Company’s results for 9 months of 2018
Company’s results for 9 months of 2018

PJSC Ukrnafta, Ukraine’s largest oil company, has published financial and operational results for 9 months of 2018.


  • Four-fold increase in net profit;
  • Average daily liquids production in 3Q2018 at 4.0 ktonnes/day, up from 3.9 ktonnes/day in 1H2018;
  • Management of Ukrnafta’s production units and gas processing plants streamlined under BU Ukrnafta (East) and BU Ukrnafta (West);
  • Failure of half of state-run oil auctions that had negative impact on the company’s cash flow;
  • UAH 11.6 bln paid in taxes, including UAH 1.1 bln of the overdue tax debt.

Key developments

  • At the end of April, Ukrnafta got the first approved Environmental Impact Assessment (EIA); the process is going on and the company has received already 12 EIA
  • The State Service of Geology and Mineral Resources extended three licenses for mineral resources extraction, expiring in 2019.


9 months 2018

9 months 2017

Difference %

Net revenue, mln UAH

27 054

19 921


Profit before taxes, mln UAH

5 764

1 753


Corporate income tax, mln UAH

(1 038)



Net profit/(loss), mln UAH

4 726

1 097


Production of crude oil and condensate, ktonnes

1 077

1 040


Gas production, mln m3




LPG production, ktonnes




Analysis of financial results

In the reported period Ukrnafta has significantly improved financial performance. In particular, for 9 months of 2018 net profit is up by 35.8% comparing to the same period of last year. The net income of the company grew in four times and made up UAH 4.7 bln against UAH 1.1 bln for 9 months of 2017.

The significant improvement of financial results reflects the positive dynamics of oil and oil products prices as well as restoration of liquid hydrocarbons production. Meanwhile, the half of state-run oil and condensate auctions failed and, consequently, influenced negatively the financial results: the significant part of crude oil was not sold, decreasing the revenues from oil sales.

Ukrnafta continues to pay all current taxes along with repaying the tax debt. For 9 months the company paid nearly UAH 11.6 bln in taxes, including UAH 1.1 bln of the overdue tax debt. Thus, as of the end 3Q2018, the outstanding tax debt made up UAH 10.7 bln. This includes the debt owed by the company and its structural units as well as the debt for the joint activities.

Meanwhile, because of no decision, approved by the government, regarding the outstanding tax debt, the company continues to make allocations to reserves for possible fines and penalties related to the rent and other tax arrears, accumulated in the previous periods. For 9 months this year they totaled UAH 2.5 bln.

For 9 months of 2018, the capital investments amounted to UAH 611.1 mln and that is insignificant increase compared to UAH 608 mln for the same period last year. For three years in row the company has been working under conditions of the restricted investments because of the non-solved problem of the historical tax debt. Therefore, Ukrnafta can’t implement in full the investment programme that has envisaged UAH 3.17 bln for this year.

Analysis of operational results

In 3Q2018, the average daily production rate of oil and condensate grew up to 4.0 ktonnes/day, up by 21.2% vs 3Q2017 (3.3 ktonnes/day) and 2.6% vs 2Q2018 (3.9 ktonnes/day). Thus, Ukrnafta has restored the liquids production rate that had declined because the company had to terminate operations at 6 its fields.

The average daily rate of gas production was at the level of 3.0 mln m3/day, demonstrating the stable positive dynamics in the reported period as well. The average daily production grew up by 15.4% against 3Q2017 (2.6 mln m3/day) and by 7.1% against 2Q2018 (2.8 mln m3/day).

The company succeeded to increase daily production, working only on the existing wells due to hydraulic fracture stimulation, optimization of capital and planned workovers of the high-potential wells, and replacement of the critically old equipment. Nevertheless, the investment level is insufficient for significant production growth because of the non-solved problem of the historical tax debt and the instability of cash flow due to the inefficient system of the state-run auctions that restrict the company`s ability to manage financial resource.