MGYOY Mol Magyar Olay Es Gazipari Rt (PK)

By Margit Feher

BUDAPEST--Budapest-based oil and gas company MOL Nyrt. (MOL.BU), Hungary's largest firm by revenue, is set to report third-quarter earnings before the market opens on Friday. Here's what you need to know:

EARNINGS FORECAST: MOL is forecast to report another set of robust results, boosted by refining revenue despite falling oil prices. Still, a write-down on lower-than-expected geological potential of its Akri-Bijeel Block in Iraq will dampen its bottom line. The total current book value of Akri-Bijeel investments in MOL's balance sheet amounts to $440 million.

MOL's net loss is forecast at 22.7 billion forints ($78.9 million) for the period, a swing from a net profit of HUF28.5 billion a year earlier, based on a poll of 11 analysts by the company.

MOL's clean earnings before interest, tax, depreciation and amortization, an indicator of profitability in the oil industry investors watched the most, is forecast at HUF187.7 billion ($652.4 million), hitting a record high for the second quarter in a row after the previous quarter's HUF179.5 billion, and up 14% from HUF164.5 billion a year earlier. Clean earnings don't include the revaluation of inventories and one-off items.

Clean operating profit is forecast at HUF108.6 billion, up 10.6% from HUF98.2 billion a year earlier.

REVENUE FORECAST: No forecast is available.

WHAT TO WATCH:

UPSTREAM: Clean upstream Ebitda is projected at HUF45.9 billion, down by a sharp 31% year-over-year on falling oil prices. Concorde Securities analyst Attila Vago projected an output rise of 7% on the year to 102,000 barrels of oil equivalent a day from 94,900 a year earlier, predominantly driven by North Sea and Kurdistan production.

DOWNSTREAM: Clean downstream Ebitda is forecast at HUF138.3 billion, more than double from HUF67.7 billion a year earlier, due to higher refining margins and persistently strong petrochemicals and retail sales performance. That would be down somewhat from the previous quarter's all-time record high of HUF143.2 billion.

Crack spreads were up and down on the year over the period, Mr. Vago said. The price difference between Brent-type and Ural-type crude narrowed in the third quarter to $1.1 per barrel from $1.4, a negative for MOL, which refines lower-priced Russian Ural-type crude, but sells the refined products at prices adjusted to Brent prices.

Downstream sales volume probably increased by up to 6% on the year to 5.25 million metric tons, but the sales margin might have narrowed to nil due to stiffer competition, Mr. Vago said.

Write to Margit Feher at margit.feher@wsj.com; Twitter: @margitfeher

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(END) Dow Jones Newswires

November 05, 2015 07:16 ET (12:16 GMT)

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