INA continues to be one of the largest investors in Croatia with more than doubled capital investments
- High hydrocarbon price levels have continued, reflecting the increased geopolitical risk and uncertainty affecting global energy markets.
- In such environment, results show a strong INA Group result in Q1-Q3 2022, although various regulatory restrictions had a negative impact on Retail result.
- Exploration and Production revenues and EBITDA more than doubled, significantly overcompensating the effect of expected natural production decline.
- Investment activities intensified and CAPEX spending more than doubled compared to the same period last year, confirming INA as one of the largest investors in Croatia:
- Rijeka Refinery Upgrade Project, as the main strategic investment, successfully continues with construction works and equipment delivery to the site.
- Rijeka Refinery Upgrade Project, as the main strategic investment, successfully continues with construction works and equipment delivery to the site.
- Many Production and Exploration development activities in Croatia, both offshore and onshore.
- Despite the strong operative results, operating cash flow of the company is lower compared to last year, due to major investments and large financing needs for the working capital.
- Related to gas sales towards HEP, regulated at fixed price, negative impact is expected from Q4 2022.
Key data:
- Net sales revenues amounted to HRK 27.2 billion
- EBITDA amounted to almost HRK 4.7 billion
- CAPEX more than doubled, to HRK 1.9 billion
Zagreb, October 28, 2022 – Energy market turmoil driven by the geopolitical risks and supply issues continues to keep the hydrocarbon prices at elevated levels, with Brent prices above USD 100 per barrel and CEGH gas price fluctuating, but shortly exceeding even 200 EUR/MWh during the Q3 2022. In such environment, entire oil and gas industry delivers strong results.
INA Group CCS EBITDA excl. special items in first nine months 2022 amounted to more than HRK 4.7 billion while net profit exceeded HRK 2.7 billion. Results are stronger in all segments with Exploration and Production naturally being the main cash generator, mainly due to the strong environment. Exploration and Production revenues amounted to HRK 5.4 billion with EBITDA HRK 3.9 billion. Natural decline of production continues, but the effect of ongoing Offshore drilling campaign is already visible in production volumes. Ongoing investment cycle in Refining and Marketing incl. Consumer services and Retail segment caused negative cash flow although the operating results improved. Various regulatory restrictions in Retail had a negative impact on the result but on the other side the refining margins improved leading to better overall results with CCS EBITDA of almost HRK 1.3 billion.
Investment activities continue to be on high levels, throughout the segments, more than doubling compared to first nine months 2021. Refining and Marketing, with the Residue Upgrade Project remain the biggest investment segment, but the ongoing Offshore drilling campaign is also a significant development project, with the effect of increase gas production already showing.
Despite the strong operative results, operating cash flow of the company is lower compared to last year, due to major investments and large financing needs for the working capital.
Statement of Péter Ratatics, President of the Management Board of INA:
“Third quarter of 2022 brought continuation of worldwide energy market volatility, with gas prices oscillating and oil price at continued high level. Questionable security of supply in some countries, caused by the global turmoil, alongside with elevated price level led to numerous regulatory interventions throughout the world. In such environment INA’s result stayed strong, primarily due to the Exploration and Production, the strongest cash generator in the conditions of high hydrocarbon prices. Ongoing Offshore drilling campaign already brought some results with two new wells put into production, although further development is needed and underway in order to mitigate the natural production decline, something expected with the mature portfolio of INA.
Compared to the same period last year, refining margins are greatly improved, which led to improved Refining and Marketing operations, despite the fact that increased energy prices also burden their result. Captive market sales also increased, with the results under pressure with the various limitations on margins. Nevertheless, the safe supply of the market remains INA’s priority. Excellent tourist season and consumption assisted the growth of Retail volumes in fuel, with third quarter amounting to more than 40% of volumes in the first nine months 2022. Alongside with fuel, a non-fuel growth continued due to expansion of offer and improved sales.
Although the external environment of high hydrocarbon prices enabled us to increase our income, it is important to emphasize that a large part of INA’s profit is returned to investments, so the period of strong investments continued. Our CAPEX more than doubled compared to the first nine months of 2021. The Rijeka Refinery upgrade project continues as INA’s largest investment in history, the goal of which is to ensure the long-term profitability of INA’s refining, on top of already ensured security of supply. The aforementioned offshore drilling campaigns will ensure an increase in natural gas production.
It is ungrateful to predict what will the future bring since the volatile markets, the regulatory measures that are hard to foresee, the rising inflation and probable recession bring a higher level of uncertainty. Therefore, INA will continue to continuously improve its operations to strengthen its position for the years ahead.”