09 Jun - 4 min read

Sasol Restructures Existing Oil Hedges and Increases the Hedge Cover Ratio for Oil for Financial Year 2022

Sasol Restructures Existing Oil Hedges and Increases the Hedge Cover Ratio for Oil for Financial Year 2022

Sasol Limited
(Incorporated in the Republic of South Africa)
(Registration number 1979/003231/06)
Sasol Ordinary Share code:           JSE: SOL                    NYSE: SSL
Sasol Ordinary ISIN codes:           ZAE000006896                US8038663006
Sasol BEE Ordinary Share code:       JSE: SOLBE1
Sasol BEE Ordinary ISIN code:        ZAE000151817
(“Sasol” or “the Company”)


Sasol has made significant progress in deleveraging its balance sheet following a strong
operating performance in a more supportive macroeconomic environment, continuing cash
conservation measures and ongoing asset divestments. One of the Company’s main
objectives remains to reduce absolute debt levels, which will trigger the consideration to
resume dividend payments. Debt metrics are currently following a positive trajectory but may
still be negatively impacted by oil price volatility.

The current hedging program consists mainly of put options and provides protection against
oil prices decreasing to below approximately US$43,11 per barrel. Following the recent
material rise in the oil price, Sasol has been able to restructure and enhance its financial year
2022 hedging programme, ensuring cash flow robustness and protection against future oil
price volatility.

The existing oil put hedges of 24 million barrels for financial year 2022, as reported in the
Production and Sales Metrics ending 31 March 2021, have been restructured and replaced by
a zero cost collar hedging structure. This has allowed the Company to increase the gross
average floor oil price on the existing 24 million barrels from US$43,11 per barrel to
approximately US$60,09 per barrel, albeit with a cap of approximately US$71,97 per barrel.
The premium paid on the original put options for financial year 2022 will be realised as an
expense of approximately US$30 million to US$34 million, reflecting the cancelled options and
new hedges which were executed in terms of the updated hedging strategy.

The oil hedge cover ratio for financial year 2022 has also been increased by hedging an
additional 18 million barrels or an incremental 4,5 million barrels per quarter. This was
achieved by increasing the hedge cover ratio from 80% to 90% of total Synfuels synthetic
crude oil production, and including 90% of Sasol’s share of Oryx production and equivalent
commodity chemicals volumes where there is a strong correlation to oil price.

The incremental 4,5 million barrels for quarter one to three of financial year 2022 have been
executed using swaps at an average strike level of US$67,52; US$67,03 and US$67,21 per
barrel respectively. Completion of the last 4,5 million barrels for quarter four is still in progress.
The actual realised chemical margins for the base chemical sales volumes for financial year
2022 will be unaffected by this hedging program.

The updated hedging levels underpin the strengthening of the balance sheet and the reduction
of the Company’s absolute debt levels. The restructuring was focused on financial year 2022
only. The Company will however continue to update the market on any changes to our financial
risk management positions in our quarterly market disclosures.

9 June 2021

Sponsor: Merrill Lynch South Africa Proprietary Limited

Disclaimer - Forward-looking statements

Sasol may, in this document, make certain statements that are not historical facts and relate
to analyses and other information which are based on forecasts of future results and estimates
of amounts not yet determinable. These statements may also relate to our future prospects,
expectations, developments and business strategies. Examples of such forward-looking
statements include, but are not limited to, the impact of the novel coronavirus (COVID-19)
pandemic on Sasol’s business, results of operations, financial condition and liquidity and
statements regarding the effectiveness of any actions taken by Sasol to address or limit any
impact of COVID-19 on its business; statements regarding exchange rate fluctuations,
changing crude oil prices, volume growth, changes in demand for Sasol’s products, increases
in market share, total shareholder return, executing our growth projects, oil and gas reserves,
cost reductions, legislative, regulatory and fiscal development, our climate change strategy
and business performance outlook. Words such as “believe”, “anticipate”, “expect”, “intend",
“seek”, “will”, “plan”, “could”, “may”, “endeavour”, “target”, “forecast” and “project” and similar
expressions are intended to identify such forward-looking statements, but are not the exclusive
means of identifying such statements. By their very nature, forward-looking statements involve
inherent risks and uncertainties, both general and specific, and there are risks that the
predictions, forecasts, projections and other forward-looking statements will not be achieved.
If one or more of these risks materialise, or should underlying assumptions prove incorrect,
our actual results may differ materially from those anticipated. You should understand that a
number of important factors could cause actual results to differ materially from the plans,
objectives, expectations, estimates and intentions expressed in such forward-looking
statements. These factors and others are discussed more fully in our most recent annual
report on Form 20-F filed on 24 August 2020 and in other filings with the United States
Securities and Exchange Commission. The list of factors discussed therein is not exhaustive;
when relying on forward-looking statements to make investment decisions, you should
carefully consider both these factors and other uncertainties and events. Forward-looking
statements apply only as of the date on which they are made, and we do not undertake any
obligation to update or revise any of them, whether as a result of new information, future events
or otherwise.

Date: 09-06-2021 01:17:00
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