Hungarian oil and gas company MOL Nyrt. (MOL.BU) will strictly monitor costs in 2009 in order to maintain its solid financial position, MOL Chief Financial Officer Jozsef Molnar said Friday.
"MOL's financial position is strong," Molnar said, adding the company plans to keep its EUR1.5 billion credit line and cash untouched for now.
The company aims to keep its gearing ratio stable at around 36% and forecasts its debt, which was HUF650 billion at the end of 2008, will remain largely unchanged this year, Molnar said.
In an effort to secure its financial stability, MOL plans to keeps its operational costs stable in 2009 on the year, or even reduce them slightly under an optimistic scenario, Molnar said.
The company will also continue efficiency improvements, with special focus on cost and energy efficiency, Chief Executive Gyorgy Mosonyi said at a press conference.
In terms of the operating environment this year, Mosonyi said MOL's calculations are based on an average oil price of $65 a barrel, with average diesel crack spread of $100 a metric ton and average gasoline crack spread of $80 a ton.
The company forecasts the average dollar-euro exchange rate at 1.25 in 2009.
Mosonyi said he expects no drastic decline in demand for MOL's products in 2009 despite expecting the economic crisis to deepen in all of the company's markets.
The company has already cut its 2009 investment plans by 35% to 220 billion Hungarian forints ($941.8 million), which will be entirely financed from operational cash flow. MOL stands ready to further cut investment spending if it becomes necessary, Molnar said.
MOL earlier Friday reported a sharp fall in its fourth-quarter operating profit, which was attributed to drastically lower oil prices, which also triggered heavy losses on inventory revaluation.
In 2008, MOL's losses on inventory revaluation amounted to HUF92 billion versus a HUF32 billion profit the year earlier, Molnar said.
Mosonyi said natural gas production at MOL's Hungarian field in Mako could start in 2011 or 2012 the earliest. Mako is an unconventional gas field and MOL is in the process of assessing the gas reserves and production possibilities there.