Overview of MOL Group Strategy Lajos Alács Executive Vice President Strategy and Business...
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Transcript of Overview of MOL Group Strategy Lajos Alács Executive Vice President Strategy and Business...
Overview of MOL Group Strategy
Lajos AlácsExecutive Vice President
Strategy and Business Development Budapest, 14th of November 2007
A Leading European Integrated Oil and Gas Company
2
36,4
10,0
5,4
10,0
9,2
8,3
8,2
5,5
7,1
Foreign investors (mainly institutional)
MFB Invest ZrtOTP Bank Nyrt
BNP Paribas
MOL Plc (treasury shares)Magnolia
Domestic investors
OMVBank Austria AG
► One of the best performingintegrated energy companiesin the world
► Leader in core markets ofHungary, Slovakia and inCroatia via INA
► State of the art asset baseserving a high growthdownstream region
► Highly successfulregional partnerships:Slovnaft, TVK, INA
► Management withoutstanding track record inoperational integration andefficiency improvement
Shareholding structure (%)(approximate) (01.10.2007)
Slovnaft ( 98.4 %)
INA ( 25.0%+1 share)
TVK ( 94.9%)*
*direct and indirect influence
UPSTREAMGas
TransmissionE&P
DOWNSTREAM
PetrochemicalsR&M
MOL Plc.
Operational integration
Key financial indicators
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2005 In USD m* 2006 Change
2006/2005
1,524.3 Operating profit 1,875.4 +23%
1,453.1 Adjusted operating profit** 1,485.0 +2%
2,142.7 EBITDA 2,514.4 +17%
1,413.1 Operating cash flow 2,515.3 +78%
1,183.3 CAPEX 889.4 (25%)
1,226.3 Net income 1,565.2 +28%
12.0 Basic EPS (USD) 16.3 +36%
23.4% Gearing (17.3%) -
29.9% ROACE*** 27.2% -
► (*) In converting HUF financial data into US Dollars the following rates were used: for 2004: 202.6 HUF/USD for 2005:199.7 HUF/USD, for 2006: 210.5 HUF/USD.
► (**) Operating profit excluding the HUF 82.6 bn one-off gain on the gas transaction and the profit of the subsidiaries sold in this transaction (Wholesale and Storage).
► (***) Excluding HUF 82.6 bn one-off gain on the gas transaction.
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► Gas transmission 5,226 km high-pressure natural gas pipeline network across
Hungary Regulated domestic business with stable cash flow Transit activity to Serbia and Bosnia-Herzegovina
Main businesses of MOL Group
► Petrochemicals Largest polymer player in Central Europe (839 kt ethylene and
1281 kt polymer capacity) Majority of sales in high growth, converging European market Full operational integration with Downstream business
► Refining and Marketing 2 complex refineries with capacity of 14.2 mtpa (NCI above 10) Turning high sulphur content Ural into quality products Pipeline based supply, extensive product pipeline and depot system 838 filling stations in 8 countries IES closing expected in Q4 2007
► Exploration and production Sizeable domestic activity since 1937 and focused international activities since early
1990s Production in 2006: 102,618 boe/day (48% gas – 52% oil) Proven reserves in 2006: 331.5 mm boe incl 25% of INA (66% gas – 34% oil)
Focused upstream portfolio with potential for significant growth
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ALGLBA
EGY PAK
KAZ
OM
YEM
SYR
ANG
RUS
RO
PRODUCTION
EXPLORATION
INA
Potential newcore markets
MOL
CRH
I
ALGLBA
EGY PAK
KAZ
OM
YEM
SYR
ANG
RUS
RO
PRODUCTION
EXPLORATION
INA
Potential newcore markets
MOL
CRH
I
H
CR
102600
300000
58200
0
50000
100000
150000
200000
250000
300000
2006 2010 Target
MOL INA
Production
266,2
261,2
900
0
300
600
900
2006 2010 Target
MOL INA
Reserveboepd mboe
Exploration & Production
High quality refining assets combined with unique logistics
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D
D
BG
UKR
ALMK
Friendship oil pipeline
Friendship ICapacity: 20 mtpa
Friendship IlCapacity: 7.9 mtpa
Adria JANAFCapacity: 10 mtpa
Refineries
BRATISLAVACapacity: 6.1 mtpaNCI: 11.5
DUNA Capacity: 8.1 mtpaNCI: 10.6
SISAKCapacity: 2.2 mtpa NCI: 6.1
RIJEKA Capacity: 4.5 mtpaNCI: 5.8
MOL Group depots used INA depots used Refineries
Friendship oil pipeline Adria oil pipeline Product pipeline
► Key target: refined product sales exceeding 25 mtpa
► Pipeline based crude supply and alternative import route
► Group level SCM optimisation
► MOL, SN complex refineries produce only EU 2009 quality products
► Extensive proprietary product pipeline logistics
► Efficient regional depot system
Refining & Marketing
CZ
A
PL
RO
BIH
SLO
SCGI
H
IES*Capacity: 2.6 mtpaNCI: 8.4
* Transaction is expected to be closed in Q4 2007
Retail: Develop an efficient network within our refineries’ supply radius
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► Key target: develop an efficient retail network of 1500 filling stations
► Retail is strongly integrated with refining and wholesale activities, enabling the capture of synergies
► MOL: 838 FSs (incl. Tifon)INA: 454 FSs
► Closing in progress:IES (Ita): 5 COCO, 30 CODO, 126 DODO
0 500 1000
MOL Group filling stations INA filling stations
km
PLD
A
CZ
RO
BIH
SLO
SCG
UKR
HR
SK
H 320 COCA43 DODO
407
10 COCO
41
Optimisation of existing network
Potential growth through greenfield or acquisition
6
67
MOL-INA JV filling stations
1,41
2,70
3,52
4,78
3,38
4,34
1,82
128 CODO
Average site throughput per year (Mlitre)
34 CODO
28 COCO
209 CODO
30 CODO
3,40
1,20
Refining & Marketing
36 COCO
Europe’s Highest Net Cash Refining Margin ($/bbl) European Upstream Net Income ($/boe, 2005) (1)
16,8
15,4 15,2 15,1 14,7 14,513,8
13,312,1
28,9
23,1
19,0
17,9 17,8 17,6
0
10
20
30
MO
LO
MV
Source: Wood Mackenzie
Source: John S. Herold, Harrison Lovegrove
(1) 2006 results are not yet available
Average = $17/bbl
$/bbl
0
2
4
6
8
10
12
MO
LN
este
Oil
PK
N O
rlen
SA
PdV
SA
Sar
asG
rupa
LO
TO
SR
epso
l YP
FC
RC
LUK
OIL
Cep
sa Eni
She
llO
MV
Gal
p E
nerg
ia BP
Tot
alH
elle
nic
Pet
role
umE
RG
KP
IE
xxon
Mob
ilT
üpra
sP
reem
Con
ocoP
hilli
psC
hevr
onT
amoi
lIN
EO
SS
tato
ilIN
AP
etro
plus
NIS
Outstanding profitability in Europe in Core Businesses
Source: Wood Mackenzie, 2007
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► Strong track record in delivering profitable growth to continue– Superior profitability in core businesses versus European peers (Downstream and
Upstream)– Strong market position
► Significant unrecognised organic upside potential– A number of high-growth organic projects are not fully recognised by the market– MOL’s high-quality asset base and unique expertise will be leveraged– EBITDA CAGR of 6.5% expected through 2011, EBITDA reaching USD 3 billion
► Clear vision of corporate development strategy (M&A and partnerships)– Actively evaluating various acquisition opportunities– Strong and disciplined M&A track record– Continuing to pursue business partnerships in order to maximise shareholder value– Favourable geographical location enables us to capitalise on partnerships with suppliers and
customers
► Commitment to maintain efficient capital structure– Enables us to continue our focused M&A activity – Provides flexibility to distribute even more cash back to shareholders
MOL’s stated independent strategy creates the highest value for our shareholders
Independent value creating strategy
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► Refining and Marketing• Duna Refinery Hydrocracker project to boost capacity & profitability• Increasing electricity integration should drive cost savings
► Exploration and Production• Intensive use of acreage through partnerships in Hungary• Replicating Hungarian E&P success internationally• Strong exploration portfolio with proven track record based on recent
transactions
► Petrochemicals• Further efficiency improvements on back of merging TVK and Slovnaft
petchem operations• 4% capacity expansion till 2011 through intensification and debottlenecking• Stronger sales based on improved marketing strategy
► Natural Gas• Doubling gas transit business through new international pipeline connections• New Hungarian gas storage business: profitable, stable upside
► Power generation• 2 gas fired power plants in Százhalombatta and Bratislava
► Targeted 2007-2010 total organic Capex: $5.3 Bn (without power generation)
Leveraging on organic growth potential…
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… while having a strong track record in inorganic growth and actively pursuing new opportunities
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► Recently announced transactions: ► Agreement on acquisition of 40% non-operating interest of an offshore exploration block in Cameroon► Signature of Production Sharing Agreements in Kurdistan (2 exploration blocks with 80% and 20%paying interest)
► MOL enforces strict evaluation criteria that focus on strategic, financial and operational targets
► Investments passing these criteria provide robust returns
Acquisition of 36.2% of
Slovnaft
Gain control over Slovnaft (stake 70.0%)
Acquisition of Shell Romanian
Retail Sites
Acquisition of 25.0%
in INA
Acquisition of 22.5% stake in Kazakh
exploration block (Federovsky)
Acquisition of Austrian
Roth company
Closing ofShell
Romaniaacquisition
Sale of Gas Business
Acquisition of 100%
shareholding of IES SpA
2000 2001 2002 2003 2004 2005 2006 2007
Acquisition of 32.9% of TVK
Gain control over TVK
(stake 34.5%)
ZMB JV signed
Acquisition of Austrian
storage facility
98.4% stake in Slovnaft
through public offer
Increasing stake to 27.5%
in Kazakh Federovsky
Block
MOL & INA acquired 67.5% of Energopetrol
Acquisition of BaiTex, Surgut-7
Acquisition of 42% of TVK
Acquisition of 100%
stake in Tifon
► R A T I N G
„MOL is a leading corporate governance actor in Central and Eastern Europe and clearly exceeds the average performance of companies in developed economies particularly in its disclosure standards and its board structure and functioning.”
Source: ISS Corporate Services Inc. (former Deminor) – Corporate Governance Rating & Investor Report, 7 June 2007
8.08.5
7.58.0
0
2
4
6
8
10
Rights & Dutiesof Shareholders
Commitment toShareholder
Value
CorporateGovernanceDisclosure
Board Structure& Functioning
Regional leader in Corporate Governance
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