MOL Group profits up 20% despite slump in upstream revenues

Market news
Market news

North Sea firm MOL Group increased its profits by a fifth in the first half of 2016 thanks to a record return from its downstream business.

MOL, based in Budapest, Hungary, said the segment achieved earnings before interest, taxes, depreciation, and amortization (Ebitda) of 209billion Hungarian forints (£570million) on the back of strong petrochemicals and retail performance.

But low oil prices saw MOL suffer a 20% drop in its upstream income – despite an 8% rise in average daily hydrocarbon production.

Crude production from MOL’s UK interests went up 136% to 7,400 barrels a day during the six months, while natural gas production increased by 4% to 1,800 barrels.

MOL arrived on the North Sea scene in 2013 when it snapped up assets worth £220million, including non-operated stakes in the Broom field, interests in the Catcher, Cladhan, Scolty and Crathes developments and a share in Shetland’s Sullom Voe terminal from Germany’s Wintershall.

In 2014, a £76million deal with Premier Oil gave MOL stakes in three North Sea fields all operated by Nexen. MOL also won four blocks in the 28th UK offshore licensing round.

The group, which employs more than 25,000 people in more than 30 countries, opened an Aberdeen office in 2014.

In reporting first half pre-tax profits of £430million, up 21% on last year, MOL said development wells on Scolty and Crathes had been completed, with first oil expected in the first half of 2017.

The company’s headcount shrank to 25,363 from 26,536 a year ago.

Zsolt Hernadi, group chairman and chief executive, said: “MOL Group remains fully on track to deliver on its promises in 2016 despite a highly challenging external environment in the oil and gas industry.

“Upstream returned to Ebitda growth, made three impressive hydrocarbon discoveries in Pakistan and is progressing in its efforts to increase production whilst optimizing the organization and reducing the cost base.

“Downstream managed to offset the expected normalization in refinery margins with very strong petrochemicals and retail performance, as these two segments now contribute almost two thirds to downstream Ebitda.”