Page 8 - FSUOGM Week 38 2021

FSUOGM PIPELINES & TRANSPORT FSUOGM

DTEK Oil & Gas EBITDA

rose 37% in 1H21

UKRAINE EBITDA at Ukraine’s largest private natural gas modest, $5mn or less ($1mn at end-June), due
producer DTEK Oil & Gas (DTEKOG) rose 37% to the nature of its business, the management
Revenues were up 59% year on year in 1H21 to $125mn, according to its added.
year on year. financial statements published on September 16. About 70% of natural gas sales in 4Q21 will
Revenue jumped 59% y/y to $196mn in be at market prices, and the remaining 30% will
1H20, and net profit from continuing operations be covered by forward contracts entered into in
was $109mn (vs. a loss of $20mn a year ago). November 2020, the management said. DTEK
Operating cash flow before working capital Oil & Gas has not hedged any of its 2022 produc-
changes jumped 64% y/y to $142mn in 1H21, tion, and currently has no sales hedging strategy
whereas cash flow from operations after work- in place.
ing capital changes (but before profit tax and The company is comfortable with any value
interest) dropped 35% y/y to $44mn, and net of gross leverage ratio below its covenant limits,
operating cash flow plunged 56% y/y to $20mn. which is 3.0x, the management said.
Capex slid 38% y/y to $26mn and free cash DTEK Oil & Gas’ EBITDA for 2020 was
flow (FCF) was a negative $6mn in 1H21 (a pos- stated at $185mn in a presentation published
itive $10mn in 1H20, excluding discontinued the same day. This is $116mn below the $301mn
operations). value disclosed in May that included $116mn of
DTEK Oil & Gas had $429mn of gross debt at net gains on reversal of provisions for receivables.
end-June, and its gross leverage ratio (gross debt DTEK Oil & Gas’ gross leverage ratio should
to LTM EBITDA) was 2.0x. remain at a comfortable level of around or below
The company’s natural gas production was 2.0x in 2H21.
0.96 bcm in 1H21, or 10% more y/y. The company apparently has not suffered
DTEK Oil & Gas plans to maintain its natural substantial working capital outflows (aside from
gas production at least flat y/y in both 2021 and possibly the $99mn due to increase of accounts
2022, according to the company management receivable) related to settlement of its forward
statements at a conference call with investors the sales contracts, which is positive.
same day. Its capex should amount to $50-70mn Nevertheless, the investors should be pre-
in 2021, and should also remain flat y/y in 2022. pared to see DTEK Oil & Gas’ cash balances in
Increases in the company’s accounts receiva- line with its stated minimum ($5mn or even less)
ble resulted in a cash outflow of $99mn in 1H21. regardless of its profits in a given period. The
The management stated at the conference call company might use working capital and possibly
that the reason for this increase in accounts other means to flexibly maintain only a minimal
receivable was a short-term liquidity gap at a cash balance, which might help support its rela-
counterparty and that these accounts should tions with its direct customers (most of which
be fully settled by the year’s end. The company’s are related parties), analysts at Concorde Capital
minimum cash balance requirements are very think. ™

P8 www. NEWSBASE .com Week 38 22•September•2021