Adjusted LIFO-based EBITDA reported by the LOTOS Group for the second quarter of 2019 was PLN 783.3m, an almost 24% increase quarter on quarter. From April to June 2019, the Gdańsk refinery ran at 105% of its nameplate capacity.
- Revenue: PLN 7.66bn
- Net profit: PLN 500.5m
- Operating profit (EBIT): PLN 658.7m
- Normalised LIFO-based EBITDA: PLN 783.3m
- Crude oil and natural gas production: 1.72 mboe
- 2P reserves: 86.3 mboe
- Crude throughput: 2.75m tonnes
- Volume of products sold in the downstream segment: 2.88m tonnes
- Cash flows from operating activities: PLN 243.6m
The LOTOS Group’s financial results for the second quarter of 2019 were mainly driven by falling commodity prices (crude oil and natural gas), a year-on-year decline in hydrocarbon sales volumes, year-on-year improvement in refinery product sales mix (a 5.9% increase in diesel sales and an almost 8.9% drop in sales of heavy fuel oil), higher inland premiums on the domestic market in June 2012, and a higher year-on-year average USD/PLN exchange rate for the quarter.
Daily oil production in Norway, Poland and Lithuania amounted to ca. 18.9 thousand boe in the second quarter. LOTOS’ total production in the period was 1.72 mboe. The E&P segment’s adjusted EBITDA was PLN 178m, with EBIT at PLN 129m.
In the second quarter of 2019, LOTOS Petrobaltic S.A. continued to produce oil and gas from the B3 and B8 fields in the Baltic Sea at an average rate of 1.2 thousand bbl/d and 3.1 thousand bbl/d respectively. From June 20th to July 27th 2019, production from the B8 field was suspended in order to repair the spider deck and its supports. The effect of the stoppage on the segment’s EBITDA is estimated at ca. PLN 28.6m, which, given the crude oil sale schedule, will not be reflected in the segment’s results until the third quarter of 2019.
In the second quarter, LOTOS Exploration & Production Norge, as a partner, produced natural gas and condensate from the Atla, Skirne and Heimdal fields in the Heimdal area and from the Sleipner Ost, Sleipner Vest and Gungne fields in the Sleipner area. The average output in Norway in the second quarter was 13.9 thousand boe/d. Progress was made on the projects to develop the Utgard field (production to start in the fourth quarter of 2019) and the Yme field (production to start in mid-2020) and on the projects aiming to prepare the Trell and Trine fields and fields located in the Greater Heimdal area (the NOAKA project) for development.
In the second quarter, the company closed the purchase of an upgraded jack-up rig from Maersk. It is LOTOS Petrobaltic’s fifth and largest rig and the most advanced drilling tool in the Baltic Sea. Once the adaptation work required to renew the rig’s classification certificate has been completed and once the crew has received relevant training, the rig will commence workover operations on LOTOS’ fields in the Baltic Sea. Its first task will be to perform workovers on seven wells in the B3 field.
In the second quarter of 2019, the LOTOS refinery in Gdańsk maintained stable operation and ran at 105% of its capacity, maintaining oil throughput at 2.75m tonnes (+ 4% yoy and + 5% qoq). The downstream segment’s adjusted LIFO-based EBITDA for the second quarter came in at PLN 600m (+ 3% yoy, + 39% qoq), with EBIT at PLN 525m (-27% yoy, + 143% qoq).
In the second quarter of 2019, the construction and assembly work on EFRA Project units was completed. On June 26th 2019, the Coker Complex (the project’s key unit) reached the Ready for Start Up status. As a result, LOTOS Asfalt could commence the start-up of the project, consisting of a series of tests and trials. As previously announced, the financial effects of the Coker Complex coming on stream should be reflected in the LOTOS Group’s financial results in the fourth quarter of 2019.
In response to the growing demand for diesel oil, in the second quarter the LOTOS Group increased its domestic sales of diesel by approximately 6%. As a result, the LOTOS Group’s total gasoline sales fell 7% year on year in the second quarter following product slate optimisation measures implemented to maximise the refining margin.
Retail delivered strong second-quarter results, with operating profit at PLN 51m (+ 50% yoy, + 43% qoq) and EBITDA for the period from April to June 2019 at PLN 78.5m (+ 54% yoy, + 24% qoq). As at the end of the second quarter of 2019, the LOTOS chain comprised 493 service stations (including 307 owned stations and 186 partner stations).
For more information on the LOTOS Group’s financial results for the second quarter of 2019, visit www.inwestor.lotos.pl.
LOTOS is a Polish corporation whose business is of strategic importance to the national and European energy security, as well as to Poland’s economy. It produces natural gas and crude oil in Poland, Norway and Lithuania. The Company owns a refinery in Gdańsk, one of Europe’s most advanced oil refining plants, where crude is processed mainly into high quality fuels, including the LOTOS Dynamic premium brand.
LOTOS also operates a chain of close to 500 service stations conveniently located at motorways and expressways, in all large cities and many other locations across the country. As a retailer and wholesaler of fuels, it has nearly a one-third market share at home. It is also Poland’s second-largest rail freight forwarder. LOTOS is a leading manufacturer of road bitumens, engine oils and lubricants used in road vehicles, aeroplanes, trains, ships, and even military vehicles.
External Communication Office, Grupa LOTOS S.A., ul. Elbląska 135, 80-718 Gdańsk, Poland, phone: (+48) 58 308 72 29, (+48) 58 308 70 44, email: email@example.com