PORTFOLIO.HU | Shell pulls out of Syria - What are the implications for INA and Hungary's MOL?

PORTFOLIO.HU | Shell pulls out of Syria - What are the implications for INA and Hungary's MOL?

clip from article:
"This is clearly a negative development although the lack of visibility makes it difficult to quantify the potential negative impacts. At worst, INA may soon be forced to follow suit and declare force majeure on its operations," commented Péter Császár, analyst at KBC Securities in Warsaw.

According to his estimates, the full shutdown of INA’s Syrian production in 2012 would wipe out roughly HUF 32.4 bn from his EBIT estimate for MOL, which translates into 9.0% of his overall EBIT forecast for the year.

Császár added that his base-case scenario remains unchanged at this stage for several reasons and he expects MOL’s production in Syria to continue to run at nearly full capacity in 2012.

"First, MOL said the safety of its staff has not yet become an area of concern. Second, the proportional share of Syrian production in Shell’s portfolio is far less significant than it is in MOL’s portfolio. However, our base-case scenario and assumptions may change if the current unrest in Syria continues and shows signs of increasing."

The monthly payment from the Syrian party (i.e. the GPC) for the produced hydrocarbon quantities for October 2011 becomes due in the days ahead, the analyst noted. He also expects to see an update from MOL, potentially as early as next week.

"In light of recent developments, the continuation of payments would be a positive surprise."

"Following MOL’s superb relative performance to peers over the last month, the disturbing newsflow from Syria may temporarily cap our estimated upside. However, intensified newsflow from Kurdistan (primarily the upcoming announcement of results at the Behme-1 exploration well) may well compensate for this."
[read more at link]