OMV : Q3 2020 Results Conference Call

Q3 2020 Results Conference Call

Rainer Seele

Chairman of the

Executive Board and CEO

October 29, 2020

OMV Aktiengesellschaft

Disclaimer

This report contains forward-looking statements. Forward-looking statements may be identified by the use of terms such as "outlook," "expect," "anticipate," "target," "estimate," "goal," "plan," "intend," "may," "objective," "will", and similar terms or by their context. These forward-looking statements are based on beliefs and assumptions currently held by and information currently available to OMV. By their nature, forward-looking statements are subject to risks and uncertainties, both known and unknown, because they relate to events and depend on circumstances that will or may occur in the future and are outside the control of OMV. Consequently, the actual results may differ materially from those expressed or implied by the forward-looking statements. Therefore, recipients of this report are cautioned not to place undue reliance on these forward-looking statements.

Neither OMV nor any other person assumes responsibility for the accuracy and completeness of any of the forward-looking statements contained in this report. OMV disclaims any obligation to update these forward-looking statements to reflect actual results, revised assumptions and expectations, and future developments and events. This report does not contain any recommendation or invitation to buy or sell securities in OMV.

2 | OMV Group, Q3 2020 Conference Call, October 29, 2020

Macro environment - improved crude oil price, but significantly lower refining margin

Oil prices

USD/bbl

70		62	63
60		59	61	50
50			43
40					47	30	37
30
			Average Brent price
20				Average realized crude price	26
10
0
Q3/19		Q4/19	Q1/20	Q2/20	Q3/20

Gas prices

EUR/MWh

14					13.0			Realized gas price (Upstream) 1
		11.2	11.0		Central European Gas Hub
12
10					11.3		8.2
		10.7	10.6	8.8
8
								7.3
6
						6.7
4
2
0
Q3/19	Q4/19	Q1/20		Q2/20	Q3/20

OMV indicator refining margin Europe

USD/bbl

6			5.5	5.0	4.9
5
4
3						2.3
2
1
0
Q3/19	Q4/19	Q1/20	Q2/20

Ethylene/propylene net margin 2

EUR/t

500			441	363	459	393
400
300
200
100
0
Q3/19	Q4/19	Q1/20	Q2/20

0.9

Q3/20

375

Q3/20

	Note: All figures are quarterly averages.
3 | OMV Group, Q3 2020 Conference Call, October 29, 2020	1 Converted to MWh using a standardized calorific value across the portfolio
2	Spread between market prices of ethylene/propylene and naphtha including standard processing consumption

Key messages

FINANCIAL

PERFORMANCE

Clean CCS Operating Result of

EUR 317 mn

(67)% y-o-y

+119% q-o-q

Quarterly cash flow from operating

activities of EUR 0.8 bn

STRONG

OPERATIONS

Quarterly production of

444 kboe/d

Production cost at USD 7.5/boe

Refinery utilization rate of

90%

Strong gas storage business

DELIVERING THE

STRATEGY

Long-term oil price revision

Signed sale agreement with

VERBUND for 51% stake in Gas

Connect Austria

4 | OMV Group, Q3 2020 Conference Call, October 29, 2020

Clean CCS Operating Result substantially impacted by lower oil and gas prices and reduced demand

Clean CCS Operating Result

EUR mn

Upstream

Corporate & Other

Downstream

949

449

	145	317
490
	309	335
9		(24)	6
	(152)
	(12)
Q3/19	Q2/20	Q3/20

Clean CCS net income attributable to stockholders

EUR mn

457

6580

Q3/19Q2/20Q3/20

Clean CCS Earnings Per Share

EUR

1.40

0.200.24

Q3/19Q2/20Q3/20

5 | OMV Group, Q3 2020 Conference Call, October 29, 2020

Upstream - significantly weaker oil and gas prices and missing contribution from Libya

Clean Operating Result

Q3/20 vs. Q3/19

EUR mn

(474)-106%

449

398

• Significantly weaker market environment
• • Average realized oil price decreased by 37%
  • Average realized gas price declined by 32%
  • Negative FX impact
• Production of 444 kboe/d (-36 kboe/d)
• • Libya (-35 kboe/d)
  • New Zealand (-10 kboe/d)
  • Romania (-9 kboe/d)
  • Norway and Russia (each -4 kboe/d)
  • Malaysia (+26 kboe/d) due to ramp-up of SK408 gas field

			Sales volumes decreased by 43 kboe/d due to lower production
163	(24)	 Production costs increased to USD 7.5/boe (+18%) due to lower
	87		production and FX effect

Q3/19	Market effects 1	Operational	DD&A 2	Q3/20
		performance

1. Market effects defined as oil and gas prices, foreign exchange impact, price effect on royalties, and hedging, selling, and distribution costs in Russia
2. Depreciation, Depletion, and Amortization

• Lower depreciation due to lower production volumes and effect of impairments

6 | OMV Group, Q3 2020 Conference Call, October 29, 2020

Downstream - significantly weaker market environment, partially offset by positive hedging impact and higher gas contribution

Clean CCS Operating Result

Q3/20 vs. Q3/19

EUR mn

					 Weaker market environment
		(155)			 Refining indicator margin at USD 0.9/bbl (-84%)
	490				 Ethylene/propylene net margins at EUR 375/t (-15%)
At-equity	65				 Operational performance
contributions				 European refinery utilization rate at 90%
Gas	28	169
		 Lower total refined product sales (-16%)
Petchem	59	70	56	335
 Improved retail performance
				10
				78	 Decreased commercial fuels performance mainly caused by
					significant fall in jet fuel demand
Fuels &				47	 Positive contribution from margin hedging
Others	338				 Better storage result and trading activities; significantly higher
					power result in Romania
				200	 At-equity contributions
					 Negative ADNOC contribution due to significantly lower
					refining margin and lower utilization rate

Q3/19	Market effects1 Operational	At-equity	Q3/20		Decreased Borealis contribution, as a result of lower
	performance	contributions
			integrated polyolefin margins and lower fertilizer result,

1 Market effects defined as refining indicator margin and petrochemical margins

partially offset by positive inventory effects and higher volumes

7 | OMV Group, Q3 2020 Conference Call, October 29, 2020

Solid organic free cash flow of EUR 1.1 bn in 9m/20

Organic cash flow 9m/20		Cash flows 9m/20 vs. 9m/19
EUR bn			Decrease of EUR 1.3 bn in cash flow from operating activities excl. net
3.3			working capital change
		Net working capital effects of EUR 502 mn (9m/19: EUR (227) mn)
			 Cash flow from operating activities of EUR 2.5 bn (9m/19: EUR 3.1 bn)
			 Organic cash flow from investing activities 1 at EUR (1,311) mn
				(9m/19: EUR (1,334) mn)
		2.0		Organic free cash flow before dividends of EUR 1,147 mn
1.7
		(9m/19: EUR 1,741 mn)
		1.1	 Payment of dividends of EUR 220 mn (9m/19: EUR 772 mn), thereof:
				 OMV Petrom minorities: EUR 174 mn (9m/19: EUR 154 mn)
				 Gas Connect Austria minority: EUR 28 mn (9m/19: EUR 29 mn)
				 Hybrid owners: EUR 14 mn (9m/19: EUR 14 mn)
				 OMV stockholders: EUR 0 (9m/19: EUR 572 mn)
	9m/19	9m/20		Inorganic cash flow from investing activities of EUR (187) mn

Cash flow from operations excl. net working capital change

Organic free cash flow before dividends 2

1. Organic cash flow from investing activities is cash flow from investing activities excluding divestments and material inorganic cash flow components (e.g. acquisitions).
2. Organic free cash flow before dividends is cash flow from operating activities less organic cash flow from investing activities.

8 | OMV Group, Q3 2020 Conference Call, October 29, 2020

Healthy balance sheet

Net debt excluding leases

Gearing ratio excluding leases

EUR bn, %

	26%
								22%		21%
									19%
									Gearing ratio 1
19%
											excluding
											leases
12%					11%
3.7					11%	3.6
						3.2	3.4
2.7								Net debt
1.7	1.7			1.8	excluding
		leases

2015

2016

2017

2018

2019

Q1/20

Q2/20

Q3/20

1 Defined as net debt to equity

9 | OMV Group, Q3 2020 Conference Call, October 29, 2020

End of Sept. 2020

OMV cash position

EUR 7.3 bn

End of Sept. 2020 OMV undrawn committed credit facilities

EUR 3.2 bn

Good progress on EUR 2 bn divestment program

Divestment of OMV retail		Divestment of 51% share
network in Germany		in Gas Connect Austria
 Signing expected in Q4/20		 Signed on Sept. 23, 2020
 Closing expected in H1/21		 Closing expected in H1/21
		Net debt reduction
	EUR 2 bn	EUR (570) mn

Divestments in Upstream

• Maari field in New Zealand - closing expected in Q4/20
• Kazakhstan Upstream operations
• Four oil fields in Malaysia

Other assets

to be announced

10 | OMV Group, Q3 2020 Conference Call, October 29, 2020

Updated outlook 2020

	2019	Outlook 2020
Brent oil price (USD/bbl)	64	40
Average realized gas price (EUR/MWh)	11.9	<10
Total hydrocarbon production (kboe/d)	487	450-4701
OMV European indicator refining margin (USD/bbl)	4.4	~ 2.5 (previously ~3.0)
Ethylene/propylene net margin (EUR/t)	433	<433
Utilization rate European refineries (%)	97%	~85%
Organic CAPEX (EUR bn)	2.3	~1.7 2
E&A expenditures (EUR mn)	360	250

1. Depending on the security situation in Libya and potential imposed production cuts by governments
2. Excluding Borealis consolidation after closing

11 | OMV Group, Q3 2020 Conference Call, October 29, 2020

OMV completes the acquisition of additional 39% share in Borealis

Schwechat site, Austria

• OMV acquires additional 39% share in Borealis, increasing its share to a controlling interest of 75%
• • Purchase price of USD 4.68 bn
  • Cash-out(net of cash acquired) of EUR 3.8 bn paid in full at closing
  • Borealis will be fully consolidated in OMV's financials
  • EPS accretive from first year onward
  • Synergies of more than EUR 800 mn until 2025
• OMV becomes #1 in European ethylene and propylene capacity and #8 in global polymer capacity

12 | OMV Group, Q3 2020 Conference Call, October 29, 2020

Very resilient operating cash flow of Borealis of EUR 1.1 bn

OMV

Operating cash flow

EUR bn

2.9

Downstream

excluding2.3

Borealis 1.2 dividends

1.5

Borealis

Operating cash flow (incl. Borouge dividends)

EUR bn

Upstream 1.9

1.11.1

1.0

OMV	OMV	Borealis	Borealis
9m/19	9m/20	9m/19	9m/20

13 | OMV Group, Q3 2020 Conference Call, October 29, 2020

Disciplined capital spending supports high free cash flows from combined businesses

OMV	Borealis
Organic CAPEX	CAPEX
EUR bn	EUR bn

1.9

~ 1.7

0.7

0.5

2017-19	2020	2017-19	2020
average		average

OMV & Borealis combined organic CAPEX

EUR bn

2.5 - 3.0

~ 2.4 1

2020 2021+

1 Pro-forma illustration including full year Capex of Borealis. OMV will consolidate it only starting with October 29, 2020

14 | OMV Group, Q3 2020 Conference Call, October 29, 2020

BACKUP

OMV Aktiengesellschaft

Upstream - improved crude oil price, partially offset by lower gas price and weaker USD/EUR

Clean Operating Result			Q3/20 vs. Q2/20
EUR mn					 Slightly improved market environment
		+128			 Realized oil price increased by 46%
				 Realized gas price decreased by 12%
					 Realized hedging loss
					 Negative effect due to weaker USD/EUR
			14	(24)	 Production of 444 kboe/d (-19 kboe/d)
		29			 Norway (- 10 kboe/d)
				 Russia (-10 kboe/d)
					 Romania (-6 kboe/d)
					 Malaysia (+13 kboe/d)
	85				 Lower sales volumes (-11 kboe/d); overlifting of oil volumes in
					Norway
					 Production costs increased to USD 7.5/boe (+ 21%) due to lower
(152)					produced volumes
Q2/20	Market effects 1	Operational	DD&A 2	Q3/20	 Lower depreciation due to decreased production
	performance

1. Market effects defined as oil and gas prices, foreign exchange impact, price effect on royalties and hedging, selling and distribution costs in Russia
2. Depreciation, Depletion, and Amortization

16 | OMV Group, Q3 2020 Conference Call, October 29, 2020

Downstream - higher earnings due to improved Retail and Borealis performance

Clean CCS Operating Result

Q3/20 vs. Q2/20

EUR mn

 Weaker market environment

	+26				 Lower refining margin at USD 0.9/bbl (-61%)
		4	335		 Lower ethylene/propylene net margin (-5%)
	309	10
At-equity		Operational performance
6	74
contributions	52	78		 Utilization rate increased from 79% to 90%
Gas	89				 Higher total refined product sales by 13%
			47		 Significantly higher retail performance due to higher fuel and
Petchem	41				non-fuel business sales, partially offset by lower fuel margins
			 Slightly lower commercial fuels performance
					 Higher petrochemical sales
Fuels &			200		 Decreased gas result due to decreasing	summer/winter
			spreads
Others	173
				 Borealis and ADNOC contributions
					 Lower ADNOC contribution impacted by a significant
					decrease in refining margin

Q2/20	Market effects 1 Operational	At-equity	Q3/20	 Significantly higher Borealis contribution on account of higher
	performance	contributions		polyolefin sales and positive inventory effects, partially offset
1 Market effects defined as refining indicator margin and petrochemical margins		by lower integrated margins

17 | OMV Group, Q3 2020 Conference Call, October 29, 2020

Operational KPIs

Hydrocarbon production			Refined product sales
kboe/d					mn t
480	464		444	5.60
						4.68
					4.16

Q3/19 Q2/20 Q3/20Q3/19 Q2/20 Q3/20

Hydrocarbon sales				Refinery utilization rate
kboe/d			%
466	434	422	96		90
					79
221	173	165	Oil & NGL
		261		Natural gas
244	258
	Q3/19	Q2/20	Q3/20			Q3/19	Q2/20	Q3/20

Retail sales

mn t

1.81

1.75

1.23

Q3/19 Q2/20 Q3/20

Natural gas sales

TWh

32.333.3

27.2

Q3/19 Q2/20 Q3/20

18 | OMV Group, Q3 2020 Conference Call, October 29, 2020

Strong balance sheet

Balance sheet September 30, 2020 vs. June 30, 2020

EUR bn

		42.9													42.9
							41.1					41.1
													Stockholders' equity	12.3	12.7
Tangible &	19.0
intangible assets		17.5
												Non-controlling interests	3.7		3.7
													Trade payables	2.6		2.4
Other	8.5			8.3									10.0
non-current assets						Bonds and other
											9.9
												interest-bearing debts
Inventories
1.6	1.4		1.8	1.5
Trade receivables													5.7
													Provisions	5.7
Cash	5.8			7.3
					Liabilities associated					0.6
														0.6
Assets held for sale		1.2								with assets held for sale
Other current assets	5.4			1.2				Other liabilities	6.3		7.7
		3.5
		Jun 30, 2020	Sep 30, 2020				Sep 30, 2020	Jun 30, 2020

• Decrease of tangible and intangible assets impacted by impairments triggered by reassessment of long-term price assumptions
• Hybrid bonds with a nominal value of EUR 1.25 bn issued in Sept 20, leading to increased cash and equity position

19 | OMV Group, Q3 2020 Conference Call, October 29, 2020

OMV Aktiengesellschaft