PJSC Ukrnafta, Ukraine's largest oil company, has published operational and financial results for nine months of 2017.

Highlights

  • Daily oil and gas production down after termination of production due to non-renewal of the licenses; company and the state suffered significant financial losses.
  • Net income and net profit maintain positive trend despite loss of production.
  • Current 2017 tax obligations covered in full year to date.
  • Investments up, however, investment program revised down due to loss of revenue.
  • Modernization of company is underway.

Key developments

  • On September 26, Ukrnafta had 9 of its production licenses extended for 20 years after winning a series of court cases against the State Service of Geology and Mineral Resource of Ukraine.
  • Four wells were drilled and put into operation, three of which in the framework of joint activities.
  • New gas modules installed at 8 gas stations within the framework of the retail network upgrade program.

Financial and operational results

9 months 2017

9 months 2016

Difference %

Net revenue, mln UAH

19 921

15 301

30%

Profit before taxes, mln UAH

1 753

937

87%

Corporate income tax

(655)

(511)

28%

Net profit/loss, mln UAH

1 097

427

157%

Production of crude oil, ktonnes

1 040

1 144

-9%

Production of gas, mln m

855

977

-12%

Production of LPG, ktonnes

89

98

-9%

Mark Rollins, Chairman of the Executive Board of Ukrnafta:

«The company has managed to improve financial performance over 9 months mainly due to strong oil prices, however, the results could have been much better. Temporary loss of licenses and production volume had negative impact on the company's revenue and investment activity. At the same time, Ukrnafta continues to maintain fiscal discipline having paid current taxes in full since the beginning of the year».

Analysis of operational and financial results

In 3Q2017, the daily production of oil and condensate amounted to 3.3 ktonnes declining by 20% compared to the 1H2017 levels, while the daily gas production amounted 2.6 mln m down by 23%. The company saw production levels decrease as it had to terminate operations at 6 of 9 its fields because of the unlawful inaction on the part of the State Geological Service leading to non-renewal of the production licenses which expired this year.

Having terminated production at Zavodivske, Korzhivske, Pivdenno-Panasivske, Anastasievske, Artyukhivske and Rybalske fields in the 2nd and 3rd quarters, Ukrnafta missed circa 70.5 ktonnes of oil and condensate and 55 mln м of gas.

Termination of production also led to significant decrease in the availability of hydrocarbon resources for Hnidyntsivskyi and Kachanivskyi gas processing plants and led to a decline in production of LPG.

Ukrnafta missed circa UAH 1.2 bln in revenues due to the termination of operations at 6 fields. However, strong oil prices compensated the negative impact from the reduction in hydrocarbon production volumes and Ukrnafta's net income for the 9 months of 2017 increased by 30% y-o-y.

For 9 months of 2017, Ukrnafta generated a net profit of UAH 1.1 bln, compared with UAH 427 mln for the same period in 2016.

In 2017, Ukrnafta continues to fully cover its current tax obligations. In 9 months, the company paid UAH 8.2 bln in taxes. The accrued rental payments amounted to UAH 4.2 bln and were completely repaid. As of September 30, 2017, the accounts payable to the state budget amounted to UAH 12.8 bln, having decreased in the 3rd quarter by UAH 0.4 bln. The amount of Ukrnafta's overdue tax debt totaled UAH 12.2 bln remaining unchanged since the end of 2016. At the same time, the state budget missed at least UAH 300 mln in revenues from rent alone due to non-renewal of the licenses and termination of production at the affected fields.

Ukrnafta made allocations to reserves for possible fines and penalties related to the rent and other tax arrears accumulated in the previous periods totaling UAH 2.5 bln in 9 months 2017. This factor continues to affect adversely the company's financial performance.

The capital investments for the 9 months of 2017 amounted to UAH 608 mln, up by 59% compared to the same period last year. At the same time, due to non-renewal of its production licenses by the regulator and significant loss of revenue, the company was forced to revise down its investment plans by at least UAH 500 mln. Company's ability to finance investment projects also continues to suffer from lack of a coordinated approach on the repayment of tax debt.

For more information please contact press office: +38 044 239 14 93

Ukrnafta PAT published this content on 10 November 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 10 November 2017 09:48:03 UTC.

Original documenthttps://www.ukrnafta.com/en/interim-results-for-9-months-of-2017

Public permalinkhttp://www.publicnow.com/view/E814427D97AF4E0327F950E866F91ACAE7F9F174