PJSC Ukrnafta, the biggest Ukrainian oil producer, announces interim results for H1 2016. 

• - Oil extraction for the period January – June 2016 amounted to 763 ktonnes, a 10,9% decrease compared to the similar period in 2015;
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• - Gas production for the period January – June 2016 amounted to 655 mln m³, a 14,7% decrease compared to the similar period in 2015;
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• - LPG production for the period January – June 2016 amounted to 64,8 ktonnes, a 17,7% decrease compared to the similar period in 2015.
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Since January 2016 Ukrnafta stabilized oil production and managed to keep the average daily production volumes at 4,2 ktonnes. It was achieved through a more rational approach to the use of funds. The oil and gas extraction, as well as the production of LPG, slightly higher than planned. However, the company failed to prevent the fall of production compared to the H1 2015 - due to the low level of investments for the equipment maintenance and modernization and drilling of new wells.

Profit before tax for the Q2, 2016 was UAH 616 mln. In accordance, net profit for the Q2 was UAH 500 mln (versus UAH 510 mln net loss in Q1), indicating the positive trends and relatively stable operational performance. However, key factors in the negative financial performance in H1 2016 (net loss UAH 10 mln) are fines and penalties for unpaid royalties and taxes of previous periods (so-called "historic" debt).

Ukrnafta paid to the State Budget of Ukraine around 3,3 bln UAH of taxes in H1 2016 and was the 6^th biggest tax payer in the first quarter 2016.  The Company has increased the payment of taxes by almost five times after the change of management.

As a start of transformation process, the Head Office restructuring program, allowing the Company to increase efficiency and optimizing costs, was launched in H1. Restructuring of structural units and other projects will begin in the near future.

As it was reported, the Ukrnafta General Meeting of Shareholders scheduled on September 15 have to grant of consent for the initiation of financial rehabilitation of Ukrnafta and determination of terms and conditions.

Mark Rollins, Chairman of the Executive Board of Ukrnafta:“Due to changes of the business model in Q2, Ukrnafta was able to get quite good operational financial results for H1. The basic financial performance of the Company remained stable during the first half of the year, despite the difficult and volatile market conditions. However, there is still a problem of unbalanced fiscal burden and issues related to the “historic” debt repayment. We hope that Ukrnafta will start implementing the process of financial recovery in H2 and that it will allow us to set to the planned investment program”.

Financial Summary:

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