OREANDA-NEWS. In the first quarter of 2016, LOTOS earned almost PLN 106m in consolidated net profit compared with a net loss in excess of PLN 100m reported for the same period last year. Operating profit (EBIT) for the period came in at PLN 138m on EBITDA of PLN 400m.

The LIFO effect amounted to PLN 192m, and net cash from operating activities for the period stayed largely unchanged year on year, at PLN 319m.

In the first quarter of 2016, average daily production in Norway, Poland and Lithuania was 29.8 thousand boe (up 135% yoy), with the throughput at LOTOS’ refinery in Gda?sk at over 2.4 million tonnes (up 2.7% yoy).

The reported performance figures were strongly influenced by falling prices of crude oil (down 37% yoy) and natural gas (down 40% yoy), coupled with declines in the prices of middle distillates, including diesel oil (down 44% yoy), light fuel oil (down 40% yoy) and aviation fuel (down 39% yoy). LOTOS’ Q1 2016 model refining margin stood at USD 4.74/bbl (down 49% yoy), with the Brent/Urals spread up 52% yoy, to USD 2.7/bbl.

Higher average quarterly USD/PLN exchange rate (up by approximately 6% yoy) partly offset the negative effect of lower prices of middle distillates and low crude oil and gas prices. Lower USD/PLN exchange rate at the end of the quarter translated into foreign exchange gains on debt remeasurement.

Net debt in March 2016 totalled PLN 5,569m, having decreased by PLN 132m compared with December 2015.

Record-high production in the quarter

The first quarter of 2016 saw LOTOS Petrobaltic’s average production in Poland, Norway and Lithuania rise to an all-time high of 29.8 thousand boe/d. Overall, LOTOS Petrobaltic produced over 2.6 million boe in the period (up 154% yoy).

The upstream segment reported EBIT of PLN 7.5m (down 39% yoy) on EBITDA of PLN 150m (up 100% yoy). The earnings were supported by increased sales of gas, condensate and oil generated on higher output in Norway (Sleipner assets) and Poland (initial production launched from the B8 field).

EFRA Project ahead of schedule

In the first quarter of 2016, the average capacity utilisation rate at the refinery in Gdansk was 93.4% (up 0.8pp yoy). With its operations stable, the refinery maintained throughput of 2.4m tonnes (up 2.7% yoy).

During the period, further EPCM (engineering, procurement, and construction management) contracts for inter-unit connections and auxiliary EFRA facilities were signed.
 Work on engineering design and procurement of equipment for the key Delayed Coking/ Coking Naphtha Hydrotreating Units (DCU/CNHT), Hydrogen Generation Unit (HGU) and Hydrowax Vacuum Distillation Unit (HVDU) was at an advanced stage.

The construction of an electrical substation and a new pipeline flyover continued. The process of securing building permits for the installations and facilities was also under way, with 19 permits secured by the end of March.

On March 31st 2016, the overall progress of work under the EFRA Project was 13.5%, compared with the planned 11.8%.

More service stations, lower fuel margins

As at the end of the first quarter of 2016, the LOTOS retail chain comprised 477 stations. Compared with March 31st 2015, the number of service stations increased significantly, with 32 new locations opened, including 25 under the LOTOS Optima economy brand.
 

The retail segment posted EBIT of PLN 3m for the quarter (down 51% yoy). Despite a 21% year-on-year increase in sales volumes, the operating profit was lower year on year due to much lower unit margins generated by the retail network.