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Mining royalty, crisis tax offset MOL's improving profit

Higher crude prices and a wider refining margin lifted Hungarian oil and gas company MOL's operating profit in Q1-Q3, but the improvement was wiped out by mining royalties Brussels ordered the state to recover and an extraordinary tax on energy companies, CFO József Molnár told MTI.

MOL reported early in the day that third-quarter consolidated net income reached HUF 92.1 billion, more than seven times the HUF 12.9 billion in the same period a year earlier as margins widened and financial gains rose. MOL's net income dropped 11% to HUF 67.9 billion in Q1-Q3 from the same period a year earlier as financial losses grew.

The average price of crude rose from to $77 barrel from $57 a barrel last year, which had a positive effect on MOL's Q1-Q3 results, Molnár said. Refining margins improved slightly, oil and gas production was up and sales of finished products increased slightly. But the company had to set aside HUF 19.8 billion of reserves to pay a “crisis tax” levied on energy companies and pay HUF 35.2 billion in mining royalties the state was ordered to recover, completely eliminating the effect of the improvement on operating profit, he added.

MOL also booked HUF 15.9 billion of a loss at the gas business of its Croatian unit INA, Molnár said.

MOL's third-quarter earnings were lifted mainly by production at gas fields in Pakistan and Syria and at its offshore gas field in the Adriatic, Molnár said. The higher output countered drops in production at fields in Hungary and Croatia, he added.

MOL continues to hold to its goal of improving INA's EBITDA by an annual $210 between 2009 and 2012, although the program is moving slightly more slowly than planned, Molnár said. (MTI – Econews)