In the three months to March 31st 2021, Polish Oil and Gas Company (PGNiG) posted revenue of PLN 14.6bn, EBITDA of PLN 3.4bn and net profit of PLN 1.7bn. In addition to the solid financial performance, most operating results also showed improvement.
The period from January to March 2021 was another good quarter for PGNiG, with PLN 14.55bn in revenue (up +6% year on year) and a 3% reduction in total operating expenses, to PLN 12.12bn, recorded by the Group. EBITDA came in at PLN 3.39bn, up 63% year on year. EBIT grew even faster, by 102% year on year, to PLN 2.44bn, with net profit up 124% year on year, to PLN 1.75bn.
‘The PGNiG Group continues its winning streak in terms of both financial and operating performance. Growing hydrocarbon prices supported solid results delivered by the Exploration and Production segment. Low temperatures and the related increase in demand for gas used for heating led to higher gas sales and distribution volumes in the Trade and Storage and Distribution segments. The weather also contributed to higher heat production and sales volumes in the Generation segment,’ said Paweł Majewski, President of the PGNiG SA Management Board.
The segments’ contribution to EBITDA: Exploration and Production – 40%, Trade and Storage – 15%, Distribution – 30%, and Generation – 14%.
Exploration and Production
Revenue stood at PLN 1.79bn, a 41% increase on the previous year, with an 18-fold surge in EBITDA, to PLN 1.35bn. One of the drivers of the major improvement in performance were rising hydrocarbon prices – the arithmetic mean of gas prices on the Day-Ahead Market of the Polish Power Exchange in the first quarter rose 79% year on year. The average oil price for the quarter rose 20% year on year, to USD 60.7 a barrel. Natural gas production rose significantly, to 1.24 bcm compared with 1.16 bcm a year earlier, particularly on the Norwegian Continental Shelf. Oil production totalled 328 thousand tonnes, having remained broadly flat year on year. Impairment losses on property, plant and equipment in the segment also had a bearing on its performance.
Trade and Storage
Revenue stood at PLN 11.49bn, having risen 4% year on year. The segment’s operating expenses rose to over PLN 11bn, or 8% year on year, driven by sharp increases in gas prices on commodity markets. The segment also reported a loss realised on hedging instruments. These factors led to a 46% year-on-year drop in EBITDA, to PLN 0.49bn.
Total gas volumes sold outside the PGNiG Group increased 6% year on year, to 11.28 bcm, largely on account of low temperatures persisting throughout much of the first quarter – the average three-month temperature in the period was 2.8oC lower than a year ago. As a result of the cold snap, PGNiG reported record sales of gas twice. On January 18th 2021, the Company supplied about 81 mcm of natural gas to its customers, exceeding the previous record of ca. 78.8 mcm established on March 1st 2018. PGNiG set a next record on February 8th, supplying about 82 mcm of gas to its customers. The rise in demand for gas used for heating led to a major increase in the volumes of gas sold to households, by 20% year on year, to 1.98 bcm in the first quarter of 2021.
Cold temperatures persisting in the first quarter of 2021 pushed up demand for gas. As a result, gas volumes distributed by the PGNiG Group rose 15% year on year, to 4.55 bcm. The higher gas volumes and a 3.6% increase in the distribution tariff, effective from February 1st 2021, supported revenue growth in Distribution, up 19%, to PLN 1.67bn. The segment’s EBITDA came in at PLN 1.01bn, having increased 31% on the previous year.
The weather was an important driver of financial and operating performance in the Generation segment as well. Sales of heat outside the PGNiG Group increased 6% compared with the first quarter of 2020, to 17 PJ, supporting a 13% year-on-year growth in the segment’s revenue, to PLN 1.1bn. EBITDA came in at PLN 0.46bn, a year-on-year increase of 11%.
Sales of generated electricity totalled 1.2 TWh, having dropped 12% year on year.