November 9 (SeeNews) - Romania's top oil and gas group OMV Petrom [BSE:SNP] said on Wednesday that its consolidated earnings before interest and taxes (EBIT) fell by 14% on the year to 1.13 billion lei ($278 million/251 million euro) in the first nine months, affected by the oil price drop
OMV Petrom also said that it plans 30% lower investments for this year.
The company's sales fell by an annual 14% to 11.65 billion lei in the January-September period, OMV Petrom said in its third quarter unaudited consolidated financial statement.
"In the context of weak oil and gas prices and significantly reduced refining margins vs. previous year, OMV Petrom’s efforts focused on operational resilience and delivered good results. In Q3/16, we continued with CAPEX prioritization and strict cost discipline, which translated into a 1.1 billion lei free cash flow. OMV Petrom CEO Mariana Gheorghe said in the statement. "Our constant focus on the most profitable barrels led us to revisit the CAPEX guidance for 2016, from 0.7 billion euro to 0.6 billion euro, down 30% year on year."
In Upstream, the reduction in production costs and exploration expenses partly compensated the weak prices, while the Downstream contribution to the group result was very strong, driven by good operational performance of both Downstream Oil and Downstream Gas, despite a challenging market environment, Gheorghe added.
OMV Petrom expects capital expenditure for 2016 to be around 600 million euro ($663 million), about 30% lower than last year's expenditure, with some 85% dedicated to the upstream segment.
In the upstream segment, OMV Petrom's EBIT dropped 16% on the year to 242 million lei in the first nine months, mainly affected by higher exploration expenses following write-offs of exploration assets, the statement showed.
Total hydrocarbon production shrank 2% to 48.07 million barrels of oil equivalent (boe) in the first nine months of 2016, while domestic crude oil and natural gas liquids production was 21.98 million barrels, 4% lower than the output in the first nine months of 2015.
Exploration expenditures plummeted 74% to 282 million lei in the first nine months of 2016, mainly due to the completion of drilling activities in the Neptun Block.
In the downstream segment, EBIT rise 13% to 998 million lei. Total refined products sales fell slightly by 1% to 3.66 million tonnes through September. Gas sales volume dropped by an annual 5% to 36.19 TWh, while net electricity output was up 38% to 2.11 TWh.
Also, at the end of September, OMV Petrom Group employee numbers were 8% lower than a year earlier, standing at 14,975.
In mid-October, Romanian investment fund Fondul Proprietatea [BSE: FP] sold a 6.4% stake in OMV Petrom [BSE:SNP] for 682 million lei in four separate transactions. Before the sale Fondul Proprietatea owned 19% of OMV Petrom.
Blue-chip OMV Petrom was trading 1.54% lower at 0.2245 lei at 0946 CET on Wednesday on the Bucharest Stock Exchange.
(1 euro=4.5072 lei)