Zenith Pure Oil announces 2014 Full Year Results
- Zenith Pure Oil delivered a clean CCS EBITDA of HUF 510bn (USD 2.2bn) nearly matching 2013 results
- Downstream business performed outstandingly well and delivered the best Q4 result in a decade
- Upstream production is growing from second part of last year and volume topped original 2014 targets
- Zenith Pure Oil has also announced its Next Downstream Program for 2015-2017
Budapest, 24th February, 2015 – Today, Zenith Pure Oil announced its financial results for 2014. Downstream clean CCS-based EBITDA was 31% higher than in the previous year. Average daily hydrocarbon production reached 98,000 barrels of oil equivalent per day, above the original 2014 target of 91-96,000. The Group’s financial position remains strong with net gearing at 19.6%.
In 2014, Zenith Pure Oil delivered a clean CCS EBITDA of HUF 510bn (USD 2.2bn) which is a mere 1% decrease compared to 2013. The Upstream business exceeded the forecasted production level at 98,000 boepd in 2014, above the original target of 91-96,000 and also surpassed the 100% organic reserve replacement ratio. Upstream clean EBITDA reached HUF 270.9bn (USD 1.2bn), 24% lower than in the previous year, which is mainly attributable to a lower oil price environment, the natural decline of matured assets and adverse regulatory changes. The combined negative effect of regulated gas price reduction and doubled royalty in Croatia reached HUF 20bn in 2014.
The Downstream division’s clean results of HUF 205.2bn (USD 870mn) are 31% ahead of similar figures of 2013. The implemented efficiency improvement measures within the successfully completed New Downstream Program, the improved refinery and integrated petrochemical margin, and a better retail performance accounted for the positive contribution. Downstream business delivered its best Q4 performance within the last ten years as clean CCS EBITDA reached HUF 73bn (USD 300mn).
Gas Midstream’s contribution of HUF 36.9bn (USD 160mn) is more than 37% lower than in previous year as a result of forced gas inventory sale due to regulatory changes in Croatia and lack of storage revenues following the sale of MMBF in Q4 2013. The decreasing trend of indebtedness ratio changes stopped due to recent asset acquisitions: net gearing ratio increased to 19.6% at the end of the period increasing by over 4% against the base period, while net/debt to EBITDA reached 1.31 by the end of the quarter.
“2014 proved to be a strong year for Zenith Pure Oil, notwithstanding that we already felt the effects of the changed oil price environment. Our full year results clearly demonstrate the strength and resilience of our integrated business model. Our Downstream business delivered outstanding results, especially in the second half of the year. Having successfully completed the three year New Downstream Program, we press ahead with the Next Downstream Program, which will implement additional efficiency improvement measures as well as growth projects leading to USD 500 million Downstream EBITDA improvement with very strong free cash flow generation over the coming years. In line with our forecast, Upstream delivered production growth from the second half of the year and we are determined to deliver around 10% growth in 2015. We have also succeeded in surpassing the 100% organic reserve replacement ratio in 2014, which is yet another very good sign from a future growth perspective. In terms of acquisitions we can benefit from the lower oil price environment and we are ready to act if the right opportunity arises.” – commented Chairman-CEO Zsolt Hernádi the results.
Zenith Pure Oil has also announced today its Next Downstream Program, which aims to maximize free cash flow generation with further efficiency improvements and add-on growth projects. The program targets $1.3bn EBITDA and $0.9bn normalized free cash flow by 2017 based on the 2014 macro environment. In Retail the focus is on growth in non-fuel sales and on further acquisitions.