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Romania's OMV Petrom H1 cons EBIT down 56% y/y, to cut investments by 20% in 2016
Romania's top oil and gas group OMV Petrom [BSE:SNP] said on Wednesday that its consolidated earnings before interest and taxes (EBIT) dropped 56% on the year to 561 million lei ($140 million/126 million euro) in the first half of 2016 affected by the oil price drop, and that it plans 20% lower investments for this year, seenews.com informs.
The company's sales fell by an annual 17% to 7.19 billion lei in the January-June period, OMV Petrom said in its first-half unaudited consolidated financial statement.
"In the first half of 2016, the difficult market environment adversely impacted our financial results, outweighing the effects from improved operational performance as well as strict cost discipline and cash management," OMV Petrom CEO Mariana Gheorghe said in the statement.
Capital expenditures fell 35% on the year to 1.33 billion lei in the review period, reflecting the completion of Neptun drilling and also the strict selection of investment projects, Gheorghe added.
Consultations regarding upstream oil and gas taxation are expected to continue in the second half of the year.
In this context, the CEO added that a stable, predictable and investment-friendly fiscal and regulatory framework is a key requirement for the company's future investments, both onshore and offshore.
OMV Petrom expects capital expenditure for 2016 to be around 700 million euro ($776 million), about 20% down on the year, with some 85% dedicated to the upstream segment.
In the upstream segment, OMV Petrom's EBIT plummeted 90% on the year to 71 million lei in the first six months of the year, mainly due to significantly lower oil prices as well as decreased sales volumes. The loss also reflected special charges related to staff restructuring and to write-offs of exploration assets, the report showed.
Total hydrocarbon production shrank 3% to 32.08 million barrels of oil equivalent (boe) in the first half of the year, mainly due to the natural decline and bad weather impact. Domestic crude oil and natural gas liquids production was 14.73 million barrels, 4% lower than in the first half of 2015. This was due to the decline in the company's main main gas fields Totea, Bulbuceni and Bustuchin, despite the successful workovers and increased contribution from Lebada Est NAG project, the report further showed.
Exploration expenditures decreased 68% to 242 million lei in the first six months of the year, mainly due to finalized drilling activities in Black Sea and significantly reduced exploration activities in partnership with Repsol.
In the downstream segment, EBIT fell 17% to 634 million lei, mainly driven by lower refining margins and the the planned refinery turnaround from the second quarter.
Total refined products sales fell slightly by 2% to 2.27 million tonnes through June. Gas sales volumes dropped by an annual 9% to 24.75 TWh while net electricity output was up 125% to 0.91 TWh.
Blue chip OMV Petrom was trading down 4.17% at 0.2530 lei at 1013 CET on the Bucharest Stock Exchange.
(1 euro=4.4578 lei)