OMV Petrom (stock symbol SNP) posted a net profit of 619 million lei (attributable to shareholders), 113% higher in the first quarter of 2017 than in the same period of the last year, according to the quarterly report released on Thursday.
The average price “obtained for crude oil” at the Group level rose by nearly 69% to USD 45.09 per barrel.
Production cost in USD/barrel oil equivalent decreased by 13% „due to the elimination of the special construction tax and the cost-efficiency measures”. The Group’s operating result for Q1/2017 increased „mainly due to the higher sale revenues and the elimination of the special construction tax starting 2017” and reached 798 million lei.
Investments decreased by 54%, to 353 million lei, „mainly influenced by the reduction of investments in the Neptun Deep perimeter and the completion of some deposit redevelopment projects in 2016,” according to the report mentioned.
„In Q1/2017, we have succeeded in capitalizing on better market conditions through a strong operational and financial performance. We have registered a substantially improved cash flow from operating activities, of 1.3 billion lei, which, in conjunction with the decrease of investments, led to an extended cash flow of 646 million lei,” says Mariana Gheorghe, CEO of OMV Petrom, in the report.
Also, „increased oil prices and higher demand for petroleum products related to the retail sales, along with the continuing cost discipline, have been translated into an operating result (…) of almost half the level of the full year 2016„, adds the general manager of the company.
The company continued to reduce the production costs of the Upstream segment, „and the decrease of production was in line with the forecast for the entire year 2017, due to the contribution of Lebada Est NAG project.
„EBIT CCA, excluding the special elements in Downstream, increased by 3% compared to Q1/2016 due to an overall improved performance, a strict cost management, and the support of the robust refining margins. EBIT in Q1/2017 was also supported by the fiscal relief measures in Romania, particularly the elimination of the special construction tax, in January 2017,” said Mariana Gheorghe.
The 2017 first-quarter report puts the 27% increase of sales in Q1/2017 compared to Q1/2016 on the „significantly higher oil prices” and „higher gas and electricity sales volume that offset the slight decrease in the quantities of petroleum products sold and the decline in natural gas prices”.
Downstream Oil sales accounted for 69% of total consolidated sales of 4.653 billion lei (excluding excise duties), while Downstream Gas sales accounted for 28%.
Market environment perspectives
OMV Petrom expects that:
the average price of Brent crude oil to be USD 55/barrel,
the demand for natural gas and energy in Romania to be similar to 2016,
„Lower prices of petroleum products, as a result of the tax relief measures in Romania, will continue to support the demand”, according to the report mentioned.
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