KEY ACHIEVEMENTS IN 2017
- In 2017 Upstream doubled its simplified free cash-flow delivery, exceeding USD 500 mn;
- ~14 USD/boe unit free cash-flow achieved on portfolio level in a 54 USD/bbl oil price environment;
- Production decreased by 5% in 2017 on portfolio level driven by lower UK volumes affected by the wax build-up in the Scolty and Crathes pipeline system and lower volumes in the CEE mainly due to natural depletion;
- Production Optimization Program (PO) continued in the CEE region, and delivered 3.2 mboepd production increment on an annualized basis, which partly offset the lower volumes from mature fields;
- Within the international portfolio the Floating Production, Storage and Offloading (FPSO) installation on the Catcher field was delivered and first oil was achieved in December 2017, while in Pakistan in the MOL-operated TAL Block gross production exceeded 85 mboepd as a result of several tie-ins were completed in 2017;
- Unit direct production cost stayed at a very competitive level of 6.1 USD/boe on portfolio level;
- In the frame of the well cost optimization project ~20% cost reduction was delivered in Hungary through the improvement in well design and activity rationalization;
- Strong CAPEX discipline remained in place in 2017; total organic CAPEX spending declined to USD ~320 mn from USD ~410 mn.;
- Exploration portfolio was extended through successful licencing rounds in Hungary and in Norway. MOL Hungary acquired three new hydrocarbon exploration licences in the 5th bid round in the areas of Őrség, Somogybükkösd, Somogyvámos. MOL Norge has been also offered three new licences with reputable partners in the 2017 APA licencing round, including two operated blocks;
- 2P oil and gas reserves stood at 356 MMboe at the end of 2017, affected by reclassification in Syria (-36 MMboe) and negative revision in Kazakhstan (-37 MMboe).
WHAT HAVE BEEN THE MOST IMPORTANT TASKS FOR MOL GROUP UPSTREAM RECENTLY?
”I am very proud to say that we doubled our free cash flow in 2017 due to the capex/opex efficiency and po initiations of the new upstream program launched in 2016, in 2018 we will put strong focus on reserve replacement, while we maintain our highly efficient and cash positive operation.”
Berislav Gašo Dr. – Executive Vice President, Exploration and Production
KEY FACTS
Production (2017) – 107.4 mboepd
SPE 2P Reserves (2017) – 355.7 MMboe
|
Segment IFRS results (HUF bn) |
FY 2017 |
FY 2016 |
Ch % |
|
EBITDA |
232.5 |
183.7 |
27 |
|
EBITDA excl. spec. items(1) |
234.8 |
190.3 |
23 |
|
Operating profit/(loss) |
74.5 |
37.0 |
101 |
|
Operating profit/(loss) excl. spec. items(1) |
95.2 |
43.6 |
118 |
|
CAPEX and investments |
87.0 |
114.4 |
(24) |
|
o/w exploration CAPEX |
11.7 |
15.9 |
(26) |
|
o/w organic CAPEX |
87.0 |
114.4 |
(24) |
|
Hydrocarbon Production (mboepd) |
FY 2017 |
FY 2016 |
Ch % |
|
Crude oil production |
37.6 |
40.9 |
(8) |
|
Hungary |
12.8 |
13.3 |
(4) |
|
Croatia |
12.2 |
11.9 |
3 |
|
Russia |
0.0 |
1.3 |
(100) |
|
Kurdistan Region of Iraq |
3.7 |
3.6 |
3 |
|
United Kingdom |
5.4 |
6.6 |
(18) |
|
Pakistan |
1.1 |
1.1 |
0 |
|
Other International |
2.4 |
3.1 |
(23) |
|
Natural gas production |
54.2 |
56.0 |
(3) |
|
Hungary |
26.3 |
26.9 |
(2) |
|
Croatia |
21.3 |
22.4 |
(5) |
|
o/w. Croatia offshore |
7.7 |
9.3 |
(17) |
|
United Kingdom |
0.8 |
1.7 |
(53) |
|
Pakistan |
5.7 |
5.0 |
14 |
|
Condensate |
7.1 |
7.6 |
(7) |
|
Hungary |
3.7 |
4.2 |
(12) |
|
Croatia |
1.8 |
1.9 |
(5) |
|
Pakistan |
1.7 |
1.5 |
13 |
|
Average hydrocarbon production of fully consolidated companies |
98.8 |
104.5 |
(5) |
|
Russia (Baitex) |
6.2 |
5.8 |
7 |
|
Kurdistan Region of Iraq (Pearl Petroleum)* |
2.4 |
2.3 |
4 |
|
Average hydrocarbon production of joint ventures and associated companies |
8.6 |
8.1 |
6 |
|
Group level average hydrocarbon production |
107.4 |
112.6 |
(5) |
|
Main external macro factors |
FY 2017 |
FY 2016 |
Ch % |
|
Brent dated (USD/bbl) |
54.3 |
43.7 |
24 |
|
HUF/USD average |
274.4 |
281.5 |
(3) |
|
Average realized hydrocarbon price |
FY 2017 |
FY 2016 |
Ch % |
|
Crude oil and condensate price (USD/bbl) |
48.8 |
38.9 |
25 |
|
Average realized gas price (USD/boe) |
30.5 |
27.7 |
10 |
|
Total hydrocarbon price (USD/boe) |
39.1 |
33.3 |
17 |
|
Production cost |
FY 2017 |
FY 2016 |
Ch % |
|
Average unit OPEX of fully consolidated companies |
6.7 |
6.3 |
7 |
|
Average unit OPEX of joint ventures and associated companies |
1.7 |
1.3 |
31 |
|
Group level average unit OPEX (USD/boe) |
6.1 |
5.7 |
7 |
* excluding gas
OUTLOOK FOR 2018-2020
- Sustain self-funding and a value-generating operation even in a below 50 USD/bbl oil price environment;
- Maintain production at ~110 mboepd through PO in the CEE and international field development program, with Catcher having a significant contribution from 2018;
- MOL Upstream will continuously pursue efficiency to maintain unit direct production cost competitively low, in the single-digit territory (USD/boe) on a portfolio level;
- Exploration CAPEX will be spent on near-field exploration activities in the CEE and in Pakistan, while in 2018 the first operated offshore well will be drilled in Norway. Development CAPEX will be used to unlock undeveloped 2P reserves in CEE, and continue the Production Optimization Program. International field development activity will focus on the UK, Pakistan, and Kazakhstan and on the Baitugan field in Russia;
- The free cash-flows generated by the Upstream business shall be sufficient to cover 100% reserve replacement even in an oil price environment of 50 USD/bbl.
- For efficient organic reserve replacement MOL Upstream intends to achieve competitive finding and development unit costs (12-16 USD/boe).