How Azeri-Chirag-Gunashli stake affected MOL Group’s H12020 performance?

How Azeri-Chirag-Gunashli stake affected MOL Group’s H12020 performance?

BAKU, Azerbaijan, Aug.7

By Leman Zeynalova – Trend:

Net Debt/EBITDA of Hungarian MOL Group rose to 1.63x and gearing to 29 percent to reflect the completion of the USD 1.5bn ACG transaction; positive FCF and a sizeable NWC release mitigated the increase in net debt, Trend reports citing MOL Group.

Oil & gas production increased by 6 percent QoQ in Q2 2020 to 117.3 mboepd, as the contribution of ACG more than offset lower volumes in the UK and Pakistan, the company said.

Upstream EBITDA excluding special items more than halved year-on-year to HUF 36bn in Q2 2020. H1 EBITDA for the segment amounted to HUF 92bn, 41% lower versus the previous year. The segment was hit by significantly lower oil and gas prices in 2020 compared to 2019, which more than offset the strong cost discipline and the positive effect of higher production helped by ACG.

CAPEX spending reached HUF 704bn (USD 2,120mn) in the first half of the year, more than doubling from a year ago. Organic capex included HUF 83bn (USD 262mn) spent on transformational projects in H1 (the largest item remained the new polyol plant with USD 101mn, while USD 22mn was spent on the Rijeka DCU) Inorganic CAPEX rose to HUF 489bn (USD 1.5bn) as the ACG acquisition was completed on 16 April, with a total consideration was USD 1.5bn.

Average daily hydrocarbon production increased by 0.4 mboepd (or 0.3%) to 114.0 mboepd in H1 2020 compared to H1 2019, driven by higher production volumes in Kurdistan Region of Iraq and the addition of Azerbaijan’s ACG field, which was partially offset by lower volumes in the CEE region driven by continued natural decline, and coronavirus-related effects in Pakistan.

Total amount of provisions as of 30 June 2020 increased compared to 31 December 2019 by HUF 39,499 million and amounted to HUF 620,827 million. The increase was mainly caused by the provision of field abandonment in MOL Azerbaijan (HUF 28,373 million) and INA (HUF 9,272 million).

On 16 April 2020, MOL Group has successfully closed the previously announced deal with Chevron Global Ventures, Ltd and Chevron BTC Pipeline, Ltd regarding the acquisition of their non-operated E&P 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-TbilisiCeyhan (“BTC”) pipeline that transports the crude to the Mediterranean port of Ceyhan for a total consideration of USD 1.57bn with an effective date of 1 January 2019. With this transaction MOL Group becomes the third largest field partner in ACG, a supergiant oil field, located in the Caspian Sea, which is operated by BP and started production in 1997.

This transaction is a major milestone in building MOL Group’s international E&P portfolio and a significant step to deliver on the inorganic reserve replacement targets. The operator estimates total gross recoverable reserves to be approximately 3bn bbl of oil, following the license extension in September 2017 until 2049.

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Follow the author on Twitter: @Lyaman_Zeyn

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