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Australiaâs leading energy company, Viva Energy Group Limited (ASX: VEA) recently provided Refining Margin Update for December 2018.
As per the announcement, the actual Geelong Refining Margin (GRM) for December 2018 was US$3.3 per Barrel (BBL). The December's GRM results in an actual GRM for the months of November and December combined of US$5.2 per barrel, compared to the revised assumption provided on 19 November 2018 of US$8.0 per barrel for November and December 2018.
In November 2018 Refining Margin Update, the company informed that Decemberâs GRM was impacted by weakness in regional refining margins which continued through the balance of the month of December. In December 2018, Crude Intake was 3.5 million barrels.
The GRM assumed in the Prospectus (dated 20 June 2018 and released to the ASX on 13 July 2018) for the half-year ending 30 June 2019 (1H2019) was US$9.7 per barrel. The actual GRM for the six months ended 31 December 2018 (2H2018) and for the month of December 2018 was US$7.6 per barrel and US$3.3 per barrel respectively.
Recently, Less Mason Asset Management Limited became the substantial holder of the company by holding 97,855,495 fully paid ordinary shares with 5.01 percent voting power.
For the six months ended 30 June 2018, Viva Energy recorded $129.4 million Net Profit After Tax (NPAT) which was in line with the forecast of $129.7 million set out in the Prospectus. The company reported Historical cost (HC) NPAT of $144.6 million which was $32.3 million above the Prospectus forecast driven primarily by inventory gains resulting from rising oil prices over the period. The companyâs retail operations achieved Underlying EBITDA (RC) of $308.0 million compared which was $9 million higher than the Prospectus forecast of $299.0 million.
The companyâs Commercial Underlying EBITDA (RC) was largely in line with forecast (+ $0.4 million) with robust sales volumes underpinned by generally strong economic activity across the commercial sectors. The companyâs Refining business achieved an Underlying EBITDA (RC) of $48.1 million compared with the Prospectus forecast of $67.8 million mainly driven by lower regional refining margins in June with Geelong Refining Margins falling to US$6.5 per barrel. Over the six-month period, Geelong Refining Margins averaged US$7.3 per barrel compared with the Prospectus forecast of US$8.3 per barrel, with crude intake at 19.1 MBBLs compared with the forecast of 19.7 MBBLs.
The companyâs Supply, Corporate and Overheads Underlying EBITDA (RC) was -$260.0 million compared with the Prospectus forecast of -$266.1 million driven mainly by head office and overhead cost savings. During the period, the Net Debt increased by $162.9 million to support corresponding increases in working capital (+$174.3 million) due to higher oil prices and increased inventory over the period.
In the past six months, the share price of the company decreased by 28.29 percent as on 25 January 2019. VEAâs shares traded at $1.800 (-0.826% intraday) with a market capitalization of circa $3.53 billion as on 25 January 2019.
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