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Polish oil and gas group PKN Orlen reports strong results in Q1
PKN Orlen posted net profit of nearly PLN2.1bn (€500mn) in the first quarter of 2017, the Polish state-controlled oil and gas group said on April 27.
The result is slightly above market consensus, with the Polish giant benefitting from increased downstream sales. That is the result of a regulatory crackdown on illegal diesel sales, as well as a 3.4% gain in the downstream margin to €12.1. An insurance claim following downtime at one of the company’s refineries also played a role.
In total, PKN Orlen’s sales came in at nearly PLN22.9bn in the first quarter, a growth of 41% y/y. EBITDA Lifo – earnings adjusted for changing value of inventories – grew 1.9% to PLN2.3bn.
Rising prices of oil and gas also contributed to increased upstream profitability, PKN Orlen operates production assets in Poland and Canada.
Production in the first quarter expanded to 14,400 barrels of oil equivalent a day (boe/d), representing growth of 8% y/y. That said, the growth took place in Canada, while production declined in Poland.
The company expects 2017 will bring a further rise in oil prices caused by the agreement by OPEC and some non-OPEC members to curb production, coupled with growing consumption. The rise could be limited by growing output in the US.
PKN Orlen also expects petrochemical margins to decrease, while refining margins remain stable. Overall, however, margins are expected to remain elevated compared to the long-term trend thanks to rising consumption and still relatively low oil prices, PKN Orlen predicts.
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