11th May 2008
Thursday, September 2nd, 2010
Orlen and Lotos benefit as oil rises above $125 a barrel
On Friday, for the first time ever, the price of oil went above $125 a barrel. "I believe that the oil price should not substantially affect the valuation of Orlen and Lotos Group. However, it might positively affect the companies due to the so-called LIFO effect and thus improve their Q2 results," said Ludomir Zalewski of DM PKO BP.
In Q1 2008 the average price of a barrel of oil purchased by Orlen stood at $96.5, while from the start of April to the May 10 it went up to about $111 per barrel. "I believe that this time, if one took into account the USD exchange rate to the z³oty, the LIFO effect could boost Orlen's EBIT by as much as z³.800 million," said Pawe³ Burzyñski of DM BZ WBK. The quarterly result will, however, be affected by the falling refinery margins, which are likely to be higher than in Q1, but much lower than last year. In Q1 2008 Orlen's refinery margin stood at $2.5 per barrel and $1.3 for the whole group, while it stood at $8 and $5.9 last year. "According to my estimates, it might reach $4.5-4.8 per barrel," said Burzyñski. In the case of Lotos Group net profit of the firm could reach as much as z³.250-300 million and thus it could get nearer to posting similar whole year earnings of roughly z³.777 million as in 2007.
From Warsaw Business Journal
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