May 11 (SeeNews) - Romania's top oil and gas group, OMV Petrom [BSE:SNP], said on Thursday it posted a 618 million lei ($148 million/136 million euro) net profit in the first three months of 2017, more than double compared to the same period of last year.
The strong increase in the company's net profit was backed by a rise of 27% in sales to 4.65 billion lei in January-March, OMV Petrom said in its first-quarter unaudited consolidated financial statement.
Sales were boosted by significantly higher oil prices and increased gas and power sales volumes, which more than offset the slightly lower volumes of petroleum products sold and the decrease in gas prices.
"Increased oil prices and higher retail demand for fuels, coupled with our continued cost discipline, were reflected in a Clean CCS Operating Result of 767 million lei, almost half of the entire 2016 figure," OMV Petrom CEO Mariana Gheorghe said in the statement.
The group's positive results were also supported by fiscal easing in Romania, in particular the elimination of the tax on special constructions starting January 2017, the CEO added.
Capital expenditures fell 54% on the year to 324 million lei in the review period, mainly due to reduced expenditures from Neptun Deep and the finalization of some projects in 2016.
In the upstream segment, OMV Petrom posted an 471 million lei positive operating result, compared to a 80 million lei loss in the first quarter of 2016, mainly due to significantly lower oil prices and lower production costs.
Total hydrocarbon production shrank 4% to 15.31 million barrels of oil equivalent (boe) in the quarter, due to lower production both in Romania and Kazakhstan. Domestic crude oil and natural gas liquids production was 6.85 million barrels, 7% lower than in the first quarter of 2016.
Exploration expenditures decreased 85% to 41 million lei in the first three months of the year, as the exploration drilling activities in the Neptun Deep block were finalized in the first quarter of 2016.
In the downstream segment, the group's operating result fell 10% on the year to 322 million lei, mainly due to performance optimization in refining and sales channels as well as tight cost control.
Total refined products sales edged down 1% to 1.13 million tonnes through March. Gas sales volumes rose by an annual 11% to 15.50 TWh while net electricity output was up 77% to 0.75 TWh.
In April, the shareholders of OMV Petrom approved a 4.56 billion lei investment programme for 2017, up 83% year-on-year, and distribution of dividend for 2016.
OMV Petrom turned to a 1.038 billion lei net profit in 2016, from a 690 million lei loss in the previous year.
Also in April, Austria's OMV, the parent of OMV Petrom took the Romanian state to the Paris International Court of Arbitration over a breach of the privatisation contract regarding compensation for environmental investment. According to the evaluations made by OMV, the total amount it has to recover from the Romanian state to settle this type of investment expenses amounts to 542 million euro ($590 million).
Romania sold Petrom to OMV in late 2004. The Romanian state is obliged under the privatisation contract to fully compensate the company, for a period of 15 years, for any claims related to previous pollution of the environment and to pay all costs related to the closure of oil wells for a period of 30 years.
OMV hold a 51.01% stake in OMV Petrom shares, the Romanian state, via the energy ministry holds 20.64%, Fondul Proprietatea holds 12.57%, and 15.78% is in free float on the Bucharest Stock Exchange and London Stock Exchange.
Blue chip OMV Petrom was trading up 1.24% at 0.3260 lei at 1119 CET on the Bucharest bourse.
(1 euro=4.5481 lei)