Production Results for 2016
Production Results for 2016

PJSC Ukrnafta announces its production results for the fourth quarter and 12 months of 2016*.

Highlights 

  • Since the beginning of 2016, daily production of crude oil and condensate stabilised at 4.2 ktonnes with limited investments;
  • More focused approach to investments allowed to improve well intervention efficiency by 23% to 198 ktonnes of oil and condensate in 2016;
  • Crude oil and condensate production for 2016 at 1.5 mln tonnes;
  • Gas production for 2016 at 1.3 bln m3;
  • LPG production for 2016 at 134 ktonnes.
 

4Q2016

4Q2015

3Q2016

2016

2015

Change, %

Production of crude oil and condensate, ktonnes

374

399

381

1 518

1 671

(9.2)%

Gas production,  mln m3

323

362

323

1 301

1 503

(13.4)%

Production of LPG, ktonnes

36

38

33

134

154

(12.9)%

In 2016, Ukrnafta stabilised daily output of oil and condensate at 4.2 ktonnes per day. However, the output of liquids declined by 9.2% year-on-year, as the company’s ability to invest in maintenance, equipment modernisation, as well as drilling of new wells was constrained throughout the year.

However, Ukrnafta was able to use its limited investment funds to avoid the natural decline of output of 15% projected in 2016. The company reduced the per-unit spend on well workovers by factor of 2.5 to 680 UAH/ tonne of oil and condensate, while increasing the cumulative output from well workovers by 30% from 111 ktonnes in 2015 to 144 ktonnes in 2016. The company brought down per-unit costs of other well interventions by 6% to 875 UAH/ tonne, while increasing the cumulative output from such measures by 8% from 50 ktonnes in 2015 to 54 ktonnes in 2016.

Mavriky Kalugin, Executive Vice President for Upstream, Ukrnafta:

"We managed to stabilise production of liquids since the beginning of year, with very limited financing, mainly, through better prioritization of investments and efficiency improvements at the existing wells. Without such measures, oil production would have declined much more strongly. We hope that the decision of the parliament to reduce the royalty rates for oil to 29% will enable us to increase our investment programme and invest all savings into modernisation of equipment and technology."

 

In 2016, Ukrnafta’s ability to invest was constrained by high rate of royalty on oil and condensate, as well as lack of progress on the proposal by Ukrnafta’s management to commence out-of-court sanation to resolve the company’s historic tax debt. According to preliminary estimations, Ukrnafta was only able to invest UAH 510 mln over the period of 12 months of 2016, which is one of the lowest investment for the past 10 years.

In order to ensure a sustainable stabilisation of production and create conditions for increase in output, Ukrnafta will need to invest at least UAH 2.6 bln per year (circa USD 100 mln). According to the company’s forecast, the reduction of the royalty rate for oil may help save around UAH 1.3 bln. In its 2017 budget, Ukrnafta is targeting the investment program of UAH 2.6 bln.

*The company will announce the audited financial results in late April 2017.

 

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