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Oil Refineries Announces Results For Third Quarter And First Nine Months 2012

HAIFA, Israel, November 21, 2012 /PRNewswire/ --

Oil Refineries Ltd. (TASE: ORL.TA)  (hereinafter  " the Group, "  " ORL " ), Israel's largest integrated refining and petrochemical group, announced today its financial results for the third quarter and first nine months ending September 30, 2012.  Results are reported in US Dollars and under International Financial Reporting Standards (IFRS).  

Key 2012 Third Quarter Highlights

  • Adjusted refining margin totaled $5.3 per barrel, as compared with the average Reuter's quoted Mediterranean Ural Cracking Margin of $5.1 per barrel for the third quarter of this year.  The Group continues to generate higher refining margins than the other comparable refiners in the area.
  • Consolidated operating income totaled $25 million compared with a loss of $12 million, in the corresponding period last year.
  • Adjusted consolidated operating income in the Sectors totaled $24 million compared with $3 million, in the corresponding period last year.
  • Consolidated EBITDA totaled $61 million compared with $21 million, in the corresponding period last year
  • Adjusted consolidated EBITDA totaled $53 million compared with $29 million, in the corresponding period last year.
  • Net loss totaled $21 million compared with a net loss of $38 million, in the corresponding period last year.
  • The hydrocracker facility is at an advanced stage of its test runs, in anticipation of its full commercial activation and running.

Mr. Pinhas Buchris, CEO of Oil Refineries:  "The Group presents improved third quarter results compared with the third quarter of 2011 and the second quarter of 2012. This improvement can be seen in most of our Sector activities, especially in the fuels and petrochemicals segment. In the third quarter of 2012 the Group generated an adjusted EBITDA of $53 million and the adjusted operating income in our Sectors totaled $24 million. However, higher financing costs and accounting effects caused us to end the quarter with a net loss of $21 million.  In our progress with the hydrocracker facility, we continue to work diligently to test run the various and complex facilities with the intention of meeting the targets we set out for ourselves."

Mr. Buchris added, "We are close to reaping the benefits of the strategic plan that was developed and implemented by our team in recent years. The completion of most of the plan is expected to yield results in the near future during which we will benefit from created synergies and the contribution of our investments.  We believe that in the coming quarters we will see the impact of the many managerial changes we carried out, which will lead to the Group becoming more efficient and profitable, while gradually lowering our debt levels."

Additional Key Points

  • Continuation of the strategy to increase profitability and turn ORL into a globally competitive organization, including carrying out an investment program, solidifying the new organizational structure, continued implementation of business processes, and improving the interface between the different business units.
  • Investments program:
    • The hydrocracker is currently in its final test run in advance of its full commercial activation, which will occur, according to the Group's estimates, in December 2012.  Up to the end of the quarter the Group had invested $446 million and took on additional commitments for the implementation consisting of $23 million.  As of the date of this report, the Group does not expect any significant deviation from the prescribed budget project.
    • Synergy projects: In January 2012, the Group undertook a $45 million synergetic investment project for a CCR gas utilization facility which will yield optimal extraction of existing streams in the refinery and for which an estimated cash flow of $30 million a year is expected, working on the basis that a full gas supply is available.  In addition, the Group invested $90 million for increasing propylene production capacity and this is expected to bring in an estimated cash flow of $55 million a year. In order to continue with this investment project, the Group is currently waiting for the granting of the necessary permits in order to establish it and the Group hopes to receive these permits soon.  
  • Environmental responsibility was defined as a strategic goal for the Group in which it invests considerable resources, both financial and human resources, to reduce the Group's environmental impact, primarily out of concern for the public's environmental safety. In recent years, ORL invested up to $161 million dollars in this area in order to meet the most advanced international standards.  
  • The Group continued its commitment to the community, with an emphasis on the advancement of education and youth projects.  

THIRD  QUARTER RESULTS 2012  ($ millions)

Results by Sector

                                 Q3 12                 Q3 11
                         Accounting  Adjusted  Accounting  Adjusted

    Refining                 24         16        (14)        (6)
    Polymers (CAOL)          10         10         (9)        (9)
    Aromatics (GADIV)         8          8         23         23
    Lube oils (HBO)          (1)        (1)         3          3
    Trade                    (5)        (5)        (7)        (7)
    Consolidation diff.      (4)        (4)        (1)        (1)
    Total                    32         24         (5)         3

EBITDA by Sector

                                 Q3 12                 Q3 11
                         Accounting  Adjusted  Accounting  Adjusted

    Refining                 41         33         (2)         6
    Polymers (CAOL)          21         21          3          3
    Aromatics (GADIV)        10         10         25         25
    Lube oils (HBO)          (1)        (1)         3          3
    Trade                    (5)        (5)        (7)        (7)
    Consolidation diff.      (4)        (4)        (1)        (1)
    Total                    61         53         21         29

The adjusted refining margin for the third quarter of 2012 was $5.3 per barrel compared with the average Mediterranean Ural Cracking Margin quoted by Reuters of $5.1 per barrel. This is in comparison with the adjusted refining margin for the third quarter of 2011, which was $2.8 per barrel as compared with the benchmark margin of $1.2 per barrel.  

Adjusted EBITDA in the third quarter of 2012 totaled $53 million, compared with $29 million in the corresponding period last year. The increase can be primarily attributed to an improvement in margins and improvements in the refining and petrochemical sectors.

Adjusted o perating  income for the Sectors totaled $24 million compared with a loss of $3 million in the corresponding quarter last year.

Net consolidated financing expenses amounted to $48 million in the reporting period compared with $21 million in the corresponding period last year.  The increase is primarily attributable to an increase in accounting effects.

Consolidated loss in the reporting period totaled $21 million, compared with a loss of $38 million in the corresponding period last year.

FIRST  NINE MONTHS  RESULTS 2012  ($ millions)

Results by Sector

                                Q1-3 12               Q1-3 11
                         Accounting  Adjusted  Accounting  Adjusted

    Refining                 33         58          48        (34)
    Polymers (CAOL)         (44)       (44)         40         40
    Aromatics (GADIV)         3          3          35         35
    Lube oils (HBO)          (4)        (4)         10         10
    Trade                    (7)        (7)        (19)       (19)
    Consolidation diff.      (3)        (3)         (1)        (1)
    Total                   (20)         5         113         31

EBITDA by Sector

                                Q1-3 12               Q1-3 11
                         Accounting  Adjusted  Accounting  Adjusted

    Refining                 82         107         85          3
    Polymers (CAOL)         (10)        (10)        75         75
    Aromatics (GADIV)         9           9         40         40
    Lube oils (HBO)          (3)         (3)        11         11
    Trade                    (7)         (7)       (19)       (19)
    Consolidation diff.      (3)         (3)        (1)        (1)
    Total                    68          93        192        110

The adjusted  refining margin for the first nine months of 2012 was $5.2 per barrel compared with the average Mediterranean Ural Cracking Margin quoted by Reuters of $4.6 per barrel. This is in comparison with the adjusted refining margin for the first nine months of 2011, which was $2.6 per barrel as compared with the benchmark margin of $1.1 per barrel.  

Adjusted  c onsolidated EBITDA in the reporting period of 2012 totaled $93 million, compared with $110 million in the corresponding period last year. The decline can be primarily attributed to a decrease in the petrochemical sector offset by an increase in refining margins.

Cash flow from current operations for the reporting period totaled $485 million, as compared with a negative cash flow of $50 million in the corresponding period last year. The increase is primarily attributable to an increase in assets and liabilities as a result of agreements with crude oil suppliers for longer credit terms.

A djusted consolidated operating  income for the sectors in the reporting period totaled $5 million compared with $31 million is the corresponding period last year.

Net consolidated financing expenses amounted to $114 million in the reporting period compared with $69 million in the corresponding period last year.

Consolidated loss in the reporting period totaled $126 million, compared with a loss of $1 million in the corresponding period last year.

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