OMV Petrom Group posts losses in 2015 due to the steep drop in oil price

Swift response to the drop in oil price: CAPEX down 49% yoy, OPEX in USD/boe down 29% yoy leading to neutral free cash flow; Upstream: Group production down 3% yoy, due to offshore planned works and lower level of investments; impairments of RON 1.9 bn were recorded in Q4/15; Downstream Oil: improved performance on higher refining margins and oil product demand; Downstream Gas: gas sales volumes down 7%, due to overall declining demand; double net electrical output; Neptun Deep: exploration drilling in yet unchartered territory successfully completed; sufficiently encouraging results to continue assessment of commercial viability; 2016: further deterioration of the market environment will lead to reduced investments by 10-20% vs. 2015, portfolio optimization and further cost efficiency initiatives – a release from the group issued on Thursday reads.
Mariana Gheorghe, CEO of OMV Petrom S.A., said: “In 2015, the steep drop in oil price severely affected our Group’s financial results. The negative contribution from Upstream was partially compensated by the strong Downstream performance, which proves the benefits of our integrated business. Throughout the year, we responded swiftly to the weakening market fundamentals and successfully delivered on our promises to contain costs and maintain a competitive position, while reducing CAPEX by 38% compared to 2014. Nevertheless, we managed to maintain a broadly stable hydrocarbon production, capitalizing on previous years’ investments and discoveries. Moreover, I am proud to announce that, together with our partner ExxonMobil, we completed the second exploration drilling campaign in the Neptun block, which included in total seven wells drilled, most of which encountered gas, and a successful well test of the Domino structure. The results are sufficiently encouraging to continue to assess the commercial viability for developing the discovered resources.
In response to the prolonged depressed market environment, we will continue to adjust our activity level, maintaining a strong balance sheet and protecting our free cash flow position. This includes management’s intention to propose that no dividends will be distributed in respect of 2015. A stable, predictable and investment-friendly fiscal and regulatory framework is crucial to enable us to maintain future investments for both offsetting natural decline and further onshore and offshore development.”
The net result attributable to the OMV Petrom S.A. shareholders was a loss of RON 676 million, as compared with net profit of RON 2.103 billion recorded in 2014. The loss per share was of RON 0.0119 in 2015 as compared to a profit per share of RON 0.0371 in the previous year.