Ukrnafta output flat, P&L worsens in 9M20

Ukraine’s leading crude oil producer and gasoline
trader Ukrnafta (UNAF UK) reported a 25% yoy drop in net revenue to UAH 16.07
bln in 9M20, according to its Oct. 30 filing. The decline was mostly the result
of crude oil sales plummeting by 77% yoy to UAH 0.79 bln (as volumes fell 44%)
and natural gas falling by 61% yoy to UAH 1.21 bln (volumes fell 22%). At the
same time, sales of oil products were flat yoy at UAH 13.27 bln (as volumes
increased 51% yoy). This implies Ukrnafta’s average price of crude oil, natural
gas and oil products fell 60%, 50% and 33% yoy in 9M20.

The company’s output of natural gas (0.86 bcm) and oil
(1.13 mmt) was flat yoy in 9M20.

Ukrnafta’s gross profit plunged 66% yoy to UAH 3.55 bln
in 9M20, while EBITDA turned to negative UAH 3.23 bln (from positive UAH 0.99
bln a year before). Its net losses swelled 8.5x yoy to UAH 3.09 bln.

The company’s payables to state budget remained flat
YTD at UAH 11.27 bln.

Alexander Paraschiy: The company’s
revenue does not match price trends on the oil & gas markets, with its
effective prices falling much faster than for peers (for instance, for the same
period, JKX reported a 46% yoy fall in crude oil prices and 31% yoy decline in
natural gas prices, in USD terms, amid less than 1% devaluation of local
currency). Thus, we can conclude that Ukrnafta remains a non-transparent
company with its financial results hard to apprehend and forecast.

Our key conclusion from its accounts is that the
company is not going to reduce its huge tax debt, so its management and
shareholders are still hoping for the government’s approval of tax debt
settlement involving Naftogaz pre-payments for the company’s natural gas, as
had been preliminary agreed to by the company’s shareholders in March 2019.