Unbundled Naftogaz Sees Profits Crash

Ukraine state Naftogaz Group reported June 2 consolidated net profits of hryvnia 3.2bn ($119mn) after tax for the three months ended 31 March 2020, down four-fifths from last year's hryvnia 16bn. Pretax earnings (Ebitda) were similarly down, from hryvnia 37.8bn to hryvnia 8bn, of which exploration and production accounted for hryvnia 7.8bn, down from hryvnia 14bn in Q1 2019. 

The company produced 3.9bn m³ and sold 6.3bn m³ but witnessed a "significant drop in oil and gas prices." Commercial sales went from a profit of hryvnia 13.3bn to a loss of hryvnia 100mn, primarily attributable to lower volumes and lower selling prices affecting gas sales revenues compared to Q1 2019. 

The figures allow for the absence of the pipeline business, including payments due under the fixed-volume transit contract with Russian exporter Gazprom. That became a separate entity January 1, 2020. 

Naftogaz CFO Peter van Driel said the company was "facing challenging circumstances with the Covid-19 crisis and the macroeconomic environment, with a sharp decline in gas prices this quarter. Cash flow from operating activities for the first quarter was hryvnia 10.9bn, compared with hryvnia 28.0bn, excluding discontinued operations, for the same period a year earlier. The result reflected lower gas prices and demand. We are lowering our spend and remain committed to capital discipline. Our balance sheet is robust with gearing at 12.4%.”