Page 68 - UKRRptDec20

9.2 ​Major corporate news 9.2.1​ Oil & gas corporate news
The government granted Naftogazon November 25 the right to develop a massive Black Sea gas block without a tender. ​The Dolphin block, near Ukraine’s portion of the Danube river delta, is believed to hold at least 1 trillion cubic meters of gas – more than double the big Black Sea find announced recently by Turkey. “This means the possibility of producing up to 10bn cubic meters per year,” Ukraine’s state oil and gas company announced on Facebook. In recent years, Ukraine has imported 11 to 14bn cubic meters a year.
Naftogaz 9M20 EBITDA remains negative.​ ​Naftogaz of Ukraine (NAFTO) reported a 6% y/y decrease in net revenue to UAH104.5bn in 9M20, according to its unaudited accounts released on November 26. The decline in revenue happened in all segments except for a small segment of gas storage. The company’s EBITDA was negative at UAH1.2bn in 9M20 (vs. positive UAH26.0bn a year before) and the bottom line was negative at UAH17.0bn (vs. positive UAH12.9bn a year before). A key contributor to the company’s negative EBITDA was the provisioning of receivables for UAH10.9bn. Meanwhile, the company’s operating cash flow before working capital changes was UAH15.0bn (78% decrease y/y) and net operating cash flow was UAH16.1bn (less 61% y/y) in 9M20. Its CapEx for the period was UAH11.8bn (47% less y/y) and dividend paid was UAH39.6bn (up 3.2x y/y). With such spending, Naftogaz decreased its cash position by 41% (or UAH31.8bn) YTD to UAH45.8bn. Its end-September net debt was UAH19.7bn, up from end-2019 net cash of UAH16.9bn.​ ​In 3Q20 alone, Naftogaz generated UAH32.6bn of net revenue (up 57% y/y and 20% qoq) and positive EBITDA of UAH0.5bn (vs. negative results a quarter and year before).
Canada’s Vermilion Energy has backed out of two production sharing agreements it won last year with Naftogaz​, reports OilPoint, citing Ukraine’s state oil and gas company. The Calgary-based company “has decided not to participate in the projects due to significant reductions in gas and oil prices compared to 2019, the coronavirus pandemic and the global economic downturn,” Naftogaz said referring to the two sites, Balaklia and Ivanovo. Instead, Naftogaz will go it alone, investing $125 over the next five years to conduct 3D seismic tests and to drill 12 exploration wells.
Undeterred by this setback, Naftogaz is open to working with a foreign company, particularly Romanian, to develop the Dolphin block, ​in the Black Sea near the Danube delta and Romania’s maritime border. Working jointly with Romania to develop the shelf may be "more economically attractive" for Ukraine, and would create better security since Romania is a NATO member, Lana Zerkal, adviser to the Naftogaz CEO, said Friday at an online briefing. However, Exxon Mobil has been mulling selling its 50% stake in Romania’s Neptun Deep offshore project. Since 2008, it has shared this Black Sea block with Romania’s OMV Petrom, which is majority-controlled by Austria’s OMV.
68​ UKRAINE Country Report​ December 2020 ​ ​www.intellinews.com