MOL to Remain Profitable at Operating Level 2011-CEO

BUDAPEST (Dow Jones Newswires), Feb. 15, 2011

Hungarian oil and gas firm MOL expects to remain profitable at the operating level, Chief Executive Gyorgy Mosonyi said Tuesday at a press conference after the company's fourth quarter earnings, but didn't provide detailed expectations.

The company posted net profit of 32.97 billion forints ($163.7 million), excluding losses at its Croatian subsidiary INA, in the last quarter of 2010.

"I hope this year's results won't disillusion investors, we're naturally not planning to generate losses," Mosonyi said.

Mosonyi forecast average hydrocarbon production in 2011 between 150,000-155,000 barrels per day, up from 143,520 barrels per day in 2010.

The company sees the contribution of international business to its earnings before interest, taxes, depreciation and amortization, or Ebitda, increasing to 60% from the current 50%, Mosonyi said.

"We see our upstream segment in Croatia, Syria, Pakistan and Kurdistan (Iraq) as the company's future," Mosonyi said, adding the most profitable segment of MOL is already the exploration and production segment.

MOL's Ebitda, excluding special items, in the fourth quarter last year was 149.4 billion forints ($744.5 million), up 46% on the previous year.

The firm calculates with a euro-forint rate of HUF280 for the coming year but decided not to engage in forecasting the rate but using an average of the past three months.

MOL calculates with a crude oil price of $82 for 2011, but Mosonyi added he expects prices to be higher than that, between $80-$100 this year. Crude prices followed a relatively continuous growth pattern in the last quarter of 2010 starting from $80 and reaching $100 by the year-end, the company said in its earnings report.

The firm forecasts the gasoline crack spread next year at around $120, and foresees the diesel crack spread between 90-$120.

Mosonyi envisages the Brent-Ural spread at $1.75 per barrel in 2011, which he regarded a "very optimistic" view. At some of its refineries, MOL uses Ural oil which costs more to process due to its higher sulfur content.

Despite the lower-than-expected net profit in the fourth quarter, analysts maintained their rating and target price on MOL shares saying the company was hit mainly by one-off items but has growth potential.

"We maintain our bullish view on the stock as MOL remains one of the few stocks to offer organic growth at good returns, increasing exposure to upstream margins and high quality assets that can weather storms in refining," KBC Securities analyst Olena Kyrylenko said.

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