MOL Profits Boosted by Cold 2Q
Higher upstream oil and gas prices and a cold 2Q boosted MOL profits, it reported August 4. Profits increased by 11% year on year in 2Q 2017 to $316mn (forints 88.8bn); pre-tax operating earnings (Ebitda) were 20% higher at $684mn. Earnings from its downstream business though declined by 38%.
MOL’s midstream gas unit, the Hungarian gas grid FGSZ, saw 2Q earnings up by a quarter to $37mn. Domestic transmission throughput was up 17% – with revenues 19% higher – spurred by colder weather and more intensive use of storage facilities. Transit volumes too were higher, as demand for gas transit to Serbia, Bosnia, Croatia and Ukraine “increased considerably” although transit revenues were down by 15% due to a tariff reduction for FGSZ.
Upstream production fell 4% year on year to 109,000 barrels of oil equivalent/day in 2Q, with oil 9% down at 38,600 b/d, and gas plus condensate both 2% lower at 54,200 boe/d and 7,400 boe/d respectively. Overall upstream earnings were 35% higher at $228mn in 2Q2017, as MOL’s average realised liquids price increased by 25% in 2Q at $47.5/b although its gas price gained only 4% to $28/boe.
Most gas was produced in Hungary (26,400 boe/d), Croatia (21,400 boe/d, of which nearly 40% offshore) and Pakistan (5,600 boe/d); in addition it produced 2,300 boe/d in 2Q from its 10% net equity in Pearl Petroleum, a gas explorer in the Kurdistan Region of Iraq, unchanged from 2Q 2016.
MOL booked a $22mn impairment change in 2Q on the divestment of the North Karpovsky exploration block in Kazakhstan to state KMG in June. However on the plus side, the Hungarian firm is gearing up for a first operated well in Norway in 2018, having expanded its exploration portfolio there.
Key MOL shareholders at end-June 2017 were foreign mainly institutional investors with 34.81%, followed by the Hungarian state 25.24% and Oman Oil 7.14%. Mol treasury shares represent a 9.29% holding in the company. Czech power group CEZ divested its 7.47% MOL interest during 2Q 2017.
Mark Smedley