January 29, 2015 - 08:00 am (CET)
- Annual investments reduced to a range of EUR 2.5 to 3.0 bn for the period 2015 to 2017
- Integrated business model and solid financial position provide strong basis
- Oil and gas production in the fourth quarter 2014 rose to 318,000 boe/d
OMV has adjusted its medium-term planning in light of the rapid fall of the oil price in recent months. Since the year high in mid-2014, the Brent oil price has fallen by approximately 58%. The Group has acted decisively to maintain profitability and its strong balance sheet.
OMV CEO Gerhard Roiss: "There has been a seismic shift for the industry in recent months. OMV has a responsibility to react accordingly and with caution." Adjusting the investment program and further cost cutting are at the heart of the measures, which have also been announced today in a Trading Statement to the financial markets. OMV Group’s annual investments have now been adjusted to a range of EUR 2.5 to 3.0 bn for the years 2015 to 2017, down from the previous investment plan, which aimed at annual investments of EUR 3.9 bn for the period 2014 to 2016. The majority of investment will continue to go to the Upstream business segment (Exploration and Production).
OMV CFO David C. Davies: "In light of the current backdrop and in line with the industry, we have adjusted both our CAPEX as well as our exploration budget and introduced cost-cutting measures. We are prepared to make further reductions to our investment program if required. Our solid financing structure and comfortable liquidity position means that we are well-equipped for the future."
"We stick to our strategic guidelines. The goal of positioning OMV as an integrated oil and gas company with a focus on Upstream remains unchanged", said CEO Gerhard Roiss. "On a forward looking basis, we remain positive on our flagship projects in execution; however, we are reducing the speed of implementing certain projects which will inevitably lead to a delay in reaching our previously stated 2016 production target of ~400 kboe/d."
OMV has a sufficient portfolio to achieve production increases even in a challenging environment. Production stood at 318,000 boe/d in the fourth quarter 2014. This represents an increase of 15% against the fourth quarter 2013, even though large parts of production from Libya have not come through. Activities in Norway are the most important driver behind the rise in production. The integrated business model allowed OMV to profit from the positive development in the Downstream business in the fourth quarter 2014.
Turbulence on the oil and gas markets has also led OMV to reappraise parts of the portfolio. Asset impairments and provisions totaling approximately EUR 700 mn have been applied in the fourth quarter 2014. These relate primarily to Petrol Ofisi in Turkey and the gas-fired power plant Brazi in Romania.
OMV CEO Gerhard Roiss: “The steps we have taken, demonstrate OMV’s flexibility and ability to take appropriate measures. The entire OMV Executive Board is fully committed to these measures and devotes its full energy to implement these new steps to make OMV fit for the new oil price environment.”
With Group sales of EUR 42.41 bn and a workforce of around 27,000 employees in 2013, OMV Aktiengesellschaft is Austria’s largest listed industrial company. The Exploration and Production business segment has a strong base in Romania and Austria and a growing international portfolio. 2013 daily production stood at approx. 288,000 boe/d. In Gas and Power, OMV sold approximately 425 TWh of gas in 2013. OMV operates a gas pipeline network in Austria and gas storage facilities in Austria and Germany with a capacity of 2.6 bcm. In Refining and Marketing OMV has an annual refining capacity of 17.4 mn tonnes and as of the end of 2013 approximately 4,200 filling stations in 11 countries including Turkey.
Disclaimer regarding forward looking statements:
This document contains forward looking statements. Forward looking statements may be identified by the use of terms such as "outlook", "expect", "anticipate", "target", "estimate", "goal", "plan2, "intend", "may", "objective", "will" and similar terms, or by their context. These forward looking statements are based on beliefs and assumptions currently held by and information currently available to OMV. By their nature, forward looking statements are subject to risks and uncertainties, both known and unknown, because they relate to events and depend on circumstances that will or may occur in the future and are outside the control of OMV. Consequently, the actual results may differ materially from those expressed or implied by the forward looking statements. Therefore, recipients of this trading statement are cautioned not to place undue reliance on these forward looking statements. Neither OMV nor any other person assumes responsibility for the accuracy and completeness of any of the forward looking statements contained in this trading statement. OMV disclaims any obligation to update these forward looking statements to reflect actual results, revised assumptions and expectations and future developments and events. This trading statement does not contain any recommendation or invitation to buy or sell securities in OMV.
The OMV Group’s results for Q4/14 will be published on February 19 2015. The information published here many change and may differ from the final figures which are yet to be published.