Results of company performance for 1H2019
Results of company performance for 1H2019

PJSC Ukrnafta announces its financial and operational results for 1H2019.


  • daily hydrocarbons production increased;
  • investments nearly doubled year-on-year;
  • the company maintained profitability, albeit net revenue and net profit decreased;
  • the company completed rebranding of 9 UKRNAFTA filling stations in Western Ukraine;
  • modernization of organizational structure and automation of business processes underway. 

Key developments:

  • 99 capital workovers and stimulation operations of oil and gas wells as well four fracking operations have been completed; 76 idle oil wells were reactivated;
  • drilling of well #102 was started in Verkhnyomaslovetskiy field;
  • Ukrnafta and JV Poltava Petroleum Company launched a joint project on preparation of Ukrnafta`s gas from Novohryhorivskiy field (Poltava oblast).
  • Ukrnafta’s new Supervisory Board elected which now includes six independent members;
  • shareholders approved solution on settling the outdated tax debt;
  • Mark Rollins resigned as Chairman of the Board and Oleg Gez, Deputy Chairman of the Board, Executive Vice President Downstream, was appointed acting Chairman of the Board until a permanent Chairman is elected as per the new Statute of the company;
  • consolidation of Ukrnafta’s information structure into the single information space, based on the cloud technologies by Microsoft completed.





Change, %

Net revenue, mln UAH

13 883

16 762


Profit before tax, mln UAH


2 996


Corporate income tax, mln UAH




Net profit/ (loss), mln UAH


2 061


Production of crude oil and condensate, ktonnes




Gas production, mln m3




Production of LPG, ktonnes





Average daily production



Change, %



Change, %

Production of crude oil and condensate, ktonnes







Gas production, mln m3







Analysis of operational results

In 1H2019, Ukrnafta increased average daily oil and condensate production to 4.18 ktonnes/day, up 6.3% y-o-y and 4.3% against 2H2018. Meanwhile, average daily gas production grew up to 3.19 mln m3/day, increasing 10.5% y-o-y and 4.7% vs. 2H2018.

In the reported period the company continues to increase production through efficient management of the existing wells. Ukrnafta completed four hydraulic fracturing operations, 71 capital workovers and 28 opex workovers. As of June 30, 2019, these operations enabled the company to produce additional 19.04 ktonnes of oil and condensate and 41.18 mln m3 of gas. Moreover, in the reported period the company reactivated 76 idle oil wells.

In order to transition from stabilization to growth Ukrnafta needs to increase investments in infrastructure upgrades, intensification of production, new drilling and obtain new licenses. Meanwhile, this increase remains impossible as long as there is no solution of the problem of the outstanding tax debt as well as there is no stable system of sales of Ukrnafta’s crude oil. That prevents the company from maintaining high growth rates which is evidenced by slower growth in 2Q2019 vs 1Q2019.

Analysis of financial results

In 1H2019, Ukrnafta maintained profitability despite the decline in oil and gas prices in the domestic market. At the same time, the company saw weaker financial results with net revenue at UAH 13.9 bln and net profit at UAH 18.2 mln.

The following factors influenced the financial performance. During 1H2019 the average-weighted selling price for oil was USD 60.4 per barrel, down by 10.1% y-o-y. The average-weighted selling price for gas declined by 18% y-o-y to UAH 7,409 per 1 thousand m3.

During the reporting period Ukrnafta decreased the volume of sales of light petroleum products, in part due to the continued decline in demand for gasoline in the Ukrainian market. At the same time, the company increased its stock of product to be sold in the future periods.

Ukrnafta continues to pay current taxes in full, with UAH 6.8 bln going to the budgets of all levels of government for 1H2019. The amount of tax paid for the reporting period is 2.0% up against the same indicator for 1H2018 (UAH 6.6 bln).

Meanwhile, there is still no solution of the problem of the outstanding tax debt, though Ukrnafta has been working on it over three years already. It submitted a number of proposals regarding the tax debt restructuring but none of them was approved. In March this year, the shareholders agreed the decision that is intended to lead to the elimination of the overdue tax debt. It envisages that NAK Naftogas will buy 2.06 bln m3 of gas which was transferred by Ukrnafta to the underground gas storage in the past and will buy additionally 2 bln m3 of gas to be produced in the future. In its turn, Ukrnafta is obligated to allocate all proceeds to repay the tax debt (including fines and penalties) and other tax obligations arising in the course of execution of the contracts, which will open the way to increasing investments, modernizing production assets and achieving sustainable growth in production of hydrocarbons. There is no governmental decision, though.

Hence, 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, which totalled UAH 1.8 bln in 1H2019.

In the reporting period the capital investments reached UAH 749 mln, up by 86% y-o-y. The company has significantly increased investments in new equipment as well as capital workovers. Nevertheless, the rate of investments remains insufficient, with the 2019 investment programme targeting UAH 2.9 bln.