OMV Petrom announced that net profit fell in the first half by 25%, to 1.04 billion lei (234.1 million euros), after sales fell by 18% to 8.81 billion lei (1.98 billion euros), according to Mediafax. Last year during the same period, OMV Petrom had sales of 10.72 billion lei.

“In the first six months, we focused on ensuring a sustainable and profitable business in a market environment with lower oil prices which could last for a while. We have implemented measures to reduce operating costs and increase the efficiency of our operations, work safety remaining our top priority. In order to maintain cash flow and a solid balance sheet, we have prioritized our investments based on potential to generate long-term value, so we achieved a decrease in capital expenditures of about 30%, in line with expectations.

In Upstream, previous investments continued to generate profits and, as a result, the Group’s hydrocarbon production increased slightly due to higher contribution of repairs and (re) developing deposits. In 2015, we completed drilling to date four wells in Black Sea’s deep waters, in partnership with ExxonMobil, and the exploration program continues. Upstream lower result was partially offset by the very good performance of the Downstream Oil, supported by increased refining margins and falling oil costs, which highlights the benefits of our integrated business model.

In addition, we increased marketing sales volumes, benefiting from higher demand for petroleum products. In the Downstream Gas, gas sales volume increased by 10%, despite the market environment deteriorated. For the second half, the Romanian authorities have announced public consultations on tax and regulatory environment. As I pointed out before, we aim to achieve a stable framework, predictable and favorable to investment, a key condition for future investments”, said general manager of OMV Petrom, Mariana Gheorghe.

Production of oil and gas at group level was 33 million barrels of oil equivalent (boe) and total production of oil and gas in Romania reached 31.3 million boe, compared to 31.1 million boe in the same period last year. Domestic oil production was 13.9 million boe, down 1%, mainly reflecting the natural decline at Suplacu deposit, shows the financial report of OMV Petrom, quoted by Mediafax.

Domestic gas production increased by 2% reaching 17.4 million boe, reflecting overhauling offshore campaigns, sidetrack drilling sites and increase of contribution of key wells at Totea deposit. Oil and gas production in Kazakhstan increased by 4%, registering a value of 1.69 million boe. Sales volume increased 1% compared to the first six months of 2014 due to higher sales of gas and condensate in Romania.

The decline of international oil quotations affects stock prices of oil companies, not just net gains and Petrom is no exception. A solution used by Petrom management has been reducing investment spending.

However, in the last 11 years, “the development of Petrom stock quotation action on the BSE can be considered reasonable if we consider that, based on the reference price of the privatization since July 2004, an investor who would liquidate currently a investment made at that price would mark a capital gain of about 76%, while only the dividends received during this time (without taking into account reinvesting their earnings and therefore more revenues) should make a yield of about 78%.

This means a total return on investment of over 150% in 11 years, which is equivalent to an average annualized yield of about 9%, where, actually, half of this represented the contribution of earnings made from dividends received over the investment horizon”, said the research team leader for capital market at BCR, going on the record for Bursa daily.