Ukrnafta EBITDA swells 91% on nearly flat sales volume in 1H17

Ukrainian oil giant Ukrnafta (UNAF UK) generated UAH
13.78 bln in net revenue in 1H17, according to its July 28 regulatory filing
(up 55% yoy). Sales volumes of its key products did not increase as crude oil
sales fell 6% yoy to 662 kt and ammonia sales were flat at 268 kt. Better
prices for its key products (crude oil, gasoline, nitrogen fertilziers) caused
EBITDA to swell 91% yoy to UAH 2.47 bln (rising 91% yoy) and enabled the company
to report a positive bottom line of UAH 1.34 bln, rising from negative UAH 0.01
bln a year before.

The company’s tax debt changed little in 1H17, staying
at UAH 13.19 bln as of the end of period (vs. UAH 13.23 bln at the year’s
start).

Alexander Paraschiy: The
company’s 3Q17 results will be definitely much worse as it had to stop
production of oil and natural gas at some of its deposits in May-June, which
led to about a 20% decrease in its hydrocarbon output from the beginning of the
year. Besides that, other negative factors include an unresolved tax debt issue
and an ongoing conflict between its two biggest shareholders. We continue to
see a high risk that the company won’t survive in the mid-term.