Ukrnafta reports first quarter 2017 results
Ukrnafta reports first quarter 2017 results

PJSC Ukrnafta, Ukraine’s largest oil company, has published results for the first quarter of 2017.

Highlights

•    Daily oil and condensate production at 4.1 ktonnes
•    Net revenue and net profit significantly improved
•    Ukrnafta continues to modernize its structure and business processes

Key developments

•    Supervisory Board approved the management’s proposal to reform Ukrnafta’s organizational structure;
•    Well № 535 at Buhruvativske oil field put into the operation;
•    Pilot system for remote well monitoring implemented at Hnidyntsy field;
•    In March production resumed at Bytkiv-Babchenske and Lelyaki fields, production suspended at Zavodivske field following refusal by the State Service for Geology and Natural Resources to extend the license;
•    On 30 January 2017, Higher Administrative Court affirmed the lower courts’ decision obligating the State Fiscal Service to accept as tax lien 2 bln m3 of natural gas that belongs to Ukrnafta;
•    On 17 January 2017, Kyiv District Administrative Court’s decision came into effect affirming that tax debt does not constitute legal ground for refusal to extend licenses;
•    On 10 March 2017, Ukrnafta filed a lawsuit with Kyiv District Administrative Court to obligate the State Service for Geology and Natural Resources to extend 9 licenses expiring in 2017.-

 

I Q 2017

I Q 2016

Change, %

Net revenue, mln UAH

7 461,7

3 122,2 139%

Profit before taxes, mln UAH

343,6 (408,0) -

Corporate income tax

(272,5) (102,0) 167%
Net profit/loss, mln UAH 71,1 (510,0) -

Production of crude oil, ktonnes

366 381 (3,9)%

Production of gas, mln m3

313 333 (6,0)%
 Production of LPG, ktonnes 34,6 33,5 3,3%

 Mark Rollins, Chairman of the Executive Board of Ukrnafta:

«The first quarter results are encouraging - we maintained stability of production and restored profitability of the company. We continue to modernize Ukrnafta, including its drilling organization, which will lead to improvement in efficiency and cost reduction. At the same time, positive short-term results should not distract from the need for financial rehabilitation of the company. The problem with extension of our licenses poses a serious risk for Ukrnafta’s business going forward.».

Analysis of operational and financial results

In Q1 2017, the company managed to maintain daily production of oil and condensate at 4.1 ktonnes, close to the 2016 level. Production of oil and condensate, as well as of natural gas declined year-on-year. However, the rate of decline in production of hydrocarbons has decelerated, including due to increased capital investments.

Ukrnafta’s financial results significantly improved, with net revenue increasing by a factor of 2.4 on the backdrop of stronger prices for oil and LPG. In Q1 2017 Ukrnafta recorded net profit of UAH 71.1 mln. This reflects the positive trends in the company’s operating activities, as well as the reduction in the rent rates for oil from the beginning of 2017.

In Q1 2017, the company paid UAH 2.7 bln in taxes, UAH 966 mln more on year-on-year basis. Presently, Ukrnafta pays its tax obligations for 2017 in full. At the same time, 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 totaled UAH 855 mln in Q1 2017.

As part of the effort to resolve the tax debt problem the management of Ukrnafta has developed an alternative plan of financial rehabilitation and is conducting consultations concerning practical aspects of its implementation. The company continues to take actions to recover overdue receivables, including under the lawsuits filed in 2016.

The capital investments in Q1 2017 reached UAH 152 mln, a 24% increase year-on-year. The company boosted the essential spending on new equipment and maintenance, as well as capital workovers.

In 2017, Ukranfta will see nine of its licenses expire which collectively account for 20% of the annual production of oil and condensate. As of today, the State Service for Geology and Natural Resources has no legal grounds to refuse extension of licenses. In March 2017, Ukrnafta filed a lawsuit with Kyiv District Administrative Court to obligate the regulator to extend nine licenses expiring this year.

For more information please contact press office: +38 044 239 14 93