LOTOS Releases Q3 Results
OREANDA-NEWS. In the challenging macroeconomic environment of Q3 2013, Grupa LOTOS earned revenue of PLN 7.8bn and generated operating profit of PLN 340.8m.
The third quarter saw a distinct recovery after the difficult first half of the year. The steps taken as part of the Effective and Rising 2013-2015 programme have produced measurable effects. The Company's financial liquidity improved and its debt was reduced. The ratio of financial debt to equity was 61.2% (-6.3pp relative to December 31st 2012).
- LOTOS is fundamentally an increasingly stronger company. Despite difficult macroeconomic conditions, we have been consistent in our implementation of the Effective and Rising 2013-2015 programme, approved in July. It is already reflected in this year's financial results. This particularly applies to the exploration and production segment - Pawel Olechnowicz, President of Grupa LOTOS S.A., summarised.
However, the results continue to come under pressure from deteriorating crack margins on key products, depreciation of the US dollar against the Polish zloty, and decline in Brent/Urals differential. It should also be noted that following the first eight months of 2013, consumption of motor fuels in Poland fell by 6.7%. The Polish Organisation of Oil Industry and Trade (POPiHN) sees the main cause of the downtrend as being in the growing grey market for fuels.
What deserves particular attention in Q3 2013 is the 12.9% increase in revenue in the retail segment (quarter on quarter). After the first nine months of 2013, LOTOS's share in the domestic fuel retail market stood at 8.4% (+0.4pp year on year). The strong growth in retail sales was achieved through development of the LOTOS service station network. The Company increased the number of its service stations to 416, or by 13% year on year, and remained the fastest growing service station network in Poland.
Intensified exploration and production activity in Poland and Norway
At the beginning of October, LOTOS Petrobaltic and Polskie Inwestycje Rozwojowe signed a financing agreement for the development of the B8 crude oil field. The launch of production from the B8 field is planned for the end of 2015. Its production potential is estimated at 3.5 million tonnes of crude oil, and based on LOTOS Petrobaltic's assumptions, it should yield some 220 thousand tonnes of oil annually.
LOTOS Petrobaltic has now upgraded and deployed the PG-1 unmanned drilling rig on the field. Therefore, annual production from the field is expected to remain stable in excess of 100 thousand tonnes until 2026.
Meanwhile, two new licences, in the Slupsk W and Slupsk E areas, have been awarded to LOTOS Petrobaltic by the Minister of the Environment. The licences are located in the Polish economic zone of the Baltic Sea. Furthermore, as part of the cooperation with PGNiG, the company is involved in development of onshore licences in Kamien Pomorski and Gorowo Ilawieckie.
LOTOS Petrobaltic has also started work on 3D seismic surveys in the Gaz Poludnie licence area, the site of the B21 and B16 gas accumulations, which have been confirmed by exploratory drilling. After the work on the Gaz Poludnie licence is completed, 3D seismic surveys will be carried out on the B4 and B6 gas fields in the Gaz Polnoc licence area, owned by Baltic Gas, a company established by LOTOS Petrobaltic and CalEnergy. If the results are positive, commercial production is expected to commence in 2016/2017.
In addition, seismic surveys of prospective formations located in the Leba, Rozewie, Sambia Wschod and Sambia Zachod licence areas are to be carried out by the end of the year.
As part of business development on the Norwegian Continental Shelf, LOTOS E&P Norge has filed licence applications with the Norwegian Oil Directorate in the APA 2013 licensing round.
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