MOL Hungarian Oil & Gas PLC Class A · BET:MOL
MOL Hungarian Oil & Gas PLC Class A — Investor Presentation (July 2013)
76 slides from MOL Hungarian Oil & Gas PLC Class A's investor presentation, July 2013
Slide 1: Investor Presentation July 2013
INVESTOR PRESENTATION July 2013
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: Content
CONTENT Executive Summary Upstream Operation Downstream Operation Financials Appendix I – Key Upstream Projects Appendix II – New Downstream Program 3
Slide 4: Key goals and messages
KEY GOALS AND MESSAGES UPSTREAM 170 – 180 MBOEPD PRODUCTION TARGET W. STABLE UNIT PROFITABILITY UNLOCKING VALUE OF 1.6 BBOE RECOVERABLE RESOURCE POTENTIAL WITH SPECIAL FOCUS ON KURDISTAN R.I. 170 – 180 MBOEPD GROUP LEVEL PRODUCTION TARGET $250 MN FURTHER EFFICIENCY IMPROVEMENT TARGETED IN 2013 DOWNS
Slide 5: Upstream-driven, integrated company
UPSTREAM‐DRIVEN, INTEGRATED COMPANY REGION EBITDA 2012 DATA 2012 GROWTH DRIVERS & COMPETITIVE ADVANTAGE ► Field development driven growth in short ► 647 MMboe SPE 2P reserves term (RUS, PAK) Upstream ► Over 100% organic ► Transforming of existing exploration assets reserve replacement ratio in to pr
Slide 6: Upstream: unlocking value of 1.6 bboe RRP
UPSTREAM: UNLOCKING VALUE OF 1.6 BBOE RRP* Good reserve base and even greater potentials Proved and probable reserves 700 1.6 bn boe 600 *Working interest based unrisked recoverable 500 resource potential 400 0.6 MM Boe bn boe 300 200 100 Executive summary Proved Reserves Probable Reserves 0 Kurdist
Slide 7: Several key international projects to de-risk upside
SEVERAL KEY INTERNATIONAL PROJECTS TO DE‐RISK UPSIDE Key project timeline till 2018 Exploration Appraisal Development Production Unrisked Working Country Assets 2012 2013 2014 2015 2016 2017 2018 RRP POS Interest MMboe Kurdistan Region Akri‐Bijeel 80%* High of Iraq 725 Kurdistan Region Shaikan 20%*
Slide 8: Kurdistan Region of Iraq: key source of growth
KURDISTAN REGION OF IRAQ: KEY SOURCE OF GROWTH With three discoveries by now KURDISTAN REGION OF IRAQ Three discoveries (Bijell, Bakrman, Shaikan) Bakrman discovery (32‐35 API) may be good for blending De‐risk 725 MMboe recoverable resource potential* (WI) in the next years Reserve bookings in the n
Slide 9: First visible barrels stabilize group production level
FIRST VISIBLE BARRELS STABILIZE GROUP PRODUCTION LEVEL Unit profit above group level due to PSA ► Shaikan Development Plan approved and starts export quality production with 40 mboepd capacity by year end ► Bijell EWT to deliver first barrels ► Average unit profit Kuridstani barrels expected to be a
Slide 10: Downstream: outperforming in a challenging environment
DOWNSTREAM: OUTPERFORMING IN A CHALLENGING, BUT SOMEWHAT BETTER ENVIRONMENT IN 2012 Two largest assets are among the bests Refinery margin (USD/bbl) Clean CCS‐based DS* unit EBITDA (USD/bbl) 11 15 URL‐MED Refinery margin 10 8 5 5 0 2 ‐5 Q1 Q1 Q1 Q1 ‐1 2005 2006 2007 2008 2009 2010 2011 2012 2013 201
Slide 11: New DS Program: USD 500-550 mn efficiency improvement
NEW DS PROGRAM: USD 500‐550 MN EFFICIENCY IMPROVEMENT Major part should come in 2013 Regain top quartile position with 3‐3.5 USD/boe improvement Delivery on track – USD 150 mn saved in 2012 600 Focusing on key cost elements Revenue Cost Σ 500‐550 mn USD 10% decrease of total costs 500 Σ 400 mn USD 4
Slide 12: Continuously strengthening financial position
CONTINUOUSLY STRENGTHENING FINANCIAL POSITION Improving indebtedness indicators despite lack of Syrian revenue in 2012 Covenants Gearing (%) 40 3,5 5 36 Limit of net debt to EBITDA 33 3 31 4 30 28 2,5 25 3,0 3 2 2,5 2,4 (%) 20 2,2 2,0 1,5 2 1 10 1 0,5 0 0 0 2 008 2 009 2 010 2 011 2 012 2008 2009 20
Slide 13: ~$1.5 bn organic capex planned (2013)
~$1.5 BN ORGANIC CAPEX PLANNED (2013) WITH STRONG UPSTREAM FOCUS CAPEX should be fully financed from operating cash‐flow Upstream Downstream Strict control on sustain CAPEX Balance between early cash generation… Selective profitable growth 31% investments (50%) CEE CAPEX New DS Program ‐ efficiency
Slide 14: Management has proven track record in transformation
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) execution of challenging integrations (Slovnaft, TVK and INA). good track re
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THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY 15
Slide 16: Upstream Operation
UPSTREAM OPERATION > MOLGROUP 16
Slide 17: Upstream: on the way of monetizing company maker stories
UPSTREAM: ON THE WAY OF MONETIZING COMPANY MAKER STORIES DE‐RISKING OF 1.6 BBOE RECOVERABLE RESOURCE POTENTIAL IN THE COMING YEARS WITH MAIN FOCUS ON KURDISTAN AND KAZAKHSTAN KURDISTAN REMAINS IN FOCUS WITH MOST SIGNIFICANT UPSIDE POTENTIAL –FIRST VISIBLE BARRELS ALREADY IN THIS YEAR 170‐180 MBOEPD
Slide 18: Production activities in countries
PRODUCTION ACTIVITIES IN 7 COUNTRIES Provide a good basis for the next three years CEE total Production*, 2013 Q1: 110 mboepd Syria Reserves: 647 MMboe Reserves: 36 MMboe Croatia, Hungary Reserves: 381 MMboe Force majeure Production: 84.5mboepd o/w CEE offshore Pakistan Reserves: 38 MMboe Reserves:
Slide 19: 1.6 bboe exploration potential of current assets
1.6 BBOE* EXPLORATION POTENTIAL OF CURRENT ASSETS to secure organic mid‐term growth CEE onshore & offshore Russia 140 230 Matjushkinsky, Surgut‐7, Hungary, Croatia, Romania Baitugan, Yerilkinskiy 135 Kazakhstan Fedorovskoye, North Karpovsky Pakistan Kurdistan Region of Iraq 55 725 Tal, Karak, Margal
Slide 20: Exploration successes are the basis of long-term growth
EXPLORATION SUCCESSES ARE THE BASIS OF LONG‐TERM GROWTH Outstanding, over 60% exploration success rate in the last 3 years Sizeable reserve additions over the Several billion last years mainly barrel Shaikan from Baitugan. More discovery (20%) – discoveries in 2009 and successful Matjushinsky block
Slide 21: Slight production decline continues in 2013
SLIGHT PRODUCTION DECLINE CONTINUES IN 2013 TO ~110 MBOEPD …but gradual increase thereafter: 110‐120 mboepd in 2014/15 Production outlook* ~115 mboepd ~110 mboepd Other Pakistan Russia mboepd Croatia Upstream Hungary *excluding Syrian contribution 21
Slide 22: Good reserve base and even greater potentials
GOOD RESERVE BASE AND EVEN GREATER POTENTIALS Resource potential could be the basis of >100% reserve replacement in 3yrs average Proved and probable reserves 700 1.6 bn boe 600 *Working interest based unrisked recoverable 500 resource potential 400 0.6 MM Boe bn boe 300 200 100 Proved Reserves Proba
Slide 23: Several key international projects to de-risk upside
SEVERAL KEY INTERNATIONAL PROJECTS TO DE‐RISK UPSIDE Key project timeline till 2018 Exploration Appraisal Development Production Unrisked Working Country Assets 2012 2013 2014 2015 2016 2017 2018 RRP POS Interest MMboe Kurdistan Region Akri‐Bijeel 80%* High of Iraq 725 Kurdistan Region Shaikan 20%*
Slide 24: Up to USD 1-1.5 bn capex per year with international focus
UP TO USD 1‐1.5 BN CAPEX PER YEAR WITH INTERNATIONAL FOCUS …to finance reserve booking and growing production Major International Upstream projects and their CAPEX (2013‐2015) expected resource allocation 80 Croatia Russia Bubble size represents CAPEX allocation for 2013‐15 Kurdistan Region of Iraq
Slide 25: Kurdistan Region of Iraq: key source of growth
KURDISTAN REGION OF IRAQ: KEY SOURCE OF GROWTH With three discoveries by now KURDISTAN REGION OF IRAQ Three discoveries (Bijell, Bakrman, Shaikan) Bakrman discovery (32‐35 API) may be good for blending De‐risk 725 MMboe recoverable resource potential* (WI) in the next years Reserve bookings in the n
Slide 26: Kazakhstan: new core country for mid-term growth
KAZAKHSTAN: NEW CORE COUNTRY FOR MID‐TERM GROWTH Federovskoye peak production is expected to be around 12‐13 mboepd KAZAKHSTAN (37 Mmboe) Significant discovery in recent years (gross field size ~ 200 Mmboe reserves) New block acquired (49%) in 2012 in the vicinity with significant recoverable resour
Slide 27: Russia: continuous production increase to ~40 mboepd
RUSSIA: CONTINUOUS PRODUCTION INCREASE TO ~40 MBOEPD Reserves and sizeable exploration upside create mid‐/long‐term growth potential RUSSIA (176 MMboe) Diversified Russian portfolio Good reserve base to boost production More focus on bigger potential mid term projects 140 MMboe undrilled exploraion
Slide 28: Pakistan: higher profit from oil/condensate discoveries
PAKISTAN: HIGHER PROFIT FROM OIL/CONDENSATE DISCOVERIES Gradual production growth to 12‐14 mboepd PAKISTAN (9 MMboe) Tal block Operatorship experience: major project with ca. 100.000 boe daily production potential (100%) Ongoing capacity extension to handle increasing condensate production Karak Blo
Slide 29: Hungary remains a core country
HUNGARY REMAINS A CORE COUNTRY Our aim is to mitigate the natural decline rate to below 5% HUNGARY (159 MMboe) 75 years E&P experience with more than 40 years EOR/EGR technological knowledge Extensive surface infrastructure Low production and exploration costs Fast development provides quick cash fl
Slide 30: Croatia: continuing recent exploration successes
CROATIA: CONTINUING RECENT EXPLORATION SUCCESSES Aiming to maintain production on 2013 level in the coming years CROATIA (222 MMboe) Three oil discoveries in 2011‐2012 proved our good geological knowledge Enhanced Oil/Gas Recovery projects and remaining offshore exploration potential Committed to ha
Slide 31: More active portfolio management to renew the asset mix
MORE ACTIVE PORTFOLIO MANAGEMENT TO RENEW THE ASSET MIX Exploration‐led focus: add new high impact elements and potential early harvests 2012: PT RD S Potential early value Russia – Yerkelinskiy KS Development realizations – after value KZ Oman 66 PA Appraisal A creation with Kazakhstan ‐ North ZMB
Slide 32: Downstream Operation
DOWNSTREAM OPERATION > MOLGROUP 32
Slide 33: Downstream remains a core pillar of the group
DOWNSTREAM REMAINS A CORE PILLAR OF THE GROUP TWO LARGEST ASSETS AMONG THE BESTS IN EUROPE IN CHALLENGING TIMES AS WELL NEW DOWNSTREAM PROGRAM ON TRACK WITH $150 MN SAVING IN 2012 MAJORITY OF $500 MN EFFICIENCY PROGRAM DUE IN 2013 STRENGTHEN CAPTIVE MARKET IN THE LANDLOCKED CEE Downstream SELECTIVE
Slide 34: Two largest assets among the best in Europe
TWO LARGEST ASSETS AMONG THE BESTS IN EUROPE IN CHALLENGING TIMES Integrated operation in adjacent markets KEY STRENGTH ► Complex, diesel geared refineries ► Integrated petrochemical units to handle surplus Bratislava gasoline/naphtha pool ► Strong land‐locked market presence – 21% motor fuel market
Slide 35: 2012: some easing in the environment, outperforming
2012: SOME EASING IN THE ENVIRONMENT, OUTPERFORMING MOL However, still significant gap to pre‐crisis level profitability, less efficient units below break even Refinery margin (USD/bbl) Clean CCS‐based DS* unit EBITDA (USD/bbl) 11 URL‐MED Refinery margin 15 13 8 11 9 5 7 5 2 3 1 2005 2006 2007 2008
Slide 36: New DS Program: USD 500-550 mn efficiency improvement
NEW DS PROGRAM: USD 500‐550 MN EFFINCIENCY IMPROVEMENT to regain top quartile position with 3‐3.5 USD/boe improvement Cost decrease Revenue increase $ 370‐400 mn $ 130‐150 mn Energy Petrochemicals management 30% 29% sales strategy Maintenance management 21% R&M and Retail 27% 42% sales strategy 73%
Slide 37: USD 150mn already delivered, even more to come in 2013
USD 150MN ALREADY DELIVERED, EVEN MORE TO COME IN 2013 Continuos delivery in time, proportional contribution of key flagship companies Revenue Cost 600 Σ 500‐550 mn USD 500 Σ 400 mn USD 400 benefit [mn USD] 300 200 Σ 150 mn USD 100 0 2012 2013 2014 NDSP total Downstream Key actions of 2012 Volumetri
Slide 38: Increasing role of captive market in falling demand environment
INCREASING ROLE OF CAPTIVE MARKET IN FALLING DEMAND ENVIRONM. Long‐term trends justify complexity and diesel focus Motor fuel demand in key regional countries Supply‐Demand Balance of the CEE region (Mt) 110% Hungary Slovakia Croatia Czech Republic 105% 5 100% 0 95% ‐5 90% ‐10 85% Gasoil Balance Gas
Slide 39: Selective investments to improve profitability
SELECTIVE INVESTMENTS TO IMPROVE PROFITABILITY …and increase flexibility 1 Growth in high margin captive markets Capture profitable niche segment + maintain/increase flexibility via 2 Petchem 3 Gradual improvement of Croatian DS profitability 1 2 3 RETAIL, LOGISTICS PETROCHEMICALS CROATIAN DOWNSTREA
Slide 40: Financial Overview
FINANCIAL OVERVIEW > MOLGROUP 40
Slide 41: Strong balance sheet has top priority
STRONG BALANCE SHEET HAS TOP PRIORITY CONSERVATIVE FINANCIAL POLICY: CAPEX SHOULD BE FINANCED FROM OPERATING CASH FLOW CONTINUOUSLY STRENGTHENING FINANCIAL POSITION IN LAST YEARS 25% NET GEARING & 1.4 NET DEBT TO EBITDA RATIO ARE WELL BELOW INTERNAL LIMITS AND COVENANTS ~$1.5 BN ORGANIC CAPEX (2013)
Slide 42: Conservative financial policy: capex financed from operating cash flow
CONSERVATIVE FINANCIAL POLICY: CAPEX should be financed from operating cash flow 700 600 500 INA 400 HUF bn Pearl 300 200 100 Financials 0 2007 2008 2009 2010 2011 2012 Organic Inorganic Operating CF 42
Slide 43: Continuously strengthening financial position
…RESULTED CONTINUOUSLY STRENGTHENING FINANCIAL POSITION Improving indebtedness indicators despite lack of Syrian revenue in 2012 Covenants Gearing (%) 40 3,5 5 36 Limit of net debt to EBITDA 33 3 31 4 30 28 2,5 25 3,0 3 2 2,5 2,4 (%) 20 2,2 2,0 1,5 2 1 10 1 0,5 0 0 0 2 008 2 009 2 010 2 011 2 012 20
Slide 44: ~$1.5 bn organic capex plan (2013)
~$1.5 BN ORGANIC CAPEX PLAN (2013) WITH STRONG UPSTREAM FOCUS Balance between early cash generation and creation of growth potential Upstream Downstream Strict control on sustain CAPEX Balance between early cash generation… Selective profitable growth 31% investments (50%) CEE CAPEX New DS Program ‐
Slide 45: Considerable available liquidity
CONSIDERABLE AVAILABLE LIQUIDITY… More than EUR 3.4 bn total available liquidity* Drawn versus undrawn facilities (EUR million) Total available liquidity (EUR million) Existing mid- and long term facilities 7000 as of 31 March 2013 6000 610 Facility Drawdowns Available 1282 amount 5000 1926 Instrume
Slide 46: From diversified funding sources
…FROM DIVERSIFIED FUNDING SOURCES Further steps made towards diversification in 2012 and 2013 Recent events Mid‐ and long‐term committed funding portfolio Multilateral Other bilateral New USD 500 mn USD denominated bond loans 8% loans 1% Syndicated / issued with 7‐years maturity ‐ Sept 2012 Perpetua
Slide 47: Average maturity of 3.3 years
AVERAGE MATURITY OF 3.3 YEARS* 2 500 2 000 687 1 500 EUR M 426 346 154 1 000 224 1834 60 362 308 500 750 750 641 475 610 382 10 53 95 98 98 98 0 31 Reported 2013 2014 2015 2016 2017 2018 2019 cash&cash Financials equivalents Reported cash&cash equivalents Long term loan (multilaterals) Senior Unsecu
Slide 48: FX mix of operation serves as natural hedge for our debt
FX MIX OF OPERATION SERVES AS A NATURAL HEDGE FOR OUR DEBT USD and EUR denominated business mix, balanced FX exposure with the debt portfolio Revenue generation by divisions, 2012 Debt by currencies, 31 Dec 2012 Corporate Gas Mid‐ Orther & Other Upstream stream 4% 3% 13% 7% USD 27% Down‐ EUR stream;
Slide 49: Changes in Hungarian taxation
CHANGES IN HUNGARIAN TAXATION Neutral to positive effect vs. 2012 level Key changes: Revenue based ’Crisis tax’ ended 2012 – cca HUF 30 bn negative effect in 2010‐12 (pre‐tax) Profit based ’Robin Hood tax’ rate will increase from previous 8% to 31% only energy related part of the profit affected (~7
Slide 50: Shareholder structure
SHAREHOLDER STRUCTURE As of 31 March 2013 DIVERSIFIED SHAREHOLDER STRUCTURE Foreign investors (mainly institutional) 27.4% Hungarian State 24.6% 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
Slide 51: Appendix I: Key Upstream Projects
APPENDIX I KEY UPSTREAM PROJECTS 51
Slide 52: Kurdistan Region of Iraq
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)* Production Sharing Contracts awarded for 42 licences** High (~70%) discovery ra
Slide 53: Overview of MOL's assets in Kurdistan Region of Iraq
OVERVIEW OF MOL’S ASSETS IN KURDISTAN REGION OF IRAQ Harvesting on first mover’s advantage – enrty in 2007 amongst the first ones ENTERING THE KURDISTAN REGION OF IRAQ IN 2007 MOL has interest in four blocks 3 major discoveries in recent years Kurdistan region of Iraq INTENSIVE APPRAISAL PROGRAM TO
Slide 54: Akri-Bijeel: two successful discoveries
AKRI‐BIJEEL: TWO SUCCESSFUL DISCOVERIES Recent oil discovery in Bakrman‐1 Located N of Erbil, total Block area: 889 km2 Kurdistan region of Iraq Consist of two different terrains: lowlands covered by thick Tertiary; mountains with exposed Cretaceous Planned expl. well 2013 Drilled expl. well 2012 Di
Slide 55: Work program 2013-2014
WORK PROGRAM 2013 – 2014 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 further evaluation. 55
Slide 56: Shaikan: development plan approved, first visible barrels in 2013
SHAIKAN: DEVELOPMENT PLAN APPROVED – FIRST VISIBLE BARRELS IN 2013 Combined capacity of production facilities will be 40 mboepd by end 2013 Located NW of Erbil Kurdistan region of Iraq Total Block area: 283 km2 Key Upstream projects Successful discovery and completion of five well appraisal program,
Slide 57: Structure of our production sharing agreements
STRUCTURE OF OUR PRODUCTION SHARING AGREEMENTS 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% of total Crude oil 10% of total Crude oil 43% Available crude Oil 40% Av
Slide 58: Kazakhstan: unrecognised value to be tested for the first time
KAZAKHSTAN: UNRECOGNISED VALUE OF 120 MMBOE TO BE TESTED FOR THE FIRST TIME FEDOROVSKOYE FIELD – MAJOR DISCOVERIES ►5 successful well tests in row ► 4.000 mboepd average with flow rate with ~55% condensate Kazakhstan content ►Wells proven multiple gas and condensate reservoirs in the Rozhkovsky fiel
Slide 59: Start of early production is expected in 2016
START OF EARLY PRODUCTION IS EXPECTED IN 2016 Following an instensive drilling campaign in the coming years FEDOROVSKOYE FIELD ► Focus both on drilling appraisal wells and development for early production phase ► 2013: Drilling 3 appraisal wells, testing 5 wells, 2014: Completion of 5 wells Kazakhst
Slide 60: Russia: core country with short/mid-term production growth
RUSSIA: CORE COUNTRY WITH SHORT/MID‐TERM PRODUCTION GROWTH Intensive work program in the coming years EXPERIENCES ► Primary target region: Volga‐Ural, Western Siberia ►10 years experience ensures technical capability in field Russia development‐rejuvenation and exploration FIVE BLOCKS IN DIFFERENT P
Slide 61: Matyushinsky Block and Baitugan Block
MATYUSHINSKY BLOCK BAITUGAN BLOCK Exploration upside: 7‐10 prospects Significant reserves accessible for production Legend Oil field Block boundary Russia Oil pipeline Gas pipeline Russia Transneft pipeline The Komalka river Road Baitugan OTU Baitugan Field Key Upstream projects The Baltugan 0 10 20
Slide 62: Matyushkinsky Block and Baitugan Block
MATYUSHKINSKY BLOCK BAITUGAN BLOCK Exploration upside: 7‐10 prospects Significant reserves accessible for production COMPLEX BLOCK INTENSIVE DEVELOPMENT RESULTED RESERVES BOOKING ► Sizeable acreage ► An intense construction and investment program was launched in ► Producing assets: 62 wells in three
Slide 63: Pakistan: increasing production profitability
PAKISTAN: INCREASING PRODUCTION PROFITABILITY BY IMPROVING OIL TO GAS RATIO… TAL BLOCK ► The aim is to continue appraisal activity on recent Pakistan Tal block discoveries (MamiKhel, Maramzai, Makori East and Tolanj) and to continue exploration of remaining potential of the block. ► Increase reserve
Slide 64: Ensuring reserve and production growth in the next three years
... AND ENSURING RESERVE AND PRODUCTION GROWTH IN THE NEXT THREE YEARS MOL has acquired noticeable operation experience HIGHLIGHTS ► 6+1 significant discoveries since 1999 ► Production started only two years after the first discovery Pakistan ► Noticeable operation experience, local and technical kn
Slide 65: CEE: maximize recovery rates and mitigate decline rate
CEE: MAXIMIZE RECOVERY RATES FROM EXISTING FIELDS AND MITIGATE DECLINE RATE Onshore and offshore field development (2012) FIELD DEVELOPMENTS AND EOR/IOR PROJECTS Central Eastern Europe ► ~130 producing fields ► ~20 field developments completed & 6 are in progress ► An additional 10 new field develop
Slide 66: Targeted recoverable resource potential: CEE exploration
275 MMBOE TARGETED RECOVERABLE RESOURCE POTENTIAL CEE exploration (2012) – outstanding success ratio in the region Central Eastern Europe ► Acreage exposure: 6 300 km2 ► 2013: up to 8 conventional drillings/tests ► 3D seismic measurement ► Exploration expenditure for 2013 (USD mn): over USD 130 mn #
Slide 67: Appendix II: New Downstream Program
APPENDIX II NEW DOWNSTREAM PROGRAM 67
Slide 68: Program covers the entire downstream value chain
PROGRAM COVERS THE ENTIRE DOWNSTREAM VALUE CHAIN More than 500 individual projects in 19 main groups of initiatives Crude Supply Refining Logistics Petchem Wholesale Retail Real Crude Selection Value chain On demand production optimization optimization Quality givaways Make or buy (Own production vs
Slide 69: Few 'big things' and hundreds of small actions
FEW ‘BIG THINGS’ AND HUNDREDS OF SMALL ACTIONS Primary attention on top actions result 80% of total benefit cumulative Total 2014 savings Some mid‐scale projects and hundreds of small actions within the more than 500 projects 400 80% of the total EBITDA increase will result from 17% of actions Four
Slide 70: Like-for-like 10% cost savings targeting all key cost elements
LIKE‐FOR‐LIKE 10% COST SAVINGS BY TARGETING ALL THE KEY COST ELEMENTS Cost structure* of Energy cost 1 MOL Group Volumetric reduction Downstream Optimization of energy sources and procedures $ 3.7 billion Contract management New Downstream Program target: 10% reduction Energy cost (own cons.) Mainte
Slide 71: Targeted 10% decrease in total energy costs
TARGETED 10% DECREASE IN TOTAL ENERGY COSTS 1 Solomon EII ® (MOL Group vs. Western Europe Trend Group) Q4 Aiming to reach Q1 performance Q3 Q2 in Solomon index for DR, BR Energy Intensity Index Q1 Aiming to increase CRO refineries Sisak Rijeka Mantova Over 200 actions Danube Bratislava Ca. USD 150 m
Slide 72: Keep tight maintenance spendings
KEEP TIGHT MAINTENANCE SPENDINGS 2 Solomon 300 MEI ® (Western Europe Trend Group) Q4 250 Q3 Complex Maintenance Spending (CMS): Maintenance Efficiency Index 200 Q2 Ca. USD 400 million in 2011, Q1 including USD 120 million CAPEX 150 (EURO) Mantova 100 Sisak Aiming to reach Q1 efficiency in maintenanc
Slide 73: Other significant cost and cash flow related initiatives
OTHER SIGNIFICANT COST AND CASH FLOW RELATED NEW DOWNSTREAM INITIATIVES Inventory Hydrocarbon loss management management Ca. 10% stockholding Hydrocarbon loss in 2011: 0.9% reduction target: Ca. USD 110‐120 million Release 110‐120 kt Set non‐tolerable loss limits and act to product and raw material
Slide 74: Reorganization and resource productivity improvement
REORGANIZATION AND RESOURCE PRODUCTIVITY IMPROVEMENT 3 Downstream Old DS structure 1. Review of our business R&M Petchem Retail SCM processes and organizational structure: PROD PROD Wind up silo operation LOG LOG SALES Exploit synergy potentials SALES SALES NETWORK Cease functional duplications and
Slide 75: Group level effect of downstream reorganization
GROUP LEVEL EFFECT OF DOWNSTREAM REORGANIZATION 3 Organizations Headcount Group‐level Downstream organizations Group‐level headcount reduction decreased by 60% from 520 to 165 people Managerial headcount reduction by 30% New/remaining Terminating Group‐level Terminating group‐level group‐level 41 gr
Slide 76: Sales portfolio revision to increase margin revenue
SALES PORTFOLIO REVISION TO INCREASE MARGIN REVENUE Fuel Sales ‐ Logistics Retail Increase/maintain strong market leader position on Increase and rationalize Retail market presence domestic markets Growth in Czech Rep., Romania, Serbia, Slovenia Market optimization on core export markets Keep leadin
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