pkn orlen capital group...rebco crude oil processing –benefits from b/u differential petrochemical...
TRANSCRIPT
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August 2016
PKN ORLEN Capital Group
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KEY DATASHAREHOLDERS STRUCTURE
DOWNSTREAM
� Refineries in Poland (supersite in Plock), Lithuania and the Czech
Rep. with 35.2 mt/y total max. throughput capacity
� Strategic location – access to key pipeline network and crude oil sea
terminals in Gdansk (Poland) and Butinge (Lithuania)
� REBCO crude oil processing – benefits from B/U differential
� Petrochemical assets fully integrated with the refining
� Energy projects of industry cogeneration – building CCGT in
Wloclawek (463 MWe) and Plock (596 MWe)
RETAIL
� 2 679 fuel stations - Poland, the Czech Rep., Germany and Lithuania
UPSTREAM
� Poland – exploration and E&P projects
� Canada – production projects (ORLEN Upstream Canada)
OPERATIONALS
Throughput in 2015 (mt) ca. 30.9
Sales in 2015 (mt) ca. 38.7
FINANCIALS 2012 2013 2014 2015
Revenues (PLN bn) 120.1 113.9 106.8 88.3
EBITDA LIFO** (PLN bn) 5.2 3.2 5.2 8.7
** EBITDA LIFO before impairments of assets:
2012 PLN (-) 0.7 bn; 2014 PLN (-) 5.4 bn; 2015 PLN (-) 1.0 bn
� Listed on WSE since 1999
� WSE ticker: PKN
� Present in WIG20 index
� MCap: ca. PLN 29.0 bn*
* Data as of 31.12.2015
Free float
72,48%
27,52%
State Treasury
PKN ORLEN – international fuel and energy group
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� Strong position on large and growing markets
� Strong customer focus
� Integrated value chain
� Operational excellence
� Sustainable Upstream development
� Modern management culture
2008 … 2017…… 2013…
Retail
Downstream
Upstream
Downstream
PKN ORLEN vision
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� 35.2 mt/y max. throughput capacity including: 16.3 mt/y
Plock, 10.2 mt/y ORLEN Lietuva, 8.7 mt/y Unipetrol
� 86% of yearly crude oil throughput is REBCO type, which
allows to get benefits from B/U differential
� Fuel production in line with 2009 Euro standards in all
refineries
� Wholesale market share*: gasoline (PL: 67%, CZ: 59%, LT:
67%) & diesel (PL: 57%, CZ: 47%, LT: 83%).
KEY DATA
HIGH-CLASS ASSETS
* Data as of 31.12.2015
** Poland, Lithuania, the Czech Republic
COMPETITIVE ADVANTAGES
� Refinery in Plock classified as a super-site (acc. to
WoodMackenzie) considering the depth and throughput
capacity, integration with petrochemical operations
� Modernized refining assets in Lithuania and in Litvinov
� Prepared for regulatory and market trends changes thanks
to investment projects execution
� Leader on the fuel market in the Central Europe**
THROUGHPUT AND UTILIZATION RATIO mt; %
Downstream
Refining
27,9 28,2 27,330,9
2014
84%
2015
91%
2012
90%
2013
90%
Utilization ratio
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� Sales in 2015 amounted to 5.3 mt
� Market share between 40% and 100% depending on the
product
� Polyolefins’ sales through Basell network
� PX/PTA – one of the most advanced petrochemical complex in
Europe with PTA production capacity of 650 kt/y
KEY DATA
ASSETS INTEGRATED WITH THE REFINING
ANWIL – CHEMICAL COMPANY
COMPETITIVE ADVANTAGES
� The largest petrochemical company in Central Europe*
� Integration with refinery allows for savings
� Attractive portfolio of products including: monomers,
polymers, aromatics, PTA, fertilizers and PVC
� Strategic regional supplier for chemical industry
� PVC and fertilizers producer
� Ethylene pipeline connection with Plock refinery secures
feedstock for PVC production
� Synergies with new CCGT plant: steam, electricity and
infrastructure
* Poland, Lithuania, the Czech Republic
Downstream
Petrochemicals
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INDUSTRY COGENERATION PROJECTS
ASSETS EFFICIENCY IMPROVEMENT COMPETITIVE ADVANTAGES
� Power plant in Plock (345 MWe, 2149 MWt) – the biggest
industrial block in Poland.
� Heating oil, refining gas and natural gas - fuels used for
energy and heat production in Plock and Wloclawek plants.
� PKN ORLEN one of the biggest gas consumers in Poland
and active participant for natural gas market liberalization.
� Favorable perspectives for energy market i.e. increase of
electricity demand not addressed by new projects, increasing
supply-demand gap resulting from closures of old units and
low-emission of gas.
PLANS FOR BLOCKS CLOSURES IN POLAND# block as a % of total, 2012-2040*
The highest profitability / the lowest risk , thanks to guarantee of permanent receiving of steam, which enables to achieve very high efficiency
Building a CCGT plant in Wloclawek (463MWe)
� Planned start-up 1Q17
� CAPEX PLN 1,4 bn
Building a CCGT plant in Plock (596 MWe)
� Planned start-up 4Q17
� CAPEX PLN 1,65 bn
* PKN ORLEN analysis
Downstream
Energy
80
44
3025
2017 2025 20402030
24%
43%
29%
78%
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� 2679 fuel stations* including: 1749 Poland, 565 Germany, 339
the Czech Rep. , 26 Lithuania
� Market share*: 37% Poland, 16% in the Czech Rep ., 6%
Germany, 4% Lithuania
� 1404 Stop Cafe and Stop Cafe Bistro in Poland.
Every 0.8 second we sell 1 hot-dog (38 m yearly) and over 8 m
liters of hot drinks yearly (3.5 Olympic swimming pools)
� Large group of loyal customers: 0.7 m active FLOTA customers
and 2.7 m active VITAY customers
KEY DATA
* Data as of 31.12.2015
** According to „The most valuable brands” ranking published by „Rzeczpospolita” dated 30 November 2015
MODERN SALES NETWORK COMPETITIVE ADVANTAGES
� The largest retail network in Central Europe
� ORLEN brand – strong, recognizable and the most valuable in
Poland (PLN 4,5 bn)
� Successful differentiation strategy of fuel stations brands
and offered fuels.
� Further development of nonfuel sales by extension of Stop Cafe
and Stop Cafe Bistro
STOP CAFE & STOP CAFE BISTRO IN POLAND#
Retail
1 404
1 3081 250
1 149
1 047
869813
708
600
700
800
900
1 000
1 100
1 200
1 300
1 400
1 500
2Q154Q12 4Q152Q142Q13 4Q13 4Q142Q12
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Poland
Total reserves of crude oil and gas (2P)
Ca. 8 m boe (100% gas)
Currently 15 wells were done
11 vertical and 4 horizontal as well as 3 fracking of horizontal wells
2015:
� 1 wells was done
� Project and analytics works were continued and acquisition/processing
of seismic 2D and 3D data were started. Preparation works of areas
development and administration works connected with adoption of
concessions were in process.
� Closing of 100% FX Energy acquisition, which increase portfolio of
conducted projects in Poland by 3 new E&P areas. Production in
December from acquired assets amounted to 1,3 th. boe/d. Assets
consolidated from 31 December 2015.
� EBITDA*: PLN (-) 30 m
� CAPEX: PLN 96 m
Upstream
Exploration projects in Poland
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Exploration and production assets
* Data before impairments of assets in the amount of PLN (-) 429 m
With cooperation: Sieraków (49% of shares), Płotki** (49% of shares)
ORLEN Upstream 100% of shares: Edge
Exploration assets
With cooperation: Warsaw South (51% of shares), Bieszczady (49% of shares)
ORLEN Upstream 100% of shares : Karbon, Lublin Shale,
Mid-Poland Unconventional, Karpaty, Miocen, Edge
Requested areas
** Production from Płotki project (100% gas)
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Canada
Assets located in Canadian Alberta province in 5 areas: Lochend, Kaybob, Pouce
Coupe, Ferrier/Strachan and Kakwa
Total reserves of crude oil and gas (2P)
Ca. 89** m boe (46% liquid hydrocarbons, 54% gas)
2015:
� Drilling of 13 new wells (11,6 net*) were started
� Closing acquisition of Kicking Horse Energy Ltd., thanks to which 2P reserves
in Canada increased by ca. 40 m boe. Production in December from acquired
assets (Kakwa area) amounted to 4,6 th. boe/d. Assets consolidated from 31
December 2015.
� Average production: 7,1 th. boe/d (44% liquid hydrocarbons)
� EBITDA***: PLN 74 m
� CAPEX: PLN 195 m
9
Upstream
Production projects in Canada
9
* Number of wells multiplied by percent of share in particular asset
** Including acquisition of Kicking Horse Energy Ltd.
*** Data before impairment of assets in the amount of PLN (-) 423 m
Assets in Canada
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PKN ORLEN competitive advantages
Financial strength
� Guaranteed sources of financing – over PLN 18 bn
� Diversified financing – over PLN 4 bn in retail bonds, corporate bonds
and Eurobonds
� Average maturity 4Q19
� Investment grade – BBB - with a stable outlook
� Financial gearing – below 30%
� Net debt / EBITDA LIFO – less than 1
� Dividend – steady increase of DPS
Value creation
� Integrated, high-class assets and strong position on competitive
market
� New units and attractive portfolio of products offered on developing
markets
� Best locations and synergies of gas-fired power generation with other
segments
� Modern and the largest sales network in the region with strong and
recognizable brand
� Poland – exploration and E&P projects
� Canada – production projects (ORLEN Upstream Canada)
People
� The World’s Most Ethical Company 2015
� Top Employer Polska 2015
� Best managed companies in CEE 2015
� ORLEN Warsaw Marathon / Verva Street Racing
ORLEN
The most valuable brand in Poland
worth PLN 4,5 bn*
* According to „The most valuable brands” ranking published by „Rzeczpospolita” dated 30 November 2015
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Thank You for Your attention
For more information on PKN ORLEN, please contact Investor Relations Department:
phone: + 48 24 256 81 80
fax: + 48 24 367 77 11
e-mail: [email protected]
www.orlen.pl
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Agenda
Supporting slides
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Key highlights 2015
� Financial gearing: 28,1%
� Cash flow from operations: PLN 5,4 bn
� Dividend paid: PLN 0,7 bn / PLN 1,65 per share
� Extension of average maturity for sources of financing to 4Q19
� EBITDA LIFO: PLN 8,7 bn*
� Record-high throughput 30,9 mt and sales 38,7 mt
� M&A of upstream assets in Canada and Poland
� New contracts for crude oil delivery up to 10,8 mt per year
Value creation Financial strength
People
* Data before impairments of assets in the amount of PLN (-) 1,0 bn regarding mainly E&P assets of ORLEN Upstream and petrochemical assets of Unipetrol
** According to „The most valuable brands” ranking published by „Rzeczpospolita” dated 30 November 2015
� The World’s Most Ethical Company 2015
� Top Employer Polska 2015
� Best managed companies in CEE 2015
� ORLEN Warsaw Marathon / Verva Street Racing
ORLEN
The most valuable brand in Poland
worth PLN 4,5 bn **
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� Our aim is to pay dividend regularly
� We plan to increase DPS gradually at maintained safe
level of financial ratios
1,50 1,44
2,00
1,65
201520142013 2016
� We paid dividend in years 2013-2016
� PKN ORLEN Management Board recommendation
regarding dividend payout in 2016 from unconsolidated
net profit of PKN ORLEN SA from 2015 in the amount of
2,00 PLN/share was proved on AGM in June 2016.
� Dividend day / payment: 16 July / 5 August 2016
� Unconsolidated net profit of PKN ORLEN SA from 2015
amounted to PLN 1048 m
DPS (PLN)
Dividend
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KEY FACTS
ASSETS
Crude pipeline
Products pipeline
Pump station
Terminal
Storage depot Mažeikių
Nafta
Klaipeda
Joniskis
Latvia
Butinge* Orlen LietuvaRefinery
Lithuania
Illukste
Biržai
Ventspils(20,0 mt/y)
(14,0 mt/y)
(16,4 mt/y)
Klaipeda(9,0 mt/y)
Polock
� Concentration on cash flow improvement
� Reduction in overhead and employment costs below USD 10 m monthly and efficiency initiatives will improve the result by over 1
USD/bbl
� CAPEX optimization to ca. USD 20 m annually
� Improvement in sales efficiency and increase in capacity utilization
� Releasing of cash frozen in assets
� In worsening of macro situation ready to temporary refinery shut down
ORLEN Lietuva - maximizing the possessed potential
* ORLEN Lietuva ownership
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1616
� Speed up of Operational Excellence Initiatives in Ceska Rafinerska
� Refining and retail sales enhancement upon grey zone limitation
� Investing in synergies between refining and petchem segments
� Regulatory affairs management in the area of renewable energy sources fee, fuels grey zone limitation and biofuel burdens
� Retail segment market share increase and non-fuel sales increase driven by expected economic recovery
KEY FACTS
ASSETS
IKL
Pipeline10 mt/y
CEPRO production pipelines
Mero Crude oil pipelines
CEPRO depots
Kralupy
3.2 mt/y
Pardubice *
1.0 mt/y
Litvínov
5.5 mt/y
Druzhba
pipeline9 mt/y
* Paramo refinery in Pardubice closed permanently and does not process crude oil since 3Q 2012. The production of bitumen and lubes was not affected.
Unipetrol – continuation of operating efficiency improvement
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Source: Oil & Gas Journal, PKN Orlen own calculations, Concawe,Reuters, WMRC, EIA, NEFTE Compass, Transneft.ru
Refinery (capacity m tonnes p.a.; Nelson complexity index)
�Oil pipeline [capacity]
Refinery of PKN ORLEN Group
Projected Oil pipeline
Sea terminal (capacity)
Lisichansk
(8.5; 8.2)
Batman
(1.1; 1.9)
Yaroslavi
Ingolstadt
(5.2; 7.5)
Litvinov (5.5, 7.0)
Kralupy
(3.4; 8.1)
Plock
(16.3; 9.5)
Gdansk
(10.5; 10.0)
Mazeikiai
(10.2; 10.3) Novopolotsk
(8.3; 7.7)
Mozyr
(15.7; 4.6)
Bratislava
(6.0; 12.3)
Schwechat
(10.2; 6.2)
Burghausen
(3.5; 7.3)
Holborn
(3.8; 6.1)
Bayernoil
(12.8; 8.0)
Harburg
(4.7; 9.6)
Leuna
(11.0; 7.1)
Schwedt
(10.7; 10.2)
Aspropyrgos
(6.6; 8.9)
Corinth
(4.9; 12.5)
Elefsis
(4.9; 1.0)
Thessaloniki
(3.2; 5.9)
Izmit
(11.5; 6.2)
Izmir
(10.0; 6.4)
Kirikkale
(5.0; 5.4)
Duna
(8.1, 10.6)
Arpechim
(3.6; 7.3)
Petrobrazi
(3.4; 7.3)
Petrotel
(2.6; 7.6)Rafo
(3.4; 9.8)
Petromidia
(5.1; 7.5)
Rijeka
(4.4; 5.7)Sisak
(3.9; 4.1)
Novi Sad
(4.0; 4.6)
Pancevo
(4.8; 4.9)
Neftochim
(5.6; 5.8)
Drogobich
(3.8; 3.0)
Kremenchug
(17.5; 3.5)
Odessa
(3.8; 3.5)
(ex 12)
Kherson
(6.7; 3.1)
DRUZHBA
DRUZHBA
DRUZHBA
ADRIA
IKL
ADRIA
�(18) Ventspils
Butinge(14)
�
(70) Primorsk� Kirishi
Yuzhniy
(ex 4)�
Brody
Tiszaojvaro
s
�
Triest�
�
Rostock�
[Ca 55]
�[C
a 2
2]
�� ��[C
a 3
0]
Novorossiys
k
(ex 45)
�
Trzebinia
(0,5)
Jedlicze
(0,1)
Naftoport(30)
[Ca 20][Ca 9]
[Ca 10]
[Ca 9][Ca 3,5]
�(30) Ust-Luga
BPS2
Supply Routes Diversification
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This presentation (“Presentation”) has been prepared by PKN ORLEN S.A. (“PKN ORLEN” or “Company”). Neither the Presentation nor any copy hereof may be copied,
distributed or delivered directly or indirectly to any person for any purpose without PKN ORLEN’s knowledge and consent. Copying, mailing, distribution or delivery of this
Presentation to any person in some jurisdictions may be subject to certain legal restrictions, and persons who may or have received this Presentation should familiarize
themselves with any such restrictions and abide by them. Failure to observe such restrictions may be deemed an infringement of applicable laws.
This Presentation contains neither a complete nor a comprehensive financial or commercial analysis of PKN ORLEN and of the ORLEN Group, nor does it present its position
or prospects in a complete or comprehensive manner. PKN ORLEN has prepared the Presentation with due care, however certain inconsistencies or omissions might have
appeared in it. Therefore it is recommended that any person who intends to undertake any investment decision regarding any security issued by PKN ORLEN or its subsidiaries
shall only rely on information released as an official communication by PKN ORLEN in accordance with the legal and regulatory provisions that are binding for PKN ORLEN.
The Presentation, as well as the attached slides and descriptions thereof may and do contain forward-looking statements. However, such statements must not be understood as
PKN ORLEN’s assurances or projections concerning future expected results of PKN ORLEN or companies of the ORLEN Group. The Presentation is not and shall not be
understood as a forecast of future results of PKN ORLEN as well as of the ORLEN Group.
It should be also noted that forward-looking statements, including statements relating to expectations regarding the future financial results give no guarantee or assurance that
such results will be achieved. The Management Board’s expectations are based on present knowledge, awareness and/or views of PKN ORLEN’s Management Board’s
members and are dependent on a number of factors, which may cause that the actual results that will be achieved by PKN ORLEN may differ materially from those discussed in
the document. Many such factors are beyond the present knowledge, awareness and/or control of the Company, or cannot be predicted by it.
No warranties or representations can be made as to the comprehensiveness or reliability of the information contained in this Presentation. Neither PKN ORLEN nor its directors,
managers, advisers or representatives of such persons shall bear any liability that might arise in connection with any use of this Presentation. Furthermore, no information
contained herein constitutes an obligation or representation of PKN ORLEN, its managers or directors, its Shareholders, subsidiary undertakings, advisers or representatives of
such persons.
This Presentation was prepared for information purposes only and is neither a purchase or sale offer, nor a solicitation of an offer to purchase or sell any securities or financial
instruments or an invitation to participate in any commercial venture. This Presentation is neither an offer nor an invitation to purchase or subscribe for any securities in any
jurisdiction and no statements contained herein may serve as a basis for any agreement, commitment or investment decision, or may be relied upon in connection with any
agreement, commitment or investment decision.
Disclaimer
18
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For more information on PKN ORLEN, please contact Investor Relations Department:
phone: + 48 24 256 81 80
fax: + 48 24 367 77 11
e-mail: [email protected]
www.orlen.pl