Strong annual results for MOL Group

MOL Fresh CornerMOL Group announced strong financial results for 2015. The Downstream segment had the historically highest and strongest financial performance in 2015, more than doubling its contribution from the previous year. Upstream production grew 7% year-on-year averaging 104 thousand barrels of oil equivalent per day (boepd) partly due to successful production intensification efforts in CEE.
MOL Group significantly outperformed its USD 2.2 target for 2015 and delivered a clean CCS EBITDA of USD 2.5bn despite oil prices halving. MOL generated substantial free cash flows (USD 2.1bn), significantly exceeding organic CAPEX (USD 1.3bn) and leading to a robust balance sheet with low indebtedness level.
MOL Group Downstream had the historically highest and strongest financial performance in 2015 with a clean CCS EBITDA of HUF 463bn (USD 1.65bn) in 2015, more than doubling its results compared with the previous year. Downstream was able to capture the opportunities given by the external conditions and 50% of its EBITDA was coming from internal efficiency improvement programmes that were started in 2011.
In the Downstream segment, MOL Group’s retail sales volumes in Romania (including fuels, LPG and lubricants) rose 17% in 2015, to 586 kt, up from 501 kt in 2014, mainly due to the inorganic network expansion. For the full year 2015, diesel fuel sales rose 15%, to 419 kt, while gasoline sales increased 18%, to 152 kt.
In the fourth quarter of 2015 alone, MOL Group’s retail sales volumes in Romania rose 20% compared to the same interval of 2014, to 153 kt. Diesel sales stood at 110 kt in Q4, up 20%, and gasoline sales were 39 kt, an increase of 18% vs. the corresponding interval of 2014.
In Upstream, with oil prices halving, EBITDA excluding special items amounted to HUF 201bn (USD 719mn) in 2015, down 26% year-on-year. Total hydrocarbon production rose 7% to 104 thousand boepd in 2015. In Croatia production increased 7% year-on-year, whilst in Hungary the production remained almost flat in comparison to the base period, a significant achievement in light of earlier projections of up to 5% annual decline. Looking at the crude output, production grew 20% in Croatia and 5% in Hungary.
In line with the previous announcements the Akri Bijeel assets were written off in Q4 2015 following the block’s relinquishment. MOL also booked additional asset impairment charges in Q4 2015, mainly driven by the revised primarily oil price assumptions used for the valuation of the assets. The largest items were related to the UK assets.
The Gas Midstream segment posted a full-year EBITDA contribution of HUF 60bn (USD 213mn) in 2015, similar to the previous year.
“The oil & gas industry, including MOL, had to face one of the toughest operating environments of the past two decades with oil prices plunging more than 70% from its 2014 summer peak. Yet despite the challenges, we managed to increase our clean results by 13% compared to 2014, beating our targets, generating substantial free cash flows and closing the year with a very strong balance sheet. These achievements have placed MOL ahead of most of the integrated oil companies. The dramatically changed environment forced us to take some painful yet necessary decisions, including the revision of the fair value of our Upstream assets. This resulted in material non-cash impairment charges, similarly to many oil and gas companies. MOL proved in 2015 that it has an efficient, highly cash generative Downstream platform which is able to capture market opportunities as it continues to invest into the long-term growth of the business. In addition, the first year delivery of the Next Downstream Program already exceeded our expectations. Simultaneously, we are in the process of realigning our Upstream division with the aim of operating profitably even in a USD 35/bbl oil price environment not only in the CEE but also internationally. Our ultimate goal for 2016 is to generate around USD 2bn EBITDA and sufficient cash flows to be able to continue to cover both internal investment needs and dividends to our shareholders, even under adverse scenarios,” Chairman-CEO Zsolt Hernádi commented.

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