Essar Oil UK expects positive cash flow in April 2021

Essar Oil UK reported today that sales of products1 from the Stanlow Refinery is expected to see a 63% year-on-year increase to 537kT in April 2021, in comparison to 329kT in April 2020. By way of comparison, sales in February 2020 were 661kT.

These figures confirm that EBITDA for April 2021 is expected to be positive for the first time since the coronavirus pandemic and subsequent national lockdowns began in March 2020.

Projections for subsequent months look increasingly positive, as the easing of lockdown restrictions has resulted in increased demand for road transport and aviation fuel.

The company is not levered and has no long term bank debt. Stanlow continues to produce and sell high value products, with a value of approximately US$700 million a month. Demand has been increasing since February 2021 and has continued to do so during the current month.
Some short term financial disruption was caused recently when a bank decided to amortise a credit facility related to the company’s receivables. In practical terms this facility allowed the company to be paid immediately for sales, rather than waiting for up to 30 days.

This change did not, however, have a material impact on the company’s operations or financial outlook. More than half of the facility has, in any event, quickly been replaced by securing alternative financing facilities. We are confident that replacement arrangements for all the facility will be secured in the near term, but as previously stated, this will not effect operations at Stanlow.

The company has always sought to implement the highest standards of corporate governance. We are well advised by a suite of highly experienced, professional firms.

A spokesperson said:

“As lockdown restrictions ease and the country returns to normality, demand for our products is already increasing. All factors indicate that this is likely to continue and therefore our financial position will strengthen over the coming months. In the four years to 2019, the company generated EBITDA of over US$300 million a year. Any short term disruption is mitigated by the underlying strength and outlook of our business. We remain fully focused on supporting the customers and industries who rely on our products.”