Ukrnafta produced 1.08 mln tonnes of oil & condensate for 9 months
Ukrnafta produced 1.08 mln tonnes of oil & condensate for 9 months

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

Highlights

  • Daily hydrocarbons production has increased y-o-y due to continuous prioritization of higher production well workovers and working with idle wells, including hydraulic fracture stimulations, reperforations, and recompletions;
  • Modernization of organizational structure and business processes underway.

Key developments

  • At the end of April, Ukrnafta got the first approved Environmental Impact Assessment (EIA) for the company’s operation in the field of mineral resources extraction;
  • The Supervisory Board approved the creation of new structural units – Oilfield Services that consolidates all oilfield services and Transportation Services.

 

9 months 2018

9 months 2017

Difference %

Production of crude oil and condensate, ktonnes

1 077

1 040

+3.5

Gas production, mln m3

797

855

-6.8

LPG production, ktonnes

81.3

89.1

- 8.8

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.

Oil production dynamics, 2016-2018

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 that restricts the company`s ability to manage financial resource. 

Meanwhile, for 9 months of 2018 Ukrnafta completed 11 hydraulic fracturing operations that have already resulted incremental 1.79 ktonnes of oil and 0.47 mln m3 of gas. Additionally, from the beginning of the year, the company has completed 72 capital workovers and 76 opex workovers. As of the end of 3Q2018, due to the capital workovers, Ukrnafta produced additional 23.3 ktonnes of oil and 41.8 mln m3 of gas. The opex workovers resulted in incremental production of 17.2 ktonnes of oil and 3.8 mln m3 of gas.

The positive production dynamics enables Ukrnafta to improve its forecast of total production volume for the whole 2018. According to the latest estimates the oil production should increase by 5% and make up 1.45 mln t (plan – 1.38 mln tonnes, oil production for 2017 – 1.38 mln tonnes). The gas forecast is up 10% against the plan and will make up 1.07 bln m3 (plan – 0.97 bln m3, gas production for 2017 – 1.11 bln m3).

“Despite the limited investments due to the tax debt and failed state-run oil auctions, the production growth proves that Ukrnafta has a huge potential for the improvement of its operational and financial results. If there are stable annual investments at the rate of UAH 3 bln at least, the company will be able to increase oil production in 1.5 times and gas production in 2 times for the next 5 years. Renewal of investments will give the opportunity to speed up technical modernization, increase the volume of jobs on the current wells and renew new wells drilling. To do that we need solutions for the problems of the historical tax debt and of restrictions for oil sales through the state-run oil auctions,” Mark Rollins, the Chairman of the Executive Board of PJSC Ukrnafta, commented the challenges for the company.