PJSC Ukrnafta, the biggest Ukrainian oil producer, announces interim results for Q1 2016.  

Summary:

• - Oil extraction for the period January – March 2016 amounted to 381 ktonnes, a 12.4% decrease compared to the similar period in 2015
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• - Gas production for the period January – March 2016 amounted to 333 mln m3, a 14.6% decrease compared to the similar period in 2015
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• - LPG production for the period January – March 2016 amounted to 33.5 ktonnes, a 17.3% decrease compared to the similar period in 2015
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• - Operating loss for Q 1, 2016 amounted to UAH 510 mln
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• - Profit on which taxes were paid was higher than profit/ (loss) incurred under IFRS accounting rules resulting in a payment of UAH 102 mln to the State budget

The financial performance was affected by significant reduction in oil prices during the period under review – oil prices in the first months of this year dropped below $30 per barrel (for reference: the average price amounted to almost $53 per barrel during the first three months of 2015).

Oil production year-on-year decreased due to natural decline in field performance, which has not been compensated due to a lack of available investment capital during the past periods.

 Fines and penalties charged on unpaid royalties and taxes of previous periods (so-called “legacy” debt) in the amount of about UAH 800 mln was the other key factors that caused the negative financial performance.

At the same time hydrocarbon production by PJSC Ukrnafta remained fairly stable in the first quarter 2016.

Revenue from sale of extracted oil during the first quarter accounted for 67% of the company revenues. During the first three months of the year, the company paid salaries to almost 26 thousand employees timely and in full as well as current taxes.

PJSC Ukrnafta commenced activities to reform the company; in particular, optimisation of management costs, improvement of procurement system and labour safety, and developing a new long-term strategy for the consideration of the Supervisory Board.

Mark Rollins, CEO: “This is a solid set of underlying business results given the difficult business environment and external factors such as the low oil price. However, we are still materially impacted by losses generated due to the legacy tax debt, which is very disappointing. The management of Ukrnafta are working hard with our shareholders to find a solution to this and hope that our debt restructuring process will be approved shortly.”

Financial Summary: