August 10 (SeeNews) - Romania's top oil and gas group, OMV Petrom [BSE:SNP], said on Thursday its net profit tripled year-on-year to 1.21 billion lei ($311million/265 million euro) in the first half of 2017.
The strong increase came on the back of increased oil prices, strong refining margins, higher demand for the company's products and strict cost discipline, OMV Petrom said in its second-quarter unaudited consolidated financial statement.
Sales rose 25% to 9.26 billion lei during January-June, spurred by significantly higher crude oil prices and higher volumes of petroleum products, natural gas and electricity but partially offset by lower average selling prices for natural gas. The downstream segment contributed 73% of total sales, downstream gas accounted for 24% and upstream for 2%.
"We revised down our 2017 CAPEX guidance to 0.7 billion lei from 0.8 billion lei, due to wells portfolio optimizations, savings and project revisions; nevertheless, we are prepared for a ramp up in investments in the second half of 2017, especially given our strong balance sheet," OMV Petrom CEO, Mariana Gheorghe, said in the statement.
Capital expenditures fell to 913 million lei in the first half of 2017 from 1.33 billion lei in the year ago period, impacted by significant cuts in the upstream segment.
In the upstream segment, OMV Petrom posted an 887 million lei operating result, compared to a 71 million lei loss in the first half of 2016, impacted by personnel restructuring charges and write-offs of exploration assets.
Total hydrocarbon production shrank 4% to 30.73 million barrels of oil equivalent (boe) in the six months through June, due to lower output in both Romania and Kazakhstan. Domestic crude oil and natural gas liquids production was 13.8 million barrels, 6% lower than in the first half of 2016, mainly due to the natural decline and bad weather impact.
Exploration expenditures decreased 68% year-on-year to 78 million lei in the first six months of 2017, as the exploration drilling activities in the Neptun Deep block were finalized in January 2016.
In the downstream segment, the group's operating result increased 4% on the year to 657 million lei in the January-June period of 2017, driven by better refining margins, improved retail demand and the low base effect of the prior year turnaround at the Petrobrazi refinery.
Total sales of refined petroleum products increased 6% year-on-year to 2.41 million tonnes in the six months through June. Gas sales volumes grew by an annual 10% to 27.29 TWh while net electricity output stayed flat at 0.91 TWh.
In the second quarter alone, OMV Petrom's net profit increased to 597 million lei from 118 million lei a year earlier, while sales rose 23% on the year to 4.6 billion lei.
OMV Petrom turned to a 1.038 billion lei net profit in 2016, from a 690 million lei loss in the previous year.
In July, OMV Petrom [BSE:SNP] has signed a contract for the sale of its Dorobantu wind park to Transeastern Power B.V. for 23 million euro ($26.5 million).
The transaction is pending approval from Romania's competition authority and is expected by end of this year. The main rationale for the sale is that wind power activities are not part of the strategic directions of the company.
Also in July, OMV Petrom has broken ground on a new 60 million euro unit at its Petrobrazi refinery and inaugurated a new railway section inside the refinery following a 1.7 million euro investment.
Romania sold Petrom to OMV in late 2004. OMV owns a stake of 51.01% in OMV Petrom, the Romanian state, via the energy ministry holds 20.64%, Fondul Proprietatea owns 12.57%, and 15.78% is in free float on the Bucharest Stock Exchange and the London Stock Exchange.
Shares of blue chip OMV Petrom were traded 2.19% higher at 0.3270 lei as at 0934 CET on the Bucharest bourse.
(1 euro=4.5687 lei)