Decreasing 1st Quarter EBITDA at MOL Group

MOL Group delivered USD 714mn Clean CCS EBITDA in Q1 2023 (a 14% decrease compared to Q1 2022), despite regulatory headwinds and decreasing oil and gas prices, the Hungarian oil and gas conglomerate said this Friday morning, announcing its financial results for Q1 2023 on the website of the Budapest Stock Exchange.

According to a statement by the Group, the strong performance was due to solid internal performance throughout the divisions: Consumer Services rebounded from last year’s lows, Upstream production volumes rose and refining remained profitable in Downstream. MOL generated over USD 500mn simplified free cash flow in Q1 2023, almost exactly as in the previous quarter and in the same quarter last year, with all the divisions contributing their fair share.

Chairman-CEO Zsolt Hernádi commented on the results by saying that “MOL Group delivered stable 1st quarter results in 2023, as normalizing macro conditions were mostly mitigated by good internal performance of the divisions. Our company reached important milestones in supporting energy sovereignty of the region, Upstream managed to increase domestic production volumes, we shipped our own crude from Azerbaijan to Europe and we continued with investments allowing our landlocked refineries to access crude oil from diverse sources. In addition, Consumer Services emerged from last year’s crisis stronger, and started the operations in Poland. One year after the beginning of the war in Ukraine, it is clear that the economic consequences are here to stay changing the landscape of the European energy scene. Despite the negative impact of regulatory headwinds, our integrated, resilient business model proved to be successful in this highly challenging environment, allowing us not only to continue with our diversification efforts but to stay on track with our transformational projects, as well.”

Downstream
Clean CCS EBITDA increased by 18% compared to the same quarter last year and reached USD 299mn. Petchem margin remained under pressure, but refining and marketing performance was able to offset the negative drivers, despite the windfall taxation in Hungary. Motor fuel demand decreased by 14% in Hungary year-on-year during the Q1 period since the price cap boosted consumption in Q1 last year, while demand slightly increased in Slovakia by +3% and Croatia by 1%.
A milestone was reached in the crude diversification efforts in March when MOL Group transported Azeri light crude from its coowned ACG field in Azerbaijan to Slovnaft refinery in Bratislava, further supporting crude sourcing flexibility.

Consumer Services
EBITDA increased by 97% in Q1 2022 year-on-year, driven by an improvement of the regulatory framework and non-fuel margin increased further. Sales volume developed by 16% compared to last year’s same period, supported by around 200mn liters of positive inorganic impact as a result of the Lotos acquisition in Poland. Following the expansion of the Consumer Services portfolio in Poland in late 2022, the MOL brand was launched in the country and service station rebranding is in progress. The number of Fresh Corner sites rose throughout the network to 1,172 in Q1 2023, from 1,081 in Q1 2022.

Upstream
EBITDA decreased to USD 283mn in Q1 2023 as lowering oil and gas prices, the extra royalty levied upon production in Hungary and the regulated gas price scheme in Croatia dented the results. However, the division generated USD 205 mn simplified free cash flow. As a result of our relentless field development efforts production volumes increased in Hungary and in Iraqi Kurdistan. ACG entitlement was also higher due to the higher share in low oil-price environment, bringing total production above 95 mboepd, above the production guidance. The implementation of the shallow gas drilling program continued in Hungary, Three wells were successfully tested in the Q1 2023, bringing the total shallow gas well count to 19 since the start of the program, 2019. Despite the cost pressure across the value chain, group-level unit OPEX remained below six USD/bbl in Q1 2023.

Gas Midstream
Q1 2023 EBITDA reached USD 79mn, rose by 64% year-on-year, due to the increased cross-border capacity demands in line with higher export volumes. Decreasing gas price and changing transmission flows had positive impact on gas consumption cost.