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MOL Group increases annual cash flow target on back of new assets in Azerbaijan

Oil&Gas Materials 7 November 2019 12:38

BAKU, Azerbaijan, Nov.7

By Leman Zeynalova – Trend

Upstream production guidance of Hungary’s MOL Group is raised to 120-130 million barrels of oil equivalent per day (mboepd) for 2020-2023 and the annual Simplified Free Cash flow target is increased to $700 million (from over $500 million) on the back of the expected addition of the new assets in Azerbaijan, Trend reports citing the company.

MOL Group said the acquisition of Azerbaijani assets is a major step towards the 2030 strategic targets of transforming MOL E&P into an international platform.

“This will further strengthen the resilient, integrated business model through maintaining exposure to oil price. Entry to Azerbaijan is in line with MOL’s strategy, adding exposure in the key Russia/CIS region. Azerbaijan has a stable and investor-friendly regulatory regime and ACG is by far the largest strategic oil asset for the country,” said the company.

Normalized Clean CCS EBITDA guidance is raised to $2.4-2.6 billion for 2020 to reflect the contribution of the recent acquisition from H2 2020. EBITDA is then expected to gradually approach $3 billion by 2023, as all three business segments are to visibly increase their contribution.

Downstream will continue to execute its strategic growth projects and deliver net efficiency gains by 2023, whilst increasingly focusing on decarbonization and sustainability.

After years of outstanding performance, Consumer Services EBITDA target is raised to $600 million by 2023 (from over $500 million) and the share of non-fuel margin is now expected to rise to close to 35 percent in the same period, as MOL is on the way to become a true consumer goods retailer.

MOL Group has signed an agreement with Chevron Global Ventures Ltd and Chevron BTC Pipeline, Ltd to acquire their non-operated E&P and mid-stream interests in Azerbaijan, including a 9.57 percent stake in the Azeri-Chirag-Gunashli (ACG) oil field, and an effective 8.9 percent stake in the Baku-Tbilisi-Ceyhan (BTC) pipeline that transports the crude to the Mediterranean port of Ceyhan, for total consideration of USD 1.57 billion (subject to adjustments at closing).

The transaction remains subject to government and regulatory approvals and is expected to close by Q2, 2020.

The BTC Co. shareholders are: BP (30.1 percent); AzBTC (25.00 percent); Chevron (8.90 percent); Equinor (8.71 percent); TPAO (6.53 per cent); Eni (5.00 percent); Total (5.00 percent), ITOCHU (3.40 percent); INPEX (2.50 percent), ExxonMobil (2.50 percent) and ONGC (BTC) Limited (2.36 percent).

The contract for developing the ACG field was signed in 1994. A ceremony to sign a new contract on development of the ACG block of oil and gas fields was held in Baku Sept. 14, 2017.

The ACG participating interests are as follows: BP - 30.37 percent; AzACG (SOCAR) - 25 percent; Chevron - 9.57 percent; INPEX - 9.31 percent; Statoil - 7.27 percent; ExxonMobil - 6.79 percent; TP - 5.73 percent; ITOCHU - 3.65 percent; ONGC Videsh Limited (OVL) - 2.31 percent.

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