Hungary’s largest oil and gas producer MOL upped its revenues and profit in the first quarter this year, despite a drop in production as oil prices increased.

Output declined to about 117,000 barrels of oil equivalent per day between January and March as against 125,000 boepd in the fourth quarter and 127,000 boepd in the third quarter of 2020.

Production also continued to fall in April, hitting 112,000 boepd, according to company’s preliminary estimates.

However, revenues grew by 9% to almost $3.7 billion in the first quarter as against last year's fourth quarter, with net profit up almost fivefold to $305 million.

MOL, which has ambitious goals to drastically reduce its carbon footprint, needs to maintain profitability and manage its oil assets portfolio in order to finance its energy transition goals.

The company said that it lost about 8000 boepd of production in the UK offshore and in Central Europe in the first quarter because of lower contributions across the portfolio and natural declines.

Meanwhile, higher oil prices have reduced MOL’s net entitlement production from the Azeri–Chirag–Guneshli (ACG) offshore development in Azerbaijan's Caspian Sea waters by 5000 barrels per day of oil to just 20,000 bpd, according to terms of the production sharing agreement.

However, vice president Berislav Gaso noted that MOL's share of revenues will increase in line with oil price increases.

MOL, which bought a 9.6% stake in ACG at the end of 2019, said gross output at the project was 484,000 bpd in the first quarter of this year as against 462,000 bpd in the fourth quarter of last year.

The company has warned that a further rise in ACG output is restricted by Azerbaijan's commitment to Opec+ alliance to reduce its total oil production, with the cap expected to continue until April 2022.

Opec+ is a grouping of Opec and other key producers, led by Russia, that has aimed to rebalance flagging oil markets through output curtailments.

According to Gaso, ACG’s output is set to increase further once the project’s partners, led by UK supermajor BP, install Azeri Central East (ACE) platform to tap into undeveloped formations at an estimated investment of $6 billion.

The ACE platform is expected to produce first oil in 2023 despite challenges that its construction faced last year because of the Covid-19 pandemic.

The planned platform is expected to eventually add up to 100,000 bpd of incremental oil output to ACG.

Production

Hungary's MOL posts profit rise despite oil and gas output decline