INA published financial results for H1 2016

Key achievements

  • INA Group’s CCS EBITDA excl. special items, amounted to HRK 755 million
  • Crude oil production up by 12% compared to H1 2015
  • Total CAPEX amounted to HRK 717 million, 31% higher than in H1 2015, out of which 88% invested in Croatia
  • Onshore exploration agreement for block Drava-2 signed

Zagreb, July 28, 2016 – INA Group’s EBITDA in H1 2016, excl. special items, reached HRK 723 million, while the CCS EBITDA, excl. special items, amounted to HRK 755 million. Net result, excl. special items, amounted to HRK 23 million. CAPEX reached HRK 717 million, a 31% increase compared to H1 2015 despite the highly challenging external environment. INA signed an onshore exploration agreement for block Drava-2 in June.

INA results in Q2 2016 improved compared to Q1 2016. However, the overall results in the first half of 2016 are still affected by the challenging external environment. INA’s Exploration and Production segment was burdened by a 31% lower Brent price compared to H1 2015 and the decrease in Brent also impacted the gas price. Nevertheless, continuous efforts for maximizing production on existing Upstream assets resulted in a 12% increase in oil production, with domestic production increasing by 16%.
Also, INA signed an onshore exploration agreement for block Drava-2 in June, while additional potential for future growth was created in July when INA acquired additional 33.5% share in Energopetrol. Starting from Q3 2016 Energopetrol will be fully consolidated in INA results.

The overall result was impacted by special items related to severance payments primarily caused by the new operating model of Retail, which amounted to HRK 270 million on EBITDA level. Still, financial position of the Company remains stable, with net debt 9% below H1 2015, amounting to HRK 3,371 million with a gearing ratio of 24.2.

In H1 2016, E&P EBITDA excl. special items reached HRK 1,047 million. The result was primarily affected by lower Brent and natural gas prices. Gas prices decreased as a consequence of reduced households gas price and more intense market competition. E&P CAPEX in H1 2016 amounted to HRK 371.5 million. Capital investments in Croatia amounted to HRK 326.6 million whereas capital investments abroad were HRK 44.9 million.

In H1 2016, R&M CCS EBITDA excl. special items amounted to HRK (106) million, while reported EBITDA amounted to HRK (338) million. The result was impacted by the external environment, coupled with lower crude processing levels, as well as deteriorated sales margins, mainly on export markets. Decline in gross refining margins was offset by positive Retail performance, including fuel and non-fuel segment. Total capital expenditures of the Segment were HRK 333 million in H1 2016, HRK 196 million higher compared to H1 2015. Refining and Marketing capital expenditures reached HRK 265 million, primarily driven by maintenance, compliance and investment type projects implemented in H1 2016 during the turnaround of the Rijeka Refinery, together with continued investment activities in logistics development projects. Retail expenditures reached HRK 68 million, a HRK 31 million increase compared to the same period in 2015.

Statement of the President of the Management Board of INA Mr. Zoltán Áldott:

“The first half of 2016 was marked by the low Brent environment of around USD 40 per barrel, significantly lower gas prices, as well as deteriorated refinery margins. Consequently, CSS EBITDA exl. special items for H1 reached HRK 723 mn, a lower result compared to the same period last year.

Despite that, in the first half of 2016 INA continued its strong investment performance with CAPEX realisation of HRK 717 mn, which is almost on level of EBITDA exl. special items.
Decrease in Brent and gas prices heavily affected Upstream operations, but the continued workover campaign and sustain type projects, together with EOR project, managed to increase the domestic crude production by 16%. Additional potential for future growth was created with the signing of Drava-2 block exploration agreement, the first exploration license after several years.

Refining operations result was driven by less favourable refining margins and adverse wholesale market conditions, but the investment more than doubled compared to 2015, primarily due to Rijeka refinery turnaround and logistics development. Retail was strengthened with the acquisition of Energopetrol shares in July, which makes INA the majority owner of the company. With this transaction INA has further positioned itself as the single largest distributor of petroleum products in Bosnia and Herzegovina, with the aim of further building the regional position.

2016 is and will be marked by an adverse external environment, not only for INA but for oil and gas companies in general. To tackle that challenge, the Company is re-evaluating all projects and processes to enable a stabile current position and future growth.”Documents