MOL earnings surge on high oil, gas prices in Q3

Clean current cost of supply (CCS) Ebitda at Hungarian oil and gas firm MOL were up 68% year on year at $1.025bn in the third quarter, on the back of higher oil and gas prices and rebounding fuel demand, the company announced on November 5.

Upstream earnings soared by 87% to $396mn, making the segment the largest generator of free cash flow at the company. The impact of higher prices was partly offset by lower production in central and east Europe.

The company's output came to 107,400 barrels of oil equivalent/day in the three-month period, down from 127,000 boe/d a year earlier. MOL blamed this fall on reduced net entitlement output at the Azeri-Chirag-Gunashli fields off Azerbaijan due to a higher oil price, as well as natural decline at other fields. Its full-year projection is 110,000 boe/d.

Downstream profits more than doubled to $436mn from $202mn a year earlier, thanks to stronger fuel demand and a doubling of petrochemical margins because of higher prices. Consumer services delivered $211mn, versus $183mn a year earlier, as sales rose in line with economic recovery, while MOL's gas midstream arm saw earnings drop 30% year on year to $30mn, as both transit revenues and regulated income fell because of reduced cross-border capacity and transmission demand.

CEO Zsolt Hernadi said the company had raised its Ebitda guidance to $3.2bn for the year in light of the strong numbers so far. While soaring commodity prices have boosted MOL's profits, Hernadi warned that the trend as well as the coronavirus pandemic "pose a significant risk to the economy and generate a very volatile operational environment."

MOL expects its full-year capital expenditure to come to around $1.7bn, and anticipates a net debt to Ebitda ratio of 1, down from 1.3 in the third quarter. Free cash flow is anticipated to come to $1.5bn or more.