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Edited Transcript of MOL.BU earnings conference call or presentation 21-Feb-20 9:00am GMT

Q4 2019 MOL Magyar Olajes Gazipari Nyrt Earnings Call

Budapest Mar 23, 2020 (Thomson StreetEvents) -- Edited Transcript of MOL Magyar Olajes Gazipari Nyrt earnings conference call or presentation Friday, February 21, 2020 at 9:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Ferenc Horváth

MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - Executive VP of Downstream Division

* József Molnár

MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - Group CEO, Member of Executive Board & Non-Independent Director

* Oszkár Világi

MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - Executive VP of Innovative Businesses & Services, Member of Executive Board & Director

* Péter Ratatics

MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - COO & Executive VP of Consumer Services

* Robert Rethy

MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - IR Manager

* Thomas Quigley

MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - COO of MOL Group E&P

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Conference Call Participants

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* Ekaterina Smyk

BofA Merrill Lynch, Research Division - Analyst

* Henri Jerome Dieudonne Marie Patricot

UBS Investment Bank, Research Division - Associate Director and Equity Research Analyst

* Jonathan David Lamb

Wood & Company Financial Services, a.s., Research Division - Equity Analyst

* Oleg Galbur

Raiffeisen CENTROBANK AG, Research Division - Financial Analyst

* Tamas Pletser

Erste Group Bank AG, Research Division - Oil and Gas Analyst

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Presentation

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Operator [1]

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(technical difficulty)

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Oszkár Világi, MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - Executive VP of Innovative Businesses & Services, Member of Executive Board & Director [2]

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(inaudible)

decrease in the cash taxes. So CapEx is slightly lower because of the lower crude prices. A higher negative number in the industry tax because of higher tax reforms in Norway, a lower corporate income tax number coming generally from the lower profitability of the downstream and petrochemical environment. So all in all, a lower cash charge, and that was offset by significantly higher deferred taxes. The 2018 deferred tax income turned into a deferred tax loss in 2019.

Now going to the Page 14, cash flows. I think the major news here that for the year, essentially no change in the working capital, i.e., the working capital buildup in beginning of the year was reversed in the fourth quarter. And all in all, actually, higher operating cash flow generation than in 2018.

Now the last slide in finance, Page 15. And as a result of last year, no change essentially in the net debt to EBITDA, so continued the -- to keep the strong balance sheet and the low gearing. And that's probably the base -- although to kind of preempt the dividend questions you will ask, so the general comment is that, as usual, decision will be made -- or a proposal will be made by the Board of Directors and we will see that roughly in a month's time. But I think what we can see from the financial numbers and the results and the outlook, that I think the financial situation provides a basis to continue the kind of -- the usual pattern of increase in the base dividends.

And with this, I like to hand it over to Ferenc Horváth to cover the Downstream results.

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Ferenc Horváth, MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - Executive VP of Downstream Division [3]

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Thank you, Oszkár. Good morning. Downstream clean EBITDA in the last quarter of 2019 has reached USD 191 million, declining roughly by 21% year-on-year, as both refining and marketing and petrochemical profitability deteriorated on the back of the weaker margins. For the same reason, our full year EBITDA also fell 13% and came -- it's at around USD 866 million. Good news that our sales volumes remained strong in refining and marketing and grew 4% year-on-year. Also, good news that the regional consumption of fuels, both gasoline and diesel, has increased between 3% and 4%, mainly driven by our domestic countries like Hungary, Slovakia and Croatia. Petchem volumes were affected by planned and unplanned events during 2019.

If you turn to the next page, Slide 18, you can see that our margins dropped in the last quarter and also year-on-year versus the previous quarter. Refining had a very strong month in October, but then refinery margins fell substantially, partially driven by seasonality. Margins did recover in January, February from that year-end slump. No benefit we can see or was visible from IMO in the crack yet. The Ural-Brent differential remained extremely volatile in the recent months and then normalized a bit. Our integrated petchem margin continued to decrease in the last quarter and remained quite weak in January. Current margins reflect the bottom-of-the-cycle trading conditions, primarily stemming from the material increase in global capacity in the ethylene value chain.

Let me add a few words about our planned turnaround and maintenance in 2020. Again, good news that after some maintenance-heavy years, in 2020, we plan no major turnaround, apart from the ongoing maintenance in Rijeka. But this means that in 2020, we should be able to produce roughly 1.5 million tons of more products and to sell products from our value chain, which is quite a big increase comparing to the previous years. Our total refining production, we plan it closer to 17 million tons.

And now let me guide you through the quarterly Downstream numbers in a little bit of more detail in -- on Page #19. The upper chart shows the Q4 EBITDA changes compared to the same period of last year. The Q4 EBITDA decline was primarily driven by the refining and marketing price impact due to the lower headline margins. Volumes also added to the negatives as our petchem production was affected by both planned and unplanned shutdowns, while our integrated petchem margin was also lower year-on-year. This was more than offset, in case of petchem, by stronger sales margins and lower energy costs, and the positive impact in the petchem price and margin line. In case of full year 2019 EBITDA change, the decline was primarily driven by the refinery margin decline, while weaker volumes due to the more maintenance were also a little bit on the negative side.

And now with that, I would like to give it over to Péter Ratatics, who will walk you through the Consumer segment.

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Péter Ratatics, MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - COO & Executive VP of Consumer Services [4]

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Thank you very much, Ferenc, and good morning. Well, I'm very happy to say that the entire 2019 was a very strong year for the Consumer Services. The EBITDA continued to grow very fast. And in all of the quarters last year, we recorded record high quarters. In quarter 4, actually, the contribution was substantial. EBITDA increased by 24% and with that, actually, we reached the $104 million. First ever exceeded the $100 million in fourth quarter.

A special highlight to me is our free cash flow, the free cash flow generation. With that, actually, in the entire 2019, the free cash flow reached $300 million. That was 35% higher than last year. The EBITDA growth in Q4 was, again, very broad based. Nonfuel volume continued to grow. Regional demand growth remained strong, supporting both for fuel volumes and also fuel margin. Other items like the OpEx, that continued to increase, mainly because of the higher labor cost, but also increasing activity level. The year-on-year comparison in quarter 4 was supported by a base effect. In quarter 4 2018 was burdened by some nonrecurring items. Small positive also came from IFRS 16. Altogether in 2019, the effect was $15 million.

If you turn the page to the fuel sales, then actually, I can just confirm what Ferenc just said earlier, that in the Central Eastern European region, the fuel consumption was very strong, and that grew by 3%, a bit more than 3%, while our core retail market experienced a very strong close to 5% growth. The good news that our fuel sales growth was slightly ahead of the demand. So with that, actually, we increased the market share in our main country. And the sector was also supported by our ongoing network expansion, mostly through organic steps, a bit small acquisitions. Altogether during the last year, an additional plus 30 sites were added to our retail family. And just beside the strong fuel consumption growth, I also can very proudly say that we were capable to manage the unit margins as well. And all together, the unit margin increase was plus 4% during the last year.

And if you turn the page to the -- to 23, then you can see the nonfuel margin performance of the segment. The nonfuel margin increased by 10% in dollar, but 14% in local currency terms. And here, we reached yet another important milestone in 2019. With that, actually, the nonfuel margin reaching 30% at the end of the year out of the total margin generation capability of the Consumer Services. And that's -- actually, with that, we reached that milestone 2 years earlier than we originally expected.

That very strong nonfuel performance came mainly from 2 kind of forces or sources. The first one is the Fresh Corner rollout. The total Fresh Corner number was 877 at the end of the 2019. Now the network penetration is exceeding the 45% and many more are coming this year. So we will continue this reconstruction. But the other source of this growth is practically the internal measures that we take, introduction, for example, of the planogram operation in all of our sites and also we significantly (inaudible) the supplier negotiations during the year. Happy to say that both the transaction number and the basket size were growing last year.

And I cannot finish my part without saying one single number from the coffee part. Actually, altogether, 53.6 million cups of coffee were sold by the station workers last year. And also, this year, we would like to introduce the hotdog as the new measures for our success. So the baseline for that will be 8.6 million pieces of hotdogs. That's where we finished last year, and that's what we would like to significantly overperform this year.

And with that, actually, let me hand over the words to Tom, who will then tackle the Upstream part.

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Thomas Quigley, MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - COO of MOL Group E&P [5]

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Thank you, Péter, and good morning, ladies and gentlemen. Let me take you through the Upstream numbers, starting with the outputs, the financials, and then I'll cover the input production costs, investments and reserves.

You can see on Slide 25, on the right-hand side, that it was a bit of a rollercoaster year in 2019 for oil prices, and there was a steady decline in gas prices, overall pricing in 2019 being less than 2018. Our EBITDA in quarter 4 was $264 million, which was actually greater than quarter 3 by about 12%. Both prices and production increased in quarter 4. But we're still 22% behind a year ago, largely due to this weaker external price environment. Also, our year-to-date EBITDA dropped by 17% year-on-year, but we still managed over $1 billion of EBITDA. Cash flow, quite positive, quite robust, $700 million of free cash flow in 2019, which is equivalent to $18 a barrel for everything we barrel lifted. And as has already been said, the Upstream is the largest free cash generator in MOL Group.

If we turn to Slide 26, we just take a look at free cash flow and EBITDA on a dollar a barrel basis. The quarterly figures are in the upper part of the chart, annual figures in the lower part. I think the only point I would make is that you can see realized prices at $46 a barrel in 2019 versus $51 in 2018. But you can still see good unit free cash flow generation at $18 a barrel in 2019.

EBITDA is shown in a bit more detail on Slide 27, firstly, on a quarter-by-quarter basis so you can see the improvement quarter 4 versus quarter 3 2019. Prices improved, as I've already said, helped by volume improvements, somewhat offset by lifting costs because we have a lot of seasonal maintenance at quarter 4. But overall, we went from $235 million to $264 million.

Regarding the full year, again, because of oil prices being down 10%, gas prices being down 24%, year-on-year, we saw a reduction in free cash flow but still at this $1 billion-plus range -- I beg your pardon, EBITDA of this $1 billion-plus range.

Now let's look at production, Slide 28. You can see that production increased in quarter 4 following the maintenance periods and, in fact, exceeded $110,000 a barrel (sic) [110,000 barrels a day] by the year-end. And that brought the full year figure to 111,000 barrels a day, which is just north of the guidance we gave.

Average production in quarter 4 was 3% -- 2% higher than quarter 3, largely helped by the -- recommissioning Scolty & Crathes following the pipeline replacement project. So you can see a big increase in U.K. production quarter 3 versus quarter 4. This year, actually, in January, we're stable at around 112,000 barrels a day. No material turnaround or shutdown activity. We do expect to be around 120,000 barrels a day by the end of this year, assuming that we get 6 months of contribution from the Azeri asset, ACG.

If we turn to Slide 29, you'll see that we continue to be very tight on costs. Costs are under control. Last year's costs were $6.4 a barrel of oil equivalent, similar to 2018, despite the uptick you see in the quarter 4, which is mostly driven by seasonal maintenance. CapEx in 2019 was somewhat higher than 2018 at $360 million, largely due to investments in exploration in Norway. Also in the U.K., I mentioned the Scolty & Crathes pipeline. Also, our field developments in the nonoperated assets, Shaikan in Iraq -- Kurdistan, Iraq.

Finally on reserves, we ended the year at 270 million barrels. You can see the effect of 2019 production. There were some revisions, upwards and downwards, leading to a net downward revision. But I'd just remind you that our guidance, which we gave in November of ending the year within the range 360 million to 380 million barrels of 2P reserves still stands, largely due to the ACG acquisition.

That's all for me. So I'd now like to turn you over to József Molnár.

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József Molnár, MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - Group CEO, Member of Executive Board & Non-Independent Director [6]

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Thank you, Tom. 2019 was another successful year for MOL as we continue to perform and deliver or even over-deliver despite the weaker external environment. 2019 was also fundamentally different compared to the previous years as this was the first year of visible and significant additional investments into our strategic transformation that we defined in our 2030 strategy.

We look with optimism into the 2020 despite rising global uncertainties. Our working assumptions remain in line with our midterm macro and financial network, with Brent crude price averaging in the range of $50 to $70 per barrel in 2020. In Downstream, petchem margins have come down, reflect the bottom-of-the-cycle trading conditions. We assume our integrated petchem margin will be at very low end or sometimes even below our EUR 300, EUR 400 per ton range. In refining, we use our mid-cycle assumptions, USD 4, USD 5 per barrel, which include no upside from IMO. This cautiousness has so far been justified as IMO changes have failed to boost the middle distillates cracks here.

Based on these assumptions, and also assuming 6 months contribution from the ACG asset in Azerbaijan, we expect to generate around $2.5 billion Clean CCS EBITDA in 2020. In other words, increasing EBITDA in a retail oil macro environment. CapEx will likely be similar to last year's as we continue to spend some USD 700 million to USD 800 million on strategic projects, on top of our usual sustained type of CapEx. Hence, total investment may be around USD 2 billion, plus/minus USD 100 million. This means our simplified free cash flow will again be positive at around USD 500 million. Our leverage will increase after completing the ACG transaction, but it will remain well within our comfort zone and will start declining once ACG is bringing in EBITDA. Even post the ACG, we'll have sufficient balance sheet strength, flexibility and financial headroom.

In Upstream, our target is twofold: to successfully complete the acquisition of the ACG asset, then to integrate them. At the same time, we will continue to maximize the value and cash flow generation of our existing assets through efficient operations. In Downstream, executing our strategic projects, polyol, Rijeka delayed coker remains a priority; and we'll be focusing our long-term technological road map. Finally, in Consumer Services, we expect another record-breaking year, increasingly driven by our internal performance rather than the macro.

Finally, as you must also have noticed, this year is all about the sustainability and climate strategy in the oil and gas industry. This is also among our priorities for 2020. Actually, we have started dealing with this already a few years ago as we have been transforming our company to adapt to a low-carbon world. By the end of this year, we will also present the detailed integrated climate and sustainability strategy.

Ladies and gentlemen, thank you very much for your attention. And now we are ready to take your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And the first question is from Ekaterina Smyk.

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Ekaterina Smyk, BofA Merrill Lynch, Research Division - Analyst [2]

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Congratulations with the strong performance despite all the macro headwinds. I have several questions, and a couple of them will be quite quick. Can you please clarify on the dividend front, I mean, I know that you mentioned that it's up to the BoD decision, but I didn't quite get. Did you say that -- I mean we can expect continuation of the extra special dividend?

And the second question on petchem volumes. You said that they were affected in the fourth quarter. Was it mainly because of the weaker petchem margin? And a related question here, given the weakness in petchem macro, at this point of time, do you reiterate your expectations from -- I mean, on contributions from the polyol plant in terms of EBITDA? As far as I remember, it was about $150 million or around that.

And the last question, can you please remind us what's the -- first, can you please clarify what's the contribution to your Upstream EBITDA from gas versus oil in 2019? And can you please remind us what's the split between regulated and spot gas sales?

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Oszkár Világi, MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - Executive VP of Innovative Businesses & Services, Member of Executive Board & Director [3]

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Let's start with the dividend. Three points. In terms of process, so the next decision point is a recommendation from the Board of Directors to the annual meetings, that annual meeting at mid-March, and then the final decision from the shareholders in the annual meeting, that's mid-April. Base dividend, where the pattern was the kind of -- at around 10% growth in the last couple of years. What I can see from a financial point of view, that in terms of our targets, forecasts and generally the financial situation, that's a solid basis to continue this growth. Again, the recommendation will come from the Board of Directors. In the annual meeting, they will decide.

As for the special dividend, what we discussed that the macro environment was much less supportive this year than in the previous years. And so actually, the kind of realized upside from the supportive macro compared to our guidance was much smaller. So in terms of special dividend, my expectation would be that either no special dividend this year or, if yes, then a smaller amount than last year. But we will see that mid-March after the Board of Directors recommendation.

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Ferenc Horváth, MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - Executive VP of Downstream Division [4]

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As to the petrochemical last quarter volume effect, that was very clearly due to the planned and unplanned shutdowns or maintenance works in our units. So it was not coming from the optimization. And I also would like to add that until now, we have not cut and we were not considering to cut our steam cracker capacity because even the current environment, from the optimization point of view, proves that we should keep our petrochemical production as high as possible.

As to the polyol return, you are right. We were mentioning earlier that the yearly average expectation on the EBITDA level is roughly $150 million after the ramp-up of the project. Today, we still link to that EBITDA generation since the current lower petrochemical margins are not correlating with the polyol margins, which is the differential between propylene and polyols, which we mentioned earlier, much more stable, not so hectic in a much higher level. Recently, we have seen that they are also not at the historically highest level, but the USD 150 million EBITDA is still our target at the current external conditions.

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Thomas Quigley, MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - COO of MOL Group E&P [5]

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Well, in terms of the oil and gas split, I mean, on a volume basis, at the company level, it's roughly 50-50. In Central Europe, Croatia and Hungary, it's more like 60%, 65% gas, 40%, 45% oil than liquids.

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Robert Rethy, MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - IR Manager [6]

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And we don't disclose the EBITDA split, if that's what you were asking. And actually, it would be certainly be very difficult to exactly split oil and gas EBITDA. But I mean, based on realized prices, you can have a good guess what the rough breakdown of EBITDA to oil and gas.

And in terms of regulated gas, roughly 1/3 of our sales is regulated, and that's Hungary and Pakistan. 1/3 is fully market-based, and that's typically linked to either TTF or Central European gas hub prices. And 1/3 is in between, so that's following market prices with a lag.

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Ekaterina Smyk, BofA Merrill Lynch, Research Division - Analyst [7]

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Yes. Okay. Understood. Yes, I mean, I have a guess, I just wanted to double check, I guess, on the split of EBITDA between gas and oil.

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Operator [8]

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The next question is from Tamas Pletser.

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Tamas Pletser, Erste Group Bank AG, Research Division - Oil and Gas Analyst [9]

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I've got a couple of questions. Let me take 3 of them. First of all, on the decline rate of Hungary, I think that was quite surprising to me that you had, year-over-year, roughly 16% decline of the Hungarian oil and gas production. Is this trend going to continue? Or is it due to the maintenance activity you had in the last quarter? So can you shed, please, some more light what's going to happen with the Hungarian production going forward? That would be my first question.

My second question would be about your delayed coker project. Somehow, it seems to me that this figure you, time to time, publish on this project is creeping up. The $600 million you mentioned in this presentation, is it -- does it include all the investments over there? Did you already sign an agreement for this delayed coker? Do you expect to have a lump sum agreement on this? So please, we'd like to see some more information here, if it's possible.

And finally, on the natural gas business, I think that was surprisingly strong in this quarter. Is this more like a one-off issue? Or do you expect the same trend to continue with lower OpEx and relatively strong volume?

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Thomas Quigley, MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - COO of MOL Group E&P [10]

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With respect to Hungarian production, I mean, the guidance we gave is that if we do nothing, then we do see double-digit decline in the Hungarian production year-on-year. But we have very active programs there. I mean for example, we drilled 4 shallow exploration gas wells last year. It was successful. They'll be brought onstream. We've got a couple of development wells. We did now expect the workovers. We obtained 2 new licenses. So with all this additional activity, our target is to limit decline to single digits as opposed to double digits. And in fact, as we speak today, this quarter, we may see 30,000 -- maybe 36,000 barrels a day as opposed to the 35,000 that you saw in quarter 4 2019. So all of this additional activity aims to arrest this double-digit decline.

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Ferenc Horváth, MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - Executive VP of Downstream Division [11]

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Yes. Your second question regarding the DCU in Rijeka Refinery, as we said earlier, the final investment decision was made and also the contract with the main contractors was signed. And the amount, what we are mentioning, that based on an EPC contract, if you wish, that's a lump sum turnkey price, yes.

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Oszkár Világi, MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - Executive VP of Innovative Businesses & Services, Member of Executive Board & Director [12]

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And as for the gas business, I think we clearly expect the kind of a continued push kind of on the revenue side, which we have to counterbalance -- try to counterbalance with the costs. Overall outlook, I would say, flattish to slightly negative, but depending on various factors, including average temperature in the winter and other things. So I think overall outlook in the gas business, flattish and slightly negative EBITDA development.

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Operator [13]

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And the next question is from Henri Patricot, UBS.

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Henri Jerome Dieudonne Marie Patricot, UBS Investment Bank, Research Division - Associate Director and Equity Research Analyst [14]

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I have 3 questions, please. The first one on your guidance for EBITDA in 2020. I wanted to confirm that it's still based on your base macro framework because you mentioned that petrochemical margins are likely to stay at the lower end of the range. So do you expect to compensate for that lower petchem margin in other ways in the rest of the business?

And then secondly, I'd like to check in the Upstream, the implications of the negative revisions to reserves in terms of your production guidance for later years.

And finally, on the ACG update call coming later this year, I was wondering if you can give us a sense of the ambitions in ACG and perhaps if you can preview up some of the additional steps that you'd be looking to take in that field.

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Oszkár Világi, MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - Executive VP of Innovative Businesses & Services, Member of Executive Board & Director [15]

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Maybe I'll start with the guidance and probably also a bit the ACG part. So the guidance is based on the unchanged midterm macro framework. So it's apples-to-apples comparison to the previous guidances. One difference that we pointed out, that actually includes 6 months of ACG contribution.

In terms of ACG, the situation, what we outlined in the Investor Day, that we are not entitled to share certain detailed information with you. That's unchanged. Once we have the closing, I think then we can start sharing information. And then you should expect an update on the guidance as well because then we will have an actual date from the start of the contribution from the ACG.

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Thomas Quigley, MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - COO of MOL Group E&P [16]

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In terms of the net downward revisions for 2019, I don't believe they will impact our current production guidance going forward. There are a lot of moving parts. We're managing a big portfolio here. Sometimes, we increase reserves. You see last year, we had 1 million barrels of discoveries. We have field reviews ongoing all the time. We're drilling development wells. We've got ACG coming in mid-year or in the second quarter. So I think all of these things balance out in terms of our forecast for production, and that remains unchanged.

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Operator [17]

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The next question is from Oleg Galbur, Raiffeisen.

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Oleg Galbur, Raiffeisen CENTROBANK AG, Research Division - Financial Analyst [18]

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I have one question left on my list, and this is about your Downstream program. Could you please update us on how much EBITDA -- additional EBITDA have you generated in 2019? If I remember correctly, your guidance was roughly $50 million. And what are your expectations for this year, for 2020?

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Ferenc Horváth, MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - Executive VP of Downstream Division [19]

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Yes. Your memory is right, we put $50 million for the last year. And we could almost deliver it with $46 million from the bottom-up actions. And for this year, the total is $80 million.

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Oleg Galbur, Raiffeisen CENTROBANK AG, Research Division - Financial Analyst [20]

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8-0? Hello?

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Ferenc Horváth, MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - Executive VP of Downstream Division [21]

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Yes. Yes, sorry.

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Oleg Galbur, Raiffeisen CENTROBANK AG, Research Division - Financial Analyst [22]

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8-0, yes? $80 million, you said?

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Ferenc Horváth, MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - Executive VP of Downstream Division [23]

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8-0.

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Operator [24]

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(Operator Instructions) And the next question is from Jonathan Lamb, Wood & Company.

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Jonathan David Lamb, Wood & Company Financial Services, a.s., Research Division - Equity Analyst [25]

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I wonder if you could tell us a little bit more about Norway. At the end of 2018, you were very bullish on your Norwegian exploration. We haven't had any good news in 2019. So I wonder what the latest expectations are.

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Thomas Quigley, MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - COO of MOL Group E&P [26]

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As you say, we had a couple of dry holes, operated, non-operated. We did have a technical discovery in one well where we discovered hydrocarbon, but not enough for it to be commercially viable. We continue to be very interested in Norway. We're drilling a well now, side tracking an operated well. We have another well that's already been approved for next year. So we continue to be very interested in Norway. But it's exploration, as soon as we discover something, we will make an announcement.

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Operator [27]

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And we have a follow-up from Ekaterina Smyk.

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Ekaterina Smyk, BofA Merrill Lynch, Research Division - Analyst [28]

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I will use this opportunity to ask another question. As far as I remember, the ACG agreement sort of implies that you will get reimbursed for the free cash flow generated from 1st January of 2019. Do you have a rough estimate of how much this amount could come at this point of time?

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Oszkár Világi, MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - Executive VP of Innovative Businesses & Services, Member of Executive Board & Director [29]

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The agreement implies that we will have the financial benefits from this point. But we will see the financial benefits before the closing as a reduction of the purchase price and after the closing as an EBITDA contribution. And as I said, in terms of the -- we cannot disclose to you, at this point, the detailed numbers. But in our guidance for this year, 6 months EBITDA contribution from the ACG is included.

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Operator [30]

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There are currently no further questions. (Operator Instructions) We haven't received any further questions. So I hand back to the speakers for closing remarks.

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Robert Rethy, MOL Magyar Olaj- es Gazipari Nyilvanosan Mukodo Reszvenytarsasag - IR Manager [31]

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Yes, thank you very much for everything -- for everyone calling in for this conference call. And if any additional questions left, then just reach out to Investor Relations. I want to say have a nice day, and see you in 3 months' time. Thank you very much.

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Operator [32]

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Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.