The collapse of global oil prices has hit the results of OMV Petrom in 2015. The group’s integrated business model still allows a strong flexibility and resilience, pointed Mariana Gheorghe, CEO of OMV Petrom, during a press conference in which the financial results for 2015 were communicated. The figures appear to have been well anticipated by the market, as Petrom’s stocks recorded minimum variations while trading on the Bucharest Stock Exchange.

Results

The main profit generator in recent years, the upstream sector, has declined sharply in 2015. From 4.6 billion RON in 2014, the upstream sector has contributed in 2015 with only 919 million RON, while the level of production remained almost the same, with a decline of 1%.

Oil prices encouraged downstream activities, with growing processed volumes and refining margins more than 4 times smaller than in 2014: 8.71 dollars/barrel, compared to 1.89 dollars/barrel.

Even if natural gas demand was low, the volumes sold by OMV Petrom increased 8%, mainly based on deliveries to the regulated clients and to Brazi power plant. The net electricity production of this unit has doubled, to 2.65 TWh, contributing 4% to the national production and 11% in the balancing market.

Overall, operating results excluding special items (EBIT CCA) have been in a sharp decline compared to 2014, but positive. Accounting revaluation of assets in the upstream sector, however, led to a net loss of 690 million RON, even though OMV Petrom paid to the Romanian state a tax on profits of 519 million RON.

Adjustment

In 2015, OMV Petrom reduced investments by 38%, to 3.9 billion RON and reduced operational costs by 500 million RON. The number of employees decreased by 910, to 16.038, and 350 wells (out of 7,500) were closed.

The special taxes applied to the Upstream component remained constant (the tax on special construction and the additional income tax), which brought together to the state budget an amount of money comparable to the one collected from royalties – about 600 million RON, namely 656 million RON.

In 2016, the investment group will continue to decline, by 10%, to 0.7 to 0.8 billion euros. OMV Petrom is expecting this year an oil production with 4% lower, less than the level of 170.000 barrels of oil equivalent per day recorded in 2015.

Offshore

The company announced the campaign of drilling in the Black Sea, the largest ever conducted in the region: 7 wells were drilled, with results promising enough to continue evaluating commercial viability. The final investment decision could be taken in the next two years.