OMV Group: Results, etc.
The Austrian integrated oil & gas company OMV Group has presented the results of the first 9 months of 2014: EUR 1,693 million.
In a web conference presentation from Vienna, the company said it had managed to achieve these results despite the instability in Libya and a challenging market environment. OMV said it would continue to pursue its strategy of “profitable growth.”
However, company representatives were light on specifics regarding exactly how OMV's financials would affect its plans, and tight-lipped about the management shake-up that has been reported last month by international media.
Admitting he had not commented on recent, what he termed rumors, and decisions reported in the press, CEO Gerhard Roiss stated, “I see my responsibility in managing this company together with 27,000 employees and managers and to work for the benefit of our customers and stakeholders – nothing else matters.”
Mr. Roiss is reportedly set to leave OMV in June 2015, about two years ahead of schedule. Meanwhile, OMV has folded its gas and power division into its refining and marketing segment.
OMV CFO David Davies said that overall gas markets remained challenging for the company. The weak oil price environment, he added, had led OMV to reexamine the pace of its investment program.
Addressing a question regarding how the oil price had affected investments, he commented, “What is clear is that, certainly for the next 2-3 years we will be basing our expectations and projection going forward on a more conservative oil price assumption than what we entered into this year. Our previous long-term assumption on a stable basis was $100/barrel approximately; only 4 months ago we had $115, and of course now we're in a quite different situation and we need to react accordingly.”
Mr. Roiss added: “The major projects expected to bring us our production target of around 400,000 boe/day in 2016 remain broadly on track. The purpose of the review of the investment program is to reduce the level of capital spending of the next 2-3 years significantly.”
He admitted that that move could lead to a delay in reaching OMV's target production.
OMV also reported that in the 3rd quarter production rose to 311,000 boe/day, resulting in an increased average production of 306,000 boe/day in the first 9 months of 2014.
Contributors included the Gudrun field in Norway, which is continuously ramping up, according to the company's presentation. The drilling of the Domino-2 well in the Romanian Black Sea has recently been completed, said OMV, while data is currently being evaluated. The Pelican South-1 exploration well in Romania has also commenced drilling on a new prospect.
Mr. Roiss characterized the 3rd quarter 2014 figure as a “strong operating result, up by 6% on last year despite the challenging environment.” The result, he said, had mainly increased due to a strong contribution from OMV's refining business. The finalization of the Petrobrazi modernization in Romania, he explained, had contributed significantly.
“Roughly, 70% of our result comes from exploration and production,” he stated. “In the 3rd quarter production increased from 275,000 barrels to 311,000 barrels of oil equivalent per day, up 13% versus Q3 2013.”
Recently, he said, production had gone up to 330,000 boe/day with Libya making a solid contribution.
Regarding Norway, Mr. Roiss reported that production from the Gudrun field had begun in April 2014 and is continuously ramping up. “In Norway we've already produced an average of 6,000 boe/day in October. Norway is now the 2nd biggest production country of OMV,” he explained.
In exploration, he said, OMV's focus relies on the Black Sea.
He offered: “The second well to test the potential for gas discovery, Domino-2 Well, was recently completed. Our experts are analyzing the data as we speak.”
According to him, OMV had also begun drilling its next exploration well in the Black Sea, the Pelican South-1.
As to whether OMV's Black Sea investments would be affected by the company's new policy, OMV Mr. Davies said those investments were a key strategic investment, both for the company and Petrom, and represented quite a transformational opportunity for both companies, so OMV would continue to work with its partners on pursuing that project.
He stated that OMV's Gas & Power division had continued to be impacted by the challenging marketing environment. “Supply, marketing and trading improved during the 3rd quarter and the 9-month period, mainly due to the renegotiated gas supply contracts with Gazprom and Statoil.”
Group investments for 2014, he reported, would be around EUR 3.9 billion as budgeted.
-Drew Leifheit