Mol Banks on Iraq to Turn Production Drop as Downstream Improves
Mol Nyrt., Hungary’s largest refiner, reported an improvement in its downstream unit in the second quarter and said it was closer to production at an Iraqi field that will help arrest the decline upstream.
Mol posted net income of 20 billion forint ($89 million) in the three months to June, compared with 500 million forint a year earlier and a 24.3 billion forint median estimate in a Bloomberg survey. The downstream unit had earnings before interest, taxes, depreciation and amortization of 42 billion forint on a current cost of supplies basis, 1 billion forint higher than in the first quarter of 2013, Mol said in a statement to the Budapest Stock Exchange today.
Production at the Shaikan field in the Kurdistan region of Iraq is “within closer reach” after approval from the local government, which will help offset the decline of matured fields elsewhere, Mol said. The company, which saw gas production fall in Croatia and Hungary, yesterday announced the sale of a stake in a mature field in Russia.
“This time, upstream was the weakest link in a declining crude-oil price environment and hit by a significant drop of gas production in Hungary,” Peter Szentirmai, a Budapest-based analyst at KBC Groep NV (KBC), wrote in an e-mailed report. “On the positive side, downstream operation shows the signs of improvements despite gloomy refining macro environment.”
The shares rose as much as 1.8 percent and traded 0.1 percent lower at 16,290 forint by 11:10 a.m. in Budapest, extending the drop this month to 3.6 percent. The benchmark BUX stock index, in which Mol has the highest weighting at 31 percent, slid 0.1 percent, paring the advance in August to 0.7 percent.
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