PGNiG Posts Financial Performance for 1H 2009
During the first half of 2009, the PGNiG Group generated sales revenue of PLN 10.25bn -- nearly 1 billion more -- year on year. PGNiG recorded a PLN 493m loss, against a 1bn net profit a year earlier. Nonetheless, there is no threat that the targets assumed in the Group's annual plans would not be achieved.
PGNiG Group's figures for 1H 2009 clearly show that Q1, when the Group sustained a loss of PLN 399m, was a particularly hard hit for the company. The financial performance in Q2 was much better -- net loss was less than four times the amount in Q1 2009 and amounted to PLN 94m. This reflects bottoming out of the negative trend.
Valuation Allowance on Mining Assets
The factors which had a material impact on PGNiG Group's results in the second quarter of 2009 include:
- PLN 162m increase in valuation allowances for production assets. This increase was connected with the change in the valuation of the mining assets as at June 30th 2009, which followed as a result of correction of the assumed prices of crude oil and natural gas.
- PLN 339m (or 19%) higher cost of natural gas purchases, year on year. Due to high prices of imported natural gas and the increased withdrawal of gas from the underground storage facilities in the first quarter of 2009, in the first half of the year the margin on sale of the high-methane gas was as much as 18% in the negative territory, whereas in the same period of 2008 it was 9% in the positive territory. In the second quarter of 2009 alone, the margin on sale of the high-methane gas was minus 8%, but starting from July 2009, the results on sale of this type of gas have been positive.
- PLN 37m (or 18%) drop in revenue on crude sales, due to lower crude prices on the global markets. In Q2 2009, PGNiG sold crude at prices 27% lower year on year.
In the first half of 2009, production of natural gas fell by 4%, to 2.03 billion cubic meters, compared with 2.11 billion cubic meters in the first half of 2008. A similar year-on-year decline was seen in the second quarter of 2009. In the second quarter of 2009 alone, production of natural gas was 931 million cubic meters.
In the first half of 2009, revenue on natural gas sales rose by 14%, although by a mere 2% in the second quarter alone. This revenue was affected by the approval of two gas selling price increases in 2008 by the President of Energy Regulatory Office, but also by a 9% reduction of the average price of gas relative to its previous level as of June 1st 2009. Another factor with a bearing on the gas sales revenue was an 11% year-on-year drop in the gas sales volume in the second quarter of 2009. The decline was due to lower gas offtake by industrial customers, mainly nitrogen plants (gas offtake lower by 12%), but also other businesses (gas offtake lower by 16%). Additionally, demand from retail customers fell by 11% due the average temperature in April, which ends the heating season in Poland, being 2oC higher.
PGNiG's crude production in the first half of 2009 was 6% higher year on year. In the second quarter of 2009 alone, crude production rose by 22%, to 130 thousand tonnes, compared with 107 thousand tonnes of oil produced in the second quarter of 2008. This considerable difference in production volumes is attributable to a change in the time of the scheduled overhaul shutdown at PGNiG's largest crude oil mine in Dębno. In 2009, this shutdown is planned in the third quarter, whereas in 2008 it took place in the second quarter of the year.
Revenue from crude sales fell in the first half of 2009 by 29%, to PLN 319m, compared with PLN 451m in the first half of 2008. In the second quarter of 2009 alone, despite a 12% increase in the sales volume, sales revenue fell by 18% year on year, from PLN 211 million to PLN 174 million. This fall was caused by a dramatic 51% drop of the average crude prices between the second quarters of 2009 and 2008.
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