Oil & Gas industry review H1
At the end of the first half of the year many companies active in the oil and gas field have released their financial results. As we announced in one of our former issues, we want to inform you which are players on the market with the highest turnouts, which are the most prosperous and what companies faced difficulties emerging from the current economically troubled period.
Rompetrol Rafinare, owned by KMG International, registered in H1 an improvement of 40 percent of the gross turnout and of the net results as against the similar interval in 2013. The company had a USD 2.78 billion turnout, as against USD 1.96 billion in H1 2013 and negative net results of USD 46.9 million, better than the negative results in H1 2013 of USD 78.4 million. The operational results (EBITDA) significantly increased in H1 2014 to USD 25.5 million as against negative results in the similar interval in 2013 of USD 8.2 million. Financial indexes were supported by positive operational results – processed raw materials (+46 percent), fuel sales in the domestic market (+24 percent) and exports (+75 percent), but also by the cuts in processing costs by increasing energy efficiency and by maintaining the mechanic-operational availability.
Although the net result was negatively influenced by the domestic economic environment, the international stock exchange list for final products and for raw materials were constant and did not register significant discrepancies in H1 2014 as against the same period last year. Rompetrol Rafinare’s refineries Petromidia (including the petro-chemical activities) and Vega Ploiesti have processed over 2.4 million tonnes of raw material in H1 2014, by 41 percent more against last year’s H1. The Petromidia refinery worked at full capacity to process 14,000 tonnes per day, surpassing the record level of processing by 7 percent in May 2014 when it processed over 465,000 tonnes of raw material, the highest level since its opening in 1979. Rompetrol Rafinare exports peaked in H1 to over USD 1 billion. In 2013 the value of fuel exported by KMG International branches to R. of Moldova, Georgia, Bulgaria and Ukraine as well as to other traditional partners in the Black Sea region peaked to USD 1.7 billion. Estimates for this year point to a 20 percent increase in exports. Having a processing capacity of 5 million tonnes per year the refinery represents 43 percent of Romania’s refining capacity. KMG International investments developed on Petromidia platform during 2007 - 2013 reached USD 1.3 billion.
Rompetrol Rafinare is still an important contributor to Romania’s state budget with USD 779 million in H1 2014 (USD 460 million during April - June). In 2013 the company’s contribution to the state budget was of USD 1.4 billion.
Rompetrol Rafinare’s turnover reached USD 1.3 billion in Q2 2014, up by 51 percent as against the same interval in 2013, being positively influenced by the higher sales and by the international stock exchange list for oil products. Rompetrol Rafinare fuel sales in Q2 2014 was 13 percent higher on the domestic market and 42 percent higher on foreign markets, while petro-chemical products sales have raised by 34 percent, as compared to the same interval last year. In H1 2014 the company sold 767 million tonnes of fuel on the domestic market (up by 24 percent against H1 2013) and exported over 1 million tonnes of fuel (up by 75 percent). Moreover, the sales of petro-chemical products increased by 26 percent.
Diesel and jet fuel output increased significantly in H1 2014 by almost 60 percent as against the similar interval in 2013, up to 1.2 million tonnes. In Q2 2014 the refinery produced 636 thousand tonnes of diesel and jet fuel, up by 33 percent as against the similar interval in 2013. Petromidia’s petrol output peaked to 322 thousand tonnes in Q2 2014, up by 14 percent as against the same interval last year. In Q1 2014 the petrol output went up by 33 percent against 2013 to 657 thousand tonnes. Petromidia’s refining used capacity was of 90.52 percent, up by 9.97 percent against the similar interval last year. As far as Vega refinery is concerned, in Q2 2014 it processed 80.5 thousand tonnes of raw materials, up by 34 percent as against Q2 2013. Vega refinery used capacity was of 97.68 percent, up by 25 percent against the similar interval in 2013. Starting January 1, 2014 the petro-chemical activity was taken over by Rompetrol Rafinare, while the polymers output was 20 percent higher in Q2 2014 as against the same interval last year. The company developed two new assortments of polypropylene used for agri-food products packing and for special packaging. Furthermore, the company intends to develop a new product for agriculture meant to ensure protection against ultraviolet rays.
During the first six months of the year, the distribution segment registered a turnout of USD 1.5 billion, up by 28 percent against H1 2013. Net results went up to USD 6.9 million. Rompetrol Downstream’s entire fuel sales, the retail department of KMG International in Romania, went up by 18 percent, from 743 thousand tonnes to 881 thousand tonnes. After the enforcing of the new excise starting April 1, the sales registered a significant drawback on retail, but were on an ascendant trend as against Q2 2013 (+12 percent). Rompetrol Rafinare has modernized, during January - July, 38 petrol stations, envisaging the modernization of another 52 petrol stations and 20 shops within the stations by the end of the year. Total investments are to reach more than USD 18 million.
OMV Petrom’s profit, in steep decline
The OMV Petrom group reported, for the first six months, a net profit of RON 1.39 billion, down by 42 percent against the same interval last year. The steep decline was determined by special elements, i.e. an additional depreciation of RON 490 million. Sales dropped by 7 percent from RON 11.57 billion to RON 10.72 billion. Putting aside the special elements, the company officials say the net profit was RON 1.91 billion, while the EBIT index (profit before taxes and interests) significantly worsened by 29 percent, from RON 2.97 billion to RON 2.1 billion.
“During the first half of 2014 we continued implementing our investment projects according to the company’s strategy. Thus, we have successfully finalized, within the set terms and the budget, the modernizing project of Petrobrazi refinery that started in 2010, amounting to EUR 600 million, which will allow us to improve the refining margins and to meet the market demands better. In E&P the drilling activities and capital repairs have had their part in stabilizing the domestic output. In the offshore shallow water area, the exploration drill Marina-1 has discovered the biggest oil deposit in the Black Sea. In the deepwater area we have finalized the mobilization of oil platform Ocean Endeavor, which allows us to start the drilling procedures for Domino-2 in the Neptun Deep block, aiming to confirm the initial discovery of natural gas deposits and to identify additional exploring possibilities,” said Mariana Gheorghe, OMV Petrom CEO.
The low demand for oil products and gas, combined with increased taxation introduced in 2013 - 2014, has balanced the benefits coming from the liberalization of the price for gas. Mariana Gheorghe underscored that, having in view the long cycle of investments in the oil and gas field and considering a favourable fiscal and regulating framework for investments, the company will carry on its projects, focussing on the exploring ones and on redevelopment of onshore and offshore deposits. OMV Petrom investments have increased significantly in H1 by 40 percent, from RON 2.08 billion to RON 2.91 billion, while the debts have decreased in the same proportion. In H1 2013 Petrom registered a debt balance of RON 1.69 billion. In the same interval in 2014 the debts decreased by 36 percent to RON 1.08 billion. As such, the indebting degree fell from 7 to 4 percent. The total output of hydrocarbons stagnated during H1 at 32.72 million barrels oil equivalent (boe) as compared to 33.2 million boe in H1 2013, while the exploration investments increased twofold from RON 257 million to RON 428 million. Production costs expressed in USD/bep have grown in H1 by 30 percent, mainly due to the newly set tax on special constructions, due to higher costs for personnel (including non-recurrent expenditures) and due to the lower output in Kazakhstan. Thus OMV Petrom registered in H1 2014 a production cost amounting to 17.86 USD/bep, higher by 22 percent as against the similar interval last year.
The OMV Petrom group has allotted an investment budget of EUR 1.3 billion for 2014, of which some 85 percent will aim to develop E&P projects (the drilling of development wells, field redevelopment projects, capital repairs/deepwater operations, Neptun Deep project).
Romgaz, higher turnout
Natural gas and electric power producer Romgaz Medias registered in H1 a turnout of RON 2.53 billion (EUR 566.7 million), up by 33 percent against the same interval last year, and a higher net profit by 40 percent of RON 871 million (EUR 195.1 million). For H1 2013 the company reported a turnout of RON 1.9 billion and a net profit of RON 622.4 million. The turnout growth was determined by the higher revenues from domestic production gas sales. The quantities sold increased by 11 percent to 3 billion cubic metres. The upward trend for deliveries was caused by the higher demand from beneficiaries aiming at injecting products into deposits. Furthermore, the turnout growth was supported by the sale of gas for higher average prices, up by 31.7 percent against 2013. The revenues from selling domestic production gas went up by 46.3 percent to RON 2.01 billion, while the ones from trading imported gas decreased by 69 percent to RON 99.9 million. Moreover, the revenues from depositing services went up by 45.5 percent to RON 217.2 million, while the ones from selling electric power increased six fold to RON 163.88 million. The company’s gas output grew by 0.1 percent during the interval, from 2.862 billion cubic metres in H1 2013 to 2.866 billion cubic metres this year. The result in H1 was influenced by a loss of RON 183.2 million, mostly coming from setting provisions for receivables depreciation in amount of RON 176 million. The most relevant influence was represented by the expenditure for the depreciation of receivables related to the customer Electrocentrale Galati as a result of the opening the insolvency procedure. The expenditures with the employees peaked to RON 265 million, as against RON 256 million in H1 2013, up by 3.5 percent due to increase in number of employees following the acquisition of CTE Iernut on February 1, 2013. Romaz is controlled by the state, through the Ministry of Economy, which owns 70 percent of the capital.
Conpet’s profit, above the budgeted one
The operator of the national network of oil pipelines Conpet Ploiesti had, in the first six months of 2014, a 20 percent higher profit as against H1 2013 and over 80 percent higher against the budgeted amount. The net result was RON 30.9 million (approx. EUR 7 million), up from RON 25.6 million during the same interval last year. The company’s turnout advanced from RON 168 million to RON 186.1 million (EUR 42 million). The company’s revenues increased by 50 percent due to the transport of imported oil, a service supplied for Petrotel refinery owned by the Russian group Lukoil.
Another issue worth mentioning is that the value of the company’s shares has grown by 8 percent this year.
Transgaz – twofold higher profit
National Gas Transmission Company Transgaz Medias registered net profit of RON 294.37 million in H1 2014, up by almost 2.2 times against the first half of last year when the registered profit was RON 134.67 million. During the same interval the turnout grew by 14.85 percent from RON 739.32 million to RON 849.13, exploitation revenues went up by 9 percent from RON 468.97 million to RON 511.23 million. Total revenues increased from RON 766.76 million to RON 873.13 million, while total expenditures dropped from RON 585.28 million to RON 514 million, as the investment expenditures went down from RON 86.33 million to RON 35.64 million. The quantity of transported gas in H1 2014 peaked to 6.139 billion cubic metres, down 2 percent against the same interval in 2013.
SNTGN Transgaz Medias is the technical operator of the National Transmission System for natural gas. The number of Transgaz shareholders registered to SC Depozitarul Central SA by the end of H1 2014 was of 8,247, down by 3 percent (by 249 shareholders) against the beginning of the semester when 8,496 shareholders were registered. On June 30, 2014 the registered capital amounted to RON 117,738,440 divided into 11,773,844 nominative shares, each share is worth RON 10. The Romanian state owns 58.5 percent of the company’s shares.
Dafora, from losses to profit
Dafora Medias, controlled by the businessman Gheorghe Calburean, registered in H1 2014 a net profit of RON 5 million (EUR 1.09 million) and a 28 percent higher turnout to RON 116 million, recovering from losses of RON 10.11 million registered during the same interval last year.
In H1 2013 the company registered turnout of RON 90.54 million, while in Q1 2014 the net profit amounted to RON 1.75 million, against a loss of RON 3.5 million during the same interval last year. Total revenues went up by 5.8 percent to RON 121.9 million, while the expenditures went down by 6.6 percent to RON 117 million. Dafora reported exploitation revenues amounting to RON 117.16 million, by 7.8 percent higher and 3.5 percent lower exploitation expenditures to RON 110.2 million. The company is carrying onshore drilling services for oil, natural gas and geothermal waters, production test works and workover, maintenance and transport services for the drilling equipments. Gheorghe Calburean owns 49.96 percent of Dafora shares. Other shareholders own 36.11 percent of the company’s share capital, while Foraj Sonde Craiova, a company owned by businessmen Marius and Emil Cristescu, owns 13.92 percent of the shares.
Lower turnout for Rompetrol Well Services
Rompetrol Well Services (PTR), the department for oil well services of KMG International, registered in H1 a 25.5 percent lower turnout from RON 58 million in H1 2013 to RON 43.2 million (EUR 9.68 million) in the same interval in 2014. Net profit fell down twofold during the same interval from RON 16.14 million in H1 2013 to RON 7.17 million (EUR 1.6 million). The profit in H1 decreased due to an unfavourable economic environment, characterized by volatility of oil prices and by the new tax on special constructions. KMG International owns 73 percent of the share capital of Rompetrol Well Services. The group is owned by the Kazakh state oil company KazMunaiGaz.