Profit Almost 5 Times Higher for OMV Petrom in H1

Although it has faced supply difficulties and an unfavourable market environment, OMV Petrom, the largest oil producer in South-East Europe, reported a net profit of RON 4.64 billion in H1/2022, almost 5 times higher than in H1/2021.

“In the first 6 months of this year, the market environment was unprecedented. In the context of the Russia-Ukraine conflict, international and regional prices for our main products were high and volatile and there were supply difficulties.

Our financial results for the first half of 2022 reflect this market environment, with an operating profit of RON 5.9 billion. Contribution to the state budget was at a record high, of about RON 10 billion. It includes taxes of about RON 9 billion, almost 80% higher than in the first 6 months of 2021, and total dividends for 2021 of almost RON 1 billion, a more than double increase.

In this period, our domestic production capacities operated at a high rate, including the Petrobrazi refinery and Brazi power plant, and we focused on diversifying supply sources, so as to ensure continuity of supplies to our customers.

To increase Romania’s gas production, it is essential to develop gas resources in the Neptun Deep Block. We welcome the amendments to the Offshore Law, but a number of clarifications from authorities are necessary. If all the prerequisites are fulfilled, the final investment decision is estimated for mid-2023.

In this very volatile environment, we focused our efforts to contribute to the security of Romania’s energy supply. Through our 2030 strategy we propose EUR 11 billion to support the much-needed growth of the country, based on investments, and transformation for a low-carbon future,” said Christina Verchere, CEO of OMV Petrom, on the occasion of announcing the group’s financial results for the first half of 2022.

 

Highlights H1

Group

• Significantly higher Clean CCS operating result, of RON 5.9 billion, in the unprecedented context of rising and volatile commodity prices generated by the geopolitical context
• Investment value of RON 1.4 billion
• Record contribution to the state budget, including the base dividends, of RON 9.2 billion

 

Exploration and Production

• Clean Operating Result was RON 3bn vs. RON 0.8bn in 1-6/21, mainly determined by higher oil and gas prices and the favourable exchange rate (stronger USD vs. RON), partially offset by the higher taxation in exploration and production and the lower sales volumes.
• Production fell by 11%, to 121 thousand boe/day, mainly due to asset sales and accentuated natural decline in the main fields.
• Production cost increased slightly, to USD 12.6/boe, due to a decrease in the available production for sale and higher expenses, partially offset by the favourable exchange rate (stronger USD vs. RON) and the positive impact in Q2/22 of a non-recurring item related to a tax inspection.

 

Refining and Marketing

• Clean CCS operating result of RON 1.8 billion, vs. RON 0.7 billion, as a result of improved refining margin, increase in fuel demand in the first quarter and better refining performance.
• The OMV Petrom indicator refining margin (related to Brent) at USD 15.20/bbl, as a result of better spreads, mainly for diesel and gasoline.
• Refinery utilization rate at 92%, compared to 93% in 1-6/21, reflecting the April 2022 planned shutdown.
• Retail sales volumes were up by 5%, mainly supported by the robust demand increase in Q1/22, while in Q2/22 a slowdown of the demand growth was registered.

 

Gas and Power

• Clean Operating Result of RON 1.5 billion vs. RON 0.2 billion, reflecting the improved performance of both gas and power segments.
• Gas sales volumes down 7%, as a result of lower gas volumes from own production and declining demand.
• Net electrical output of 2.1 TWh vs. 1.9 TWh, the highest so far for H1, even in the context of the planned outage for full capacity of Brazi power plant in March 2022 and half of its capacity in April 2022.

 

Key Events

• OMV Petrom announced in June the first batch of sustainable aviation fuel at Petrobrazi.
• Completion of the first Photovoltaic Park supplying green energy for own Exploration and Production operations.
• OMV Petrom and Auchan Romania reached more than 200 MyAuchan stores in Petrom stations.
• OMV Petrom launched OMV MyStation, a new application with exclusive offers for customers.
• Launch of the 2021 Sustainability Report
• On July 26, the OGMS approved the distribution of RON 0.045/share special dividend, leading to record high dividends: base dividends of RON 1.9 bn paid from June 6 and special dividends of RON 2.5 bn to be paid starting September 2.

 

Social Involvement

• Launch of OMV Petrom Foundation to strengthen company’s contribution to social projects
• OMV Petrom joined the efforts of the civil society and authorities in Romania to support refugees from Ukraine in cooperation with UNICEF and Red Cross Romania.
• School renovated to near zero energy consumption standards (nZEB), inaugurated in Ploiești, within the Efficient Romania project

 

Market Environment

• For the full year 2022, OMV Petrom expects the average Brent oil price to be above USD 100/bbl (previous guidance: around USD 95/bbl; 2021: USD 71/bbl).
• Refining margin is expected to be above USD 15/bbl (2021: USD 5.5/bbl).
• Retail demand for oil products is expected to be broadly flat; market demand for gas and power is expected to be lower than in 2021.
• Temporary measures were introduced for the gas and power markets applicable between April 2022 – March 2023 with regards to prices, margins, storage, and taxes; also measures to reduce fuel prices are applicable in Q3/22 on a voluntary basis.

Capital expenditure amounted to RON 1,389mn in 6m/22, 15% higher than in 6m/21 (RON 1,208mn), mainly directed to Exploration and Production with investments of RON 1,022mn (6m/21: RON 993mn). Refining and Marketing investments amounted to RON 261mn (6m/21: RON 198mn), while Gas and Power investments amounted to RON 92mn (6m/21: RON 9mn). Corporate and other investments were RON 14mn (6m/21: RON 7mn).

OMV Petrom Group reported a net cash position including leases of RON 12,337mn as at June 30, 2022, higher than RON 6,474mn as at June 30, 2021 and RON 9,391mn as at December 31, 2021.