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OMV Petrom publishes H1 financial results with increased production and completed Petrobrazi modernization

Gerhard Roiss, CEO of OMV says: In the first half of 2014, our results were adversely impacted by lower refining margins, a weaker US dollar and political instability in Libya and Yemen. Despite this instability, our production level increased compared to the same period of last year, following the contribution of acquired assets in Norway.

2014-08-12 15:36:18

In E&P, the oil discovery at the Hanssen appraisal well reconfirmed the potential of the Wisting area in Norway.

Additionally, the Domino-2 well in the Black Sea is currently drilling with the target to confirm our significant gas discovery. With the closing of the Bayernoil refinery sale, we have completed the biggest step in our R&M divestment program. Further, the modernization of the Petrobrazi refinery is now complete which will further enhance our competitiveness. In G&P, we are reviewing our asset portfolio in order to increase profitability. Our participation in the South Stream project will play an important role in the future to safeguard the security of gas supplies for Europe and, particularly, for Austria. I am looking forward to the second half of the year where major E&P projects like Gudrun and Maari Growth will ramp up production to deliver our targets.

Second quarter 2014 (Q2/14) vs. second quarter 2013 (Q2/13)

Production flat compared to Q2/13, as contribution from Norway offset the shut-ins in Libya
Production costs increased due to change in the country mix and higher costs in Romania

In Q2/14, the average Brent price in USD was 7 per cent higher than in Q2/13. The Group's average realized crude price increased by 5 per cent while the average realized gas price in EUR was 17 per cent higher compared to Q2/13.

Clean EBIT decreased by 42 per cent to EUR 349 mn, mainly due to higher depreciation in Norway, as it was not included in Q2/13, and in Tunisia. Additionally, higher production costs in Norway (production included since Q4/13) and in Romania, negatively impacted the result. The weaker USD against the EUR had an additional negative effect on the result. Exploration expenses increased from EUR 98 mn in Q2/13 to EUR 182 mn (thereof EUR 22 mn from Tunisia treated as a special charge), mainly including the write-off of unsuccessful high impact wells in Gabon, namely Padouck Deep, Affanga Deep and Okala, in the Faroe Islands, namely Brugdan, and in Norway, namely Byrkje and Apollo. Net special items of EUR (138) mn led to a reported EBIT of EUR 211 mn, 65 per cent below the level of Q2/13 (EUR 597 mn). The special items are mainly related to the impairment of the TOC asset in Kazakhstan (EUR (110) mn) as a consequence of the unsuccessful field redevelopment results and deteriorated fiscal conditions over the recent years. Furthermore, the special items include the write-off of an exploration license in Tunisia (EUR (22) mn).

Production costs excluding royalties (OPEX) in USD/boe were 42 per cent higher than in Q2/13, mainly due to the change in the country mix, with contribution from Norway, lower production volumes in Libya, as well as higher costs in Romania. OPEX in USD/boe at OMV Petrom increased by 30 per cent, mainly due to the new construction tax and higher personnel costs. OMV Group's total exploration expenditure increased by 35 per cent compared to Q2/13 to EUR 186 mn, reflecting higher activity levels in Romania, due to the Ocean Endeavor deep offshore drilling rig mobilization for Domino-2 well and the successful Marina-1 well in the Black Sea, and in Norway.

Total OMV daily production of oil, NGL and gas was 297 kboe/d. This was at the same level as in Q2/13, mainly reflecting the lower Libyan contribution, as production volumes were affected by security issues, which was offset by the contribution from Norway. OMV Petrom's total daily oil and gas production decreased by 2 per cent compared to Q2/13, mainly due to Kazakhstan, where production levels were impacted by pipeline issues. Total OMV daily oil and NGL production decreased by 9 per cent, mainly reflecting lower volumes from Libya. Production volumes from Norway and Pakistan mitigated this development. Total OMV daily gas production increased by 10 per cent vs. Q2/13, mainly due to the contribution from Norway and higher production in Pakistan, which were partly offset by lower volumes from Kazakhstan. Total sales quantity increased by 2 per cent, mainly related to sales volumes from Norway partially offset by lower sales volumes in Libya.



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