PGNiG: nearly PLN 1.3 billion in net profit in first half of 2016

PGNiG Upstream International AS has a portfolio of 17 exploration licenses offshore Northern Norway, including production as a partner with 11.9% in BP’s Skarv field. Photo: PGNiG Upstream Int.
PGNiG Upstream International AS has a portfolio of 17 exploration licenses offshore Northern Norway, including production as a partner with 11.9% in BP’s Skarv field.
Photo: PGNiG Upstream Int.

In the first half of 2016, the PGNiG Group (Polskie Górnictwo Naftowe i Gazownictwo – Polish Oil and Gas Company) earned net profit of nearly PLN 1.3bn (approx. EUR 325m) which is PLN 594m less than a year earlier. The Group’s revenue was PLN 17.3bn, down PLN 3bn year on year, and operating expenses fell by PLN 2.2bn. EBITDA was PLN 3.1bn, having decreased by PLN 865m – the company said in its release.

Production and sales volumes remained stable in the first half of 2016, across all operating segments of the Group. However, the financial performance was affected, among other things, by macroeconomic factors, particularly the falling crude oil prices on global markets, as well as by the reduction of tariffs in recent months and the discount policy.

Revenue of the Exploration and Production segment in H1 2016 came in at PLN 2.1bn, having decreased 16 per cent year on year despite a 2 per cent increase in the volume of crude oil sold. The segment’s EBITDA was PLN 495m, down 68 per cent year on year, and operating loss was PLN 80m.

The weaker operating performance by the segment was an effect of lower prices of hydrocarbons, a drag on the segment’s sales revenue. In addition, impairment losses recognised on assets and dry wells and seismic surveys written off totalled PLN 739m, having doubled year on year.

Revenue of the Trade and Storage segment was PLN 14.9bn in H1 2016, down 17 per cent year on year. The segment’s operating profit was PLN 646m and was PLN 95m lower than in the corresponding period of 2015.

To proactively respond to the changing market conditions in 2015 and 2016, PGNiG SA and PGNiG Obrót Detaliczny reduced their tariffs several times during the period. As a result, the average prices of gas fuel was approximately 12 per cent lower in H1 2016 than in H1 2015. The Group companies also offered attractive discount schemes to their largest customers. However, by bringing down gas procurement costs, the margin on sales of high-methane gas in H1 2016 was maintained at +1 per cent, i.e. close to the margin reported the year before.

Operating profit of the Distribution segment for H1 2016 increased 24 per cent year on year, to PLN 968m. At PLN 1.4bn, EBITDA was PLN 205m higher year on year. The increase was achieved mainly due to a consistent cost-cutting policy. In H1 2016, costs decreased by PLN 121m (8 per cent) year on year. The decrease is attributable, among other things, to lower employee benefits which were reduced as a result of workforce streamlining efforts as part of the Voluntary Redundancy Programme. Revenue increased by PLN 68m (3 per cent) year on year following a 5 per cent increase in the volume of distributed gases.

The segment’s operating profit in H1 2016 was PLN 274m, having increased by PLN 23m year on year. EBITDA reached PLN 450m and was PLN 38m (9 per cent) higher compared with H1 2015. The improvement was driven in particular by higher volumes of heat sales (up 3 per cent year on year), accompanied by higher tariff prices of heat and lower coal procurement costs.

Polish Oil and Gas Company (PGNiG SA) is listed on the Warsaw Stock Exchange as part of WIG 20, the index of the largest Polish companies. The company’s core business includes exploration and production of natural gas and crude oil fields and, through its key subsidiaries, import, storage, sale and distribution of gaseous and liquid fuels, as well as generation of heat and electricity.

PGNiG SA has a stake in approximately 30 companies, including entities providing professional geophysical, drilling and maintenance services, highly esteemed on international markets.

PGNiG SA has branches in Russia, Belgium, Pakistan, Belarus, and Ukraine. The company is also the sole owner of PGNiG Upstream International AS (formerly PGNiG Norway AS), a company engaged in exploring and operating deposits on the Norwegian Continental Shelf and the Norwegian Sea, POGC – Libya BV, a company engaged in exploring hydrocarbon deposits in the Murzuq Basin in Libya, PGNiG Sales & Trading GmbH based in Munich, a company engaged in gas trading, and PGNiG Finance AB based in Stockholm, which issues Eurobonds on the European market.

GL, rel (PGNiG)

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