Naftogaz Losses Widen in Q3
Net losses at Ukraine's national gas company Naftogaz widened to hryvnias 5.5bn ($194mn) in the third quarter, up from hryvnias 4.8bn a year earlier, it said on November 26, blaming the result on lower gas prices.
Adjusted Ebitda improved to hryvnias 0.5bn, however, from a loss of hryvnias 2.8bn a year before, while operating cash flow was also hryvnias 0.5bn, compared with negative hryvnias 12.6bn in Q3 2019.
"Despite a challenging environment, we are performing while transforming," CFO Peter van Driel said in a statement. "Our operating cash flow is improving and we remain focused on capital discipline. We continue to strengthen the efficiency of our operations."
Naftogaz's adjusted Ebitda for the first nine months of the year came in at a hryvnias 1.2bn loss, versus a hryvnias 26bn gain in the same period of 2019. Earnings were weaker across all its segments save for its gas storage business, which saw a bump in adjusted Ebitda to hryvnias 4.1bn from 2.3bn.
Ukraine started the year with unusually high levels of gas in storage, having stocked up ahead of the country reaching a five-year contract with Russia for gas transit to Europe from January 1 2020. European traders have also been storing more gas in Ukraine this year, amid excess supply.
Core earnings at Naftogaz's exploration and production division slumped to hryvnias 16.3bn in January through September from hryvnias 34.5bn a year before, as a result of lower gas prices partly offset by lower subsoil royalties. Meanwhile losses at its commercial unit expanded to hryvnias 16.3bn from 9.9bn, on the back of lower volumes and weaker prices, and increased provisions for deliveries made under public-service obligations, which were finally abolished on August 1.
The company's oil production arm Ukrnafta swung to a hryvnias 2.2bn loss, from 1.0bn in core earnings a year earlier, owing to lower gas prices and a drop in oil sales volumes. Oil midstream and downstream earnings fell to hryvnias 1.3bn from 1.9bn, and Naftogaz incurred hryvnias 4.1bn in losses from other segments, including its operations in Egypt, owing to impairments, versus hryvnias 2.3bn in losses in the first nine months of 2019.