Page 10 - Euroil Week 34 2019

EurOil PERFORMANCE EurOil
PGNiG H1 earnings down on weaker gas prices
POLAND
While gas sales slumped in price, PGNiG paid more for Russian gas.
POLAND’S state-owned PGNiG posted lower pro ts in the rst half of 2019, a er being hit by lower gas prices.
Net income tumbled to PLN1.3bn ($331mn), from PLN2.27bn a year earlier, while Ebitda slumped to PLN3.1bn from PLN4.3bn. Reve- nues climbed 8% year on year to PLN22.63bn, however, on the back of higher sales of electricity.
“ e second quarter of the year was a chal- lenging period, mainly on account of declining prices of natural gas and rising prices of crude oil on the spot market,” CEO Piotr Wozniak explained in an August 22 statement. “Lower gas prices directly a ect our revenue from sales of this fuel.”
PGNiG noted that day-ahead gas prices were down 20.8% at Poland’s power exchange and 23.5% in other key European markets.
Revenues from the rm’s core trading and storage business climbed 13% to PLN17.88bn, on the back of a 4% growth in gas sales volumes to 15.53bn cubic metres. But this was o set by a 14% rise in the cost of gas purchases, as higher
oil prices led to a spike in import costs under PGNiG’s long-term, oil-indexed contract with Russia’s Gazprom.
Poland relies on Russia to cover around two thirds of its consumption, which averages 15 bcm per year. e country has been buying LNG from the US and Qatar to diversify its supply, with the government stating it will not renew its contract with Gazprom a er it expires in 2022.
Gas distribution volumes were almost unchanged at 6.31bn cubic metres in the six- month period, but revenues fell 5% y/y owing to a cut in tari s applied in February. Revenues from exploration and production were also down 18% y/y as the impact of lower gas prices was compounded by a 23% decline in crude oil sales.
PGNiG’s power generation segment per- formed well, with revenues up 11% thanks to a 6% growth in output to 2.26 TWh.
Six-month earnings were also affected by PLN222mn in impairment charges during the period. ™
Decipher slashes output at North Sea field
UK
The Orlando eld has had several owners since its discovery.
UK-FOCUSED Decipher Production has had to curtail output at the Orlando oil eld in the North Sea a er encountering di culties with the upper completion of its wells there, the company reported on August 23.
Orlando is capable of owing oil at a rate of 10,000 barrels per year, but Decipher said the issues had forced it to slash production to 5,000 bpd.
“Decipher are reviewing whether a workover may be required to deliver the planned peak pro- duction rates from the eld,” it said, noting that Orlando’s 2P reserve estimate of 10mn barrels remained unchanged.
Decipher is helmed by Steve Bowyer, the for- mer chief of now-defunct Aberdeen-based rm First Oil. It snapped up a 75% stake in Orlando in April 2017 through a deal with the adminis- trators of Iona Energy, another Scottish explorer that went under in early 2016.
Decipher went on to purchase the remaining 25% from Faroe Islands-based Atlantic Petro- leum, which secured a cut of future production
revenues in return.
Orlando was first discovered in 1989 by
US major Chevron, which opted to pass up on development. It was eventually acquired by Iona in 2012, which initially aimed to launch produc- tion in 2017. ese plans were scuppered follow- ing the oil price crash.
After consolidating its control, Decipher renewed plans to develop Orlando by connecting it to the nearby Ninian Central platform, oper- ated by Canadian Natural Resources (NCR). e eld was brought on stream in March this year. Its oil is pumped through the Ninian pipeline system managed by Enquest to the Sullom Voe terminal on the Shetland Islands.
Decipher added it was continuing to move ahead with the appraisal at the nearby Senna and Mansell discoveries, where it is targeting 70mn barrels of oil equivalent (boe) in recover- able resources. It shot 3D seismic surveys at the nds last year, and aims to take a nal investment decision (FID) on their development later this year. ™
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w w w . N E W S B A S E . c o m Week 34 29•August•2019