February 15 (SeeNews) - Romanian natural gas producer Romgaz [BSE:SNG] said on Friday that its 2018 net profit fell by 22% year-on-year to 1.43 billion lei ($339 million/301 million euro), as royalties and taxes increased.
The drop in profit was mainly due to a 51% increase to 445 million lei in petroleum royalty expenses that the company had to pay for 2018, the company said in a financial report submitted to the Bucharest Stock Exchange, BVB.
Also, Romgaz's net profit was affected by a 43% increase of the windfall tax further to the deregulation of prices in the gas sector to 164 million lei.
Romgaz's said its 2017 net profit was adjusted from 1.8 billion lei to 1.6 billion lei with the recognized income from the reimbursement of excise duty for technological gas consumption.
Exploration expenses rose to 247.1 million lei in 2018 from 185 million lei in the previous year, mainly due to a growing number of 3D seismic activities studies. Romgaz stressed that the increase in expenses prove its engagement for the discovery of new reserves.
The company's revenue for 2018 rose 9% on the year to 5 billion lei, due to a 17.7% rise of revenue from sales of internal produced gas and of gas purchased for resale as well as gas from joint ventures. This offset the decrease by 30.6% of revenue from electricity sales and by 41.08% of revenue from storage services. The decrease was due to a 26% drop of storage tariffs approved by the National Regulatory Authority for Energy (ANRE) in April 2018.
The company produced 5.33 million cubic meters of natural gas in 2018, up 3.4% on the year.
Romgaz increased its investments in 2018 to 1.15 billion lei from 781.8 million lei in 2017.
In January, Romgaz said it is considering a partnership with Azerbaijan's oil company Socar in off-shore projects in the Black Sea.
The involvement of the Azerbaijani company with Romgaz in major projects would open the road to Romgaz's expansion on international markets, the company said in at the time.
The company's majority shareholder is the Romanian state with a 70% stake, with the balance of 30% in free float on the BVB.
Shares in Romgaz traded 1.27% lower at 31.1 lei lei by 1004 CET on Friday on the BVB.
(1 euro=4.7451 Romanian lei)