Exploration and production

MOL Group Upstream has 80 years of experience. MOL Group’s portfolio consists of oil and gas exploration and production assets in 13 countries with production activity in 8 countries. MOL Group is committed to the key principles of sustainable operations, aiming at zero HSE incidents and accidents, protecting the environment by reducing the number of spills and decreasing greenhouse gas emissions by flaring and amongst other measures, by participating in the World Bank’s Zero Flaring Initiative.

KEY ACHIEVEMENTS IN 2016

  • Over USD 250mn free cash flow delivered (7.0 USD/boe unit free cash flow) in a 44 USD/bbl Brent price environment and an average realized hydrocarbon price of 33 USD/bbl
  • Production decline successfully reversed, annual average production of ~112 mboepd (104 mboepd excluding joint ventures and associated companies) achieved on portfolio level, up by 6% compared to last year on a like-for-like basis
  • Highest onshore CEE production (71 mboepd) achieved since 2012
  • Production Optimization Program (PO) continued in the CEE region, and achieved 7% onshore production increase (vs last year) driven by significant rise of oil (+14%) and onshore gas (+4%) production
  • In 2016 ~90 mn USD OPEX saving was delivered in line with New Upstream Program aspirations, which resulted in 1.0 USD/boe reduction in direct unit production cost (-14%) compared to previous year. The total unit direct production cost was 6.6 USD/boe on portfolio level. Organic CAPEX came in 36% lower versus 2015.
  • Portfolio optimization continued with the divestment of Matyushinsky block in Russia and a farm-down in two licences in Romania. Our exploration portfolio was extended through successful licensing rounds in Hungary and in Norway
  • MOL Norge’s exploration concept attracted world-class partners like Aker BP, Statoil and Petoro

WHAT HAVE BEEN THE MOST IMPORTANT TASKS FOR MOL GROUP UPSTREAM RECENTLY?

“Oil and gas producers were put to a test as oil prices averaged slightly above 40 USD/bbl during the year, nevertheless we successfully implemented all major actions of our New Upstream Program. MOL E&P generated free cash-flows over USD 250mn or 7 USD/boe even at the bottom of the industry cycle. Moving forward our strong intention is to keep our business fit against a challenging macro backdrop while also making sure that we deliver on reserve replacement in order to maintain our long-term competitiveness.”
Berislav Gašo Dr. – Executive Vice President, Exploration and Production

KEY FACTS

Production (2016) – 112.2 mboepd

 

SPE 2P Reserves (2016) – 459.4 MMboe

 
 

Key Upstream operational data

2015

2016

Change (%)

Gross crude oil & condensate reserves, SPE 2P (MMbbl)

284.0

246.4

-13

Gross natural gas reserves, SPE 2P (MMboe)

229.7

212.5

-7

Total gross hydrocarbon reserves, SPE 2P (MMboe)

513.7

459.4

-11

Average crude oil & condensate production (mboepd)

47.1

56.6

20

Average natural gas production (mboepd)

56.9

55.6

-2

Total hydrocarbon production (mboepd)

103.9

112.2

8

Key Upstream financial data

2015
restated

2016

Change (%)

Total sales revenues (USD mn)

1,462

1,317

-10

EBITDA (USD mn)

855

652

-24

EBITDA excluding special items (USD mn)

705

675

-4

Operating profit (USD mn)

-1.43

132

n/a

Operating profit excluding special items (USD mn)

-49

155

n/a

Hydrocarbon Production (mboepd)

2015*

2016

Change (%)

Crude oil production

35.2

40.9

16

Hungary

11.4

13.3

16

Croatia

10.7

11.9

12

United Kingdom

3.2

6.6

106

Russia

1.9

1.3

-33

Kurdistan Region of Iraq

3.6

3.6

0

Other International

4.4

4.2

-3

Natural gas production

56.9

55.6

-2

Hungary

25.7

26.9

4

Croatia

25.0

22.4

-10

ow. Croatia offshore

12.2

9.3

-24

UK (North Sea)

1.7

1.3

-21

Other International

4.5

5.0

11

Condensate

7.1

7.5

7

Hungary

3.8

4.2

10

Croatia

1.9

1.9

-1

Other International

1.3

1.5

9

Average hydrocarbon production of fully consolidated companies

99.1

104.1

5

Russia (Baitex)

4.8

5.8

20

Kurdistan Region of Iraq (Pearl Petroleum)

0.0

2.3

n\a

Average hydrocarbon production of joint ventures and associated companies

4.8

8.1

68

Group level average hydrocarbon production

103.9

112.2

8

*restated with Baitex

OUTLOOK FOR 2017-2019

  • Upstream remains a key pillar of the integrated business model, and has to be self-funding even in low oil price environment
  • Increase production up to ~115 mboepd level through PO and the implementation of international field development programs by 2018
  • Continue to apply greater scrutiny in project approvals to ensure lower unit finding and development cost (~12-16 USD/boe)
  • Exploration CAPEX to be spent in our core regions, mainly in CEE, Pakistan and Norway; development CAPEX spending will address undeveloped 2P reserves in CEE, and the international field development activity will focus on UK, Pakistan, Kazakhstan and on the Baitugan field in Russia
  • Efficiency will remain in focus to deliver competitive unit direct production cost in line with strategic aspiration
  • Investigate and pursue inorganic options in order to sustain at least current production in long-term