MOL Upstream Boosts Production amid Operating Loss
MOL Group’s upstream business boosted its production by almost seven percent year-on-year in 2015, posting an operating loss of HUF 468.3 billion ($1.65 billion) in the process.
The Hungarian company’s average hydrocarbon production last year was 103,900 barrels of oil equivalent per day, up from 97,500 boepd in 2014. MOL’s crude oil production was up 16 percent to 40,000 boepd and its natural gas production increased 3.5 percent year on year to 56,900 boepd. Condensate production dropped by 12.6 percent to 7,100 boepd.
Hungary was the largest source of crude oil and natural gas production for the company, posting 11,400 and 25,700 boepd, respectively. Croatia was the second biggest source of crude oil and natural gas for MOL in 2015, producing 10,700 boepd of crude oil and 25,000 boepd of natural gas.
MOL Upstream’s operating loss of marked a 717 percent drop compared to the operating profit of HUF 75.8 billion ($268.6 million) registered in 2014. Profit at the EBITDA level decreased by 14.4 percent to HUF 245.1 billion ($868.6 million) and capital expenditure decreased by 29.3 percent to HUF 232.2 billion (822.9 million). In contrast to MOL’s upstream segment, MOL Group Downstream had the “historically highest and strongest financial performance” last year. The business posted an operating profit of HUF 263.4 billion ($933.5 million).
Commenting on the results, MOL Group Chairman and CEO Zsolt Hernádi said in a company statement:
“The oil and gas industry, including MOL, had to face one of the toughest operating environments of the past two decades with oil prices plunging more than 70 percent from its 2014 summer peak.
“The dramatically changed environment forced us to take some painful yet necessary decisions, including the revision of the fair value of our upstream assets, which resulted in material non-cash impairment charges, similarly to many oil and gas companies. MOL proved in 2015 that it has an efficient, highly cash generative downstream platform which is able to capture market opportunities as it continues to invest into the long-term growth of the business.
“We are in the process of realigning our upstream division with the aim of operating profitably even in a $35 per barrel oil price environment not only in the CEE [Central and Eastern Europe] but also internationally. Our ultimate goal for 2016 is to generate around $2 billion EBITDA and sufficient cash flows to be able to continue to cover both internal investment needs and dividends to our shareholders, even under adverse scenarios.”
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