18.08.2017 PGNiG Group reports stable growth in H1 2017
In the first six months of 2017, the PGNiG Group recorded about 15% year-on-year rise in the volumes of gas sold to external customers. Net profit increased by 65%, to almost PLN 2.1bn. The Group’s EBITDA came in at just under PLN 4.2bn for the first half of 2017, having increased 33% year on year. The first half year results are not weighed down by major impairments, in contrast to the same period last year, when impairment losses reduced consolidated EBITDA by over PLN 550m.
In the second quarter of 2017, PGNiG reported an EBITDA of PLN 1.4bn, which is almost double the figure posted for the same period in 2016 (up 91%), when the Company recognised impairment losses on property, plant and equipment of PLN 725m. Total revenue increased 12% in the last three months, to over PLN 7.2bn.
“Our second quarter performance is in line with the new Group strategy for 2017−2022, unveiled in March. We keep a stable pace of growth. In the last three months we reported stronger revenue figures across all business segments,” said Piotr Woźniak, President of the PGNiG Management Board. “We have signed a number of strategic contracts, we continue to export gas to Ukraine, we have received our first US cargo of liquefied natural gas, and we are close to launching the Norwegian Corridor project. All these factors help us to further consolidate our position on the international gas market,” added Mr Woźniak.
Exploration & Production – revenue growth on stable volumes
In the second quarter of 2017, Exploration & Production revenue from sales of gas climbed 10%, or PLN 67m, year on year. Despite lower sales volumes reported for the period, revenue from sales of oil and condensate also rose, by PLN 5m year on year. Net of property, plant and equipment impairments, segment EBITDA increased in the last three months by 8% year on year, from PLN 726m to PLN 785m.
Trade & Storage − revenue up 12% on stronger sales volumes
Compared with the same quarter last year, Trade & Storage revenue grew by PLN 675m, to PLN 5.4bn, with the growth fuelled by rising gas prices and higher volumes of gas sold to residential and industrial customers (both retail and wholesale).
Distribution − revenue growth driven by new connections and colder weather
Gas distribution volumes rose 19% year on year, to 2.4bn m3. New connections and colder weather in the second quarter had a major effect on the segment performance. Revenue from distribution services was up PLN 92m, or 10%, year on year.
Generation – 95% growth in EBITDA
In Generation, revenue from sales of heat increased to PLN 231m, by 21%, year on year in the second quarter of 2017. EBITDA totalled PLN 171m, up 95%. The strong segment performance was mainly driven by the PEC and SEJ acquisitions in 2016 (SEJ has since been renamed to PGNiG TERMIKA Energetyka Przemysłowa) and an over 25% rise in sales volumes of electricity generated from own sources.
Key developments at the PGNiG Group in the first half of 2017
Diversification of gas supply sources
Polish Oil and Gas Company consistently implements its strategy to diversify gas supplies to Poland. In June 2017, the Company received the first US cargo of liquefied natural gas destined for a country in Central and Eastern Europe at the President Lech Kaczyński LNG Terminal in Świnoujście. Going forward, the Company may sign further contracts for the supply of US liquefied gas.
Back in the first quarter of the year, PGNiG signed a supplementary agreement to the long-term contract with Qatargas, one of the world’s leading LNG producers, who will increase the volume of LNG supplied to Poland to a total of 2.9bn m3 per year in 2018−2020 and to 2.7bn m3 in the following years of the contract term.
PGNiG Group’s new contracts
In June 2017, PGNiG signed contracts for the supply of natural gas to Grupa Azoty SA and its subsidiaries, running from October 1st 2018 to September 30th 2020, with an option to extend the contracts for another two years. The Company has also signed a long-term gas supply contract with the ArcelorMittal Group in Poland. The volume of gas to be supplied under the contract may reach around 1.6bn m3 in total, for a price of up to approximately PLN 1.4bn.
Furthermore, PGNiG has signed gas export contracts with customers outside Poland. In partnership with ERU Trading, it has won a contract for the supply of 218m m3 of gas in 2017 to Ukrtransgaz, Ukraine’s transmission system and storage facilities operator.
New gas fields
The Gina Krog field in the North Sea was brought on stream at the end of June. PGNiG Upstream Norway is one of the four partners operating in the field.
PGNiG has also made two discoveries in the Greater Poland region. One is located near the town of Środa Wielkopolska and was discovered in partnership with the ORLEN Group. For the first time in western Poland, geologists used the horizontal drilling technique to drill into a local sandstone formation.
The other discovery is located in the Rokietnica commune. The drilling of the Rokietnica 5H exploration well was successfully completed in the Pniewy-Stęszew licence area, where PGNiG is the sole operator.
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