* MOL cuts midterm output projections in investor presentation
* Lower output expected from Kurdistan region of Iraq-analysts
* Downstream hit by collapsing margins, lower sales volumes
* MOL says earlier 2018 target achievable, hinges on acquisitions (Adds MOL’s comments)
By Krisztina Than
BUDAPEST, Feb 25 (Reuters) - Hungarian oil group MOL has cut its crude oil production forecasts mainly due to lower expected output from its fields in the Kurdistan region of Iraq, which had been seen as an important growth driver for its upstream business.
Output was expected to fall to 91,000-96,000 barrels per day (bpd) this year from 96,900 in the fourth quarter of last year, before growing again in 2015, MOL said in an investor presentation posted on its website on Tuesday.
Production will rise to 105,000-110,000 bpd in 2015 and peak at about 125,000-135,000 by 2018, based on its current upstream portfolio, MOL said.
That is way lower than a 170,000-180,000 bpd target set out in an investor presentation in November 2013.
“Two drillings (in Kurdistan) were unsuccessful recently and this led them to downgrade the field’s potential,” Concorde analyst Attila Vago said.
MOL said in an emailed response to Reuters questions that “depending on future acquisitions, it’s possible to reach 170,000-180.000 barrels per day in 2018.”
For the two blocks in the Kurdistan region of Iraq where MOL has a stake, it had projected peak production at about 50,000 barrels per day by 2020, and now this has been cut to 20,000-25,000 barrels per day.
MOL said the earlier 50,000 barrels per day production level was “an unrisked best estimate” at the beginning of its work program and as such, had been subject of high uncertainty.
“Now we have more detailed information on resource potentials following the final evaluation of our last two exploration wells and appraisal wells, which led us to be more conservative,” MOL’s communications department said.
“The (upstream) growth potential is significantly lower ... and this is mainly due to Kurdistan,” Erste equity analyst Tamas Pletser said.
“This is not good news as upstream has been the key story of interest in MOL.”
MOL has four refineries in central Europe and upstream businesses in Hungary, Croatia, Russia, Iraqi Kurdistan, Pakistan, Angola and elsewhere. It recently bought stakes in North Sea offshore fields from Wintershall Norge AS, a unit of Germany’s BASF, for $375 million.
Its executive vice president for exploration and production (E&P) has said that MOL planned to invest about $1 billion a year to achieve growth in E&P, including bidding for licenses in the North Sea.
Concorde’s Vago said lower production in Russia and the sale of MOL’s 49-percent stake in upstream firm BaiTex LLC to Turkish Petroleum Corporation also contributed to the drop.
“This shows a more conservative approach to the current (upstream) portfolio which is not positive,” he said.
MOL also reported on Tuesday that net profit halved in the fourth quarter due to a squeeze on gasoline margins as well as big impairment charges related to its Croatian assets and the shutdown of a refinery in Italy.
The company said its downstream result was hit by a sharp drop in gasoline crack spreads, decreasing sales volumes and one-off costs totalling 51 billion forints ($226 million).
MOL Chairman and CEO Zsolt Hernadi said in an earnings statement that MOL would continue its downstream efficiency programme in 2014 and would seek upstream growth opportunities.
MOL shares dropped 3.6 percent on Tuesday, underperforming the broader Budapest market. (Reporting by Krisztina Than; Editing by Louise Ireland)