASH-FLOW VS CAPEX (MN USD) 4,000 3,500 3,000 INA 2,500 2,000 Pearl 1,500 1,000 Financials 500 0 2008 2009 2010 2011…
CONTINUOUSLY STRENGTHENING FINANCIAL POSITION Indebtedness indicators at a 6-year low NET DEBT TO EBITDA (X) GEARING (%) 3.5 50 Limit of net debt to EBITDA 45 3 40 36 2.5 35 33 31 1.96 30 28 2 1.72 25 1.66 1.44 1.38 25 1.5 20…
USD 1.6-1.9BN CAPEX PLANNED FOR 2014 WITH UPSTREAM FOCUS Downstream spending to peak in 2014-15 due to ongoing growth projects Upstream Downstream Balance between early Strict control on sustain CAPEX cash generation 43% Selective…
MOL HAS SUFFICIENT LIQUIDITY FOR ACQUISITIONS EUR 4.5 bn total available liquidity as of Q3 2014 DRAWN VERSUS UNDRAWN FACILITIES (EUR MILLION) TOTAL AVAILABLE LIQUIDITY (EUR MILLION) Financials 51
FROM DIVERSIFIED FUNDING SOURCES Cost rationalization keeping diversification in mind RECENT EVENTS MID- AND LONG-TERM COMMITTED FUNDING PORTFOLIO EUR 500m Revolving Credit Facility matured in September (USD 650m equivalent) New…
AVERAGE MATURITY OF 3.0 YEARS* Maturity structure enhanced with new transaction Financials *as of 30. 09. 2014 53
CREDIT RATING ABOVE SOVEREIGN RATING AT FITCH, IN LINE WITH THAT AT S&P FFO/NET DEBT* HISTORICAL FOREIGN LONG TERM RATINGS 50% MOL S&P Hungary S&P MOL Fitch Hungary Fitch 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2008 2009 2010 2011…
KEY ITEMS OF TAXATION Positive effect vs. 2012 level HUNGARY Revenue based Crisis tax abolished from 2013 HUF 30bn negative effect p.a. in 2010-12 Profit based Robin Hood nominal tax rate is 31% only energy related part of the profit…
DIVIDEND POLICY Conservative, predictable payouts with balance sheet stability in focus 80 KEY PRINCIPLES 70 Pay out dividend to shareholders in parallel maintaining adequate financial 60 stability Balance sheet has top…
SHAREHOLDER STRUCTURE As of 30 September 2014 DIVERSIFIED SHAREHOLDER STRUCTURE Foreign investors (mainly institutional) 22.7% Hungarian State 24.7% CEZ MH B.V. 7.3% OmanOil (Budapest) Limited 7.0% OTP Bank Plc. 5.9% Magnolia…
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V. APPENDIX KEY UPSTREAM PROJECTS 59
KURDISTAN REGION OF IRAQ World class discoveries in row, already in the spotlight of majors Oil reserves potential around 45 Bboe* Kurdistan Region of Iraq Gas and associated gas reserves potential up to 6 Tcm (38 Bboe)*…
OVERVIEW OF MOLS ASSETS IN KURDISTAN REGION OF IRAQ Harvesting on first movers advantage entry in 2007 amongst the first ones ENTERING THE KURDISTAN REGION OF IRAQ IN 2007 Kurdistan Region of Iraq MOL has interest in four blocks…
AKRI-BIJEEL: COMMERCIALITY DECLARED Accelerated field development work program with 4+1 rigs Kurdistan Region of Iraq Key Upstream projects 2 successful oil discoveries: Bijell-1 & Bakrman-1 Bijell EPF facility ready for operation…
WORK PROGRAM 2014-2015 to derisk the significant petroleum original oil in place Kurdistan Region of Iraq Key Upstream projects E - expected spud - expected well test * Conditional, not fixed yet, dependant on FDP approval.…
SHAIKAN: COMMERCIAL PRODUCTION STARTED, FIRST EXPORT CARGO DELIVERED IN JAN Gross production and sales of 20-40 mboepd in 2014 Kurdistan Region of Iraq Key Upstream projects Successful discovery and completion of five well…
STRUCTURE OF OUR PRODUCTION SHARING CONTRACTS SCHEMATIC OF PRODUCTION SHARING AT AKRI-BIJEEL BLOCK SCHEMATIC OF PRODUCTION SHARING AT SHAIKAN BLOCK Kurdistan Region of Iraq Oil produced Oil produced Royalty Oil Royalty Oil 10%…
CATCHER AREA One of the largest discoveries in the UK in the last 5 years 3 main discoveries: Catcher (2010), Varadero (2011), Burgman (2011) 2 additional small recent discoveries: Carnaby (2012) and Bonneville (2013) North Sea…
MOL HAS 20% IN THE RECENTLY SANCTIONED CATCHER PROJECT One of the largest ongoing North Sea development project KEY METRICS (100%, GROSS PROJECT) CATCHER AREA DEVELOPMENT SCHEME Gross capex 2.25 bn (1.6 bn to first oil) 2P reserves…
DERISKED ASSETS WITH SIZEABLE SHORT-MID TERM PRODUCTION Two blocks contribute with 5 mboepd already in 2015 BROOM FACTSHEET BROOM First discovery 1976 Two separately developed compartmentalized oil Type Oil accumulations, North…
TWO BLOCKS TO CONTRIBUTE 5 MBOEPD PRODUCTION ALREADY IN 2015 SCOTT FACTSHEET Scott Start of production 1993 Discovered in 1987, peak production was over 200 mboepd Type Oil The current development concept involves water flooding…
HUNGARY: MITIGATE THE DECLINE TO 5% FROM EXISTING FIELDS Along with several efficiency improvement measures to maximize cash-flow PRODUCTION AND FIELD DEVELOPMENT Central Eastern Europe 130 producing fields Accelerated…
CROATIA: STABLE PRODUCTION IN 2015 with significant efforts in field development PRODUCTION AND FIELD DEVELOPMENT Central Eastern Europe Close to 60 producing fields Deliver new volumes from ongoing development projects to turn…
KAZAKHSTAN: ENTERING FIELD DEVELOPMENT PHASE IN 2014 Likely upward revision of reserves on FED block after 7 succesful wells in row FEDOROVSKOYE FIELD MAJOR DISCOVERIES 7 successful well tests in row 3.900 boepd average flow rate with…
START OF EARLY PRODUCTION IS EXPECTED BY 2016 In the first phase of the field development focusing on early value generation FEDOROVSKOYE FIELD Finishing appraisal campaign with 1 well test left as well as update reserve estimates…
RUSSIA: A CORE COUNTRY AMID PORTFOLIO RESTRUCTURING Intensive work program continues on existing fields EXPERIENCES Primary target region: Volga-Ural, Western Siberia Over 10 years experience ensures technical capability in field…
MATJUSHINSKY BLOCK BAITUGAN BLOCK Russia Key Upstream projects Operator: MOL, 100% Operator : MOL, 100% 2P reserves: 22 MMbbl (2013) 2P reserves: 108 MMbbl (2013) Oil quality: 34 0 API Oil quality: 26 0 API Area: Western Siberia,…
PAKISTAN: INCREASING PROFITABILITY BY IMPROVING LIQUID OIL TO GAS RATIO More focus on condensate rich exploration blocks with higher interest HIGHLIGHTS 6+1 significant discoveries since 1999 Present in 5 blocks, in 3 as…
15 YEARS OF OPERATOR EXPERIENCE WITH 6 DISCOVERIES IN TAL BLOCK Accelerated work programs in other blocks in early phases TAL BLOCK Operated since 1999, 6 discoveries made by now Reserve base further increased with net 11 MMboe…
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