OMV Aktiengesellschaft, Central Europe's leading oil and gas group, generated very satisfactory results in the first three quarters 2007. From January to September 2007 Group sales increased by 4% to EUR 14.31 bn, EBIT (earnings before interest and taxes) amounted to EUR 1.69 bn and increased by 2% compared to the same period 2006. Petrom's contribution to EBIT was EUR 506 mn. Net income after minorities increased by 16% to EUR 1.26 bn. Cash flow of operations decrease by 9% to EUR 1.57 bn. The gearing ratio is 21%.
OMV's CEO Wolfgang Ruttenstorfer stated: "We have generated strong results in the first three quarters of this year. This once again evidences the success of our strategy - to advance our growth as an integrated oil and gas group. All business segments are performing well. We have ideally positioned ourselves to take advantage of the opportunity the European growth belt has to offer and are consistently pursuing our 2010 strategy.
In addition to this strategy we consider a combination of OMV and MOL a unique opportunity which would generate a high level of synergies and value for the shareholders of both companies. The Board would be prepared to make an offer to MOL's shareholders of HUF 32,000 per share after technical impediments, namely the 10% voting restriction in MOL's Articles of Association and MOL management's effective control of shares in MOL, are removed.
With this Declaration of Intent we have put our cards on the table and we want to enable shareholders of MOL to decide for themselves. In the course of the numerous talks with shareholders of MOL our plans have predominantly met with approval."
From January to September 2007, total investments of EUR 3 bn, including the acquisition of MOL shares, were significantly higher than those in the same period 2006 (1-9/06: EUR 1.93 bn). EUR 936 mn of these investments was directed into E&P, mostly for the development of fields in Kazakhstan, Austria, Great Britain and New Zealand as well as in the modernisation of Petrom. EUR 709 mn was invested into R&M. This includes investments in petrochemical projects in Burghausen and Schwechat, quality enhancement projects in the refinery segment, as well as increasing OMV's share in Petrol Ofisi to 37.13% at the end of September 2007. In the gas segment EUR 98 mn were invested, mostly into the expansion of the West-Austria gas pipeline (WAG).
Comparing third quarters, sales in 2007 increased by 6% to approximately EUR 5.14 bn and EBIT rose by 23% to EUR 619 mn. Net income after minorities - which is so far the highest quarterly result of OMV - increased by 40% to EUR 517 mn. At the end of September 2007, OMV Group (incl. Petrom) had 35,926 employees.
Refining and Marketing incl. Petrochemicals: respectable contribution of Petrochemicals West
In the first three quarters 2007, sales in this segment declined by 10% to approximately EUR 11.76 bn, mainly due to refinery shutdowns and mild weather that lowered demand for heating oil. Compared to the same period 2006, EBIT of EUR 203 mn was substantially higher (1-9/06: EUR 165 mn). In particular, this reflects a stronger environment in petrochemicals and Marketing.
The EBIT contribution of petrochemicals (excl. Petrom) was EUR 80 mn and increased by 22% in comparison to the first nine months 2006 (1-9/06: EUR 66 mn). This is due to higher margins, in particular in Q1/07.
Due to refinery shutdowns, OMV's overall capacity utilisation of the refineries was 86% (1-9/06: 90%).
Sales volumes in marketing decreased by 7% to 12.78 mn t compared to the same period 2006 (1-9/06: 13.76 mn t). This was caused by lower sales volumes of heating oil. Higher sales volumes in the retail business, where the increase in efficiency had positive effects (in Romania the number of premium filling stations increased to 86 and almost all Petrom filling stations have been adapted to the modern full agency system), could not offset the decline of sales in the commercial business segment.
As of the end of September 2007, OMV including Petrom operated 2,518 filling stations. The Group's market share in Central Europe amounts to 20% and reflects OMV's clear No. 1 position in this region.
OMV further focuses on qualitative growth in the retail business. With the repositioning of the VIVA shops - making the VIVA experience one to savour - the Group is strengthening its position as market leader in quality and service in the region. By 2010 up to every second filling station in Central Europe will be equipped in accordance with the new customer friendly concept. By launching OMV BIXXOL, the Group aims to increase its sales volumes in lubricants. Here the lubricant capacities of Turkey's Petrol Offisi will be utilised as well. With the expansion of the business segment "Commercial Road Transport", OMV is developing a new filling station network in Central Europe that is custom-make to match the need of the transport business. The first filling station of this kind was opened in March of this year.
Exploration and Production: expanding the international core regions
Segment sales decreased slightly by 1% to approximately EUR 2.96 bn (1-9/06: EUR 2.99 bn) in particular due to weaker USD-exchange rates.
The average realised crude price of USD 60.84/bbl (barrel) was 2% above the comparable 2006 value and the gas price was 12% higher. EBIT in this segment decreased by 8% to EUR 1.37 bn, mainly due to a lower contribution from Petrom, which was affected by lower volumes and a negative exchange rate.
Total production of oil, NGL (natural gas liquids) and gas declined slightly by 1% to 87.5 mn boe (barrels of oil equivalent), which corresponds to an average daily production of 320,000 boe (1-9/06: 323,000 boe/d). Oil and NGL production of 44.4 mn bbl declined slightly and was 4% lower than last year's level (1-9/06: 46.1 mn bbl).
This was due to the exclusion of the assets in South America and lower volumes in Romania caused by a natural decline in production. However, Petrom's oil production was successfully stabilised in the second quarter of this year thanks to a production optimisation programme. 1,214 wells were modernised in the first nine months of 2007. The modernisation programme aims to increase the efficiency and the level of production, as well as reduce production costs.
Gas production increased by 3% and was 43.03 mn boe (1-9/06: 42.04 mn boe). Slightly lower production volumes at Petrom could be more than compensated by additional volumes of the recently developed gas field Pohokura (New Zealand).
In the first three quarters of 2007, this segment further strengthened its international core regions. OMV acquired four offshore exploration licenses in Norway and two offshore exploration licenses in the Great Britain, as well as an offshore exploration license in Ireland, all of which show strong potential for future growth. The core region Australia/New Zealand was expanded with four new offshore explorations licenses in New Zealand as well four offshore licenses in Australia. In this region, OMV aims to strengthen its position as New Zealand's third largest producer of gas. In Great Britain one oil production site was successfully tested.
In Libya, OMV made two oil discoveries in the exploration block NC 200 in the Southern Sahara Desert. In Pakistan, the Group further strengthened its position: in the Sawan gas field OMV managed to increase its sales volumes by more than 15% thanks to additional wells and improved facilities. The Group discovered gas in successful exploration wells in the Latif 1 exploration block near Sawan and in Tajjail 1 in the Gambat block.
In Austria EUR 120 mn will be invest in the restructuring of production facilities in the Vienna basin by 2009. OMV aims to sustainably secure the oil and gas production in this region.
Gas: EBIT almost doubled
Segment sales from January to September 2007 rose by 105% to approximately EUR 2.05 bn compared to the same period of last year (1-9/06: EUR 1 bn). EBIT increased by 94% to EUR 166 mn (1-9/06: EUR 86 mn). This is due to EconGas being fully consolidated since the fourth quarter 2006 as well as the strong contribution of EconGas, the improved results by Petrom and a strong contribution of the logistics business.
Combined gas sales volumes declined by 13% to 8.79 bcm. On the one hand this is due to the warm winter. On the other hand the assignment of parts of OMV's Russian gas import volumes to GWH and Centrex resulted in lower sales volumes for the Group.
Petrom managed to increase its sales volumes. The share of gas sales volumes generated abroad was further increased thanks to EconGas, further strengthening the segments international position. The total gas transportation capacity sold increased by 10% to 38.45 bcm (1-9/06: 34.99 bcm), mainly due to the start of the TAG Loop II (Trans-Austria gas pipeline) at the end of 2006. The average storage capacities sold increased by 20% to 751,935 cbm/h.
In May 2007 OMV and Gazprom signed a Memorandum of Understanding on further cooperation in the gas business. The two companies have stated their interest to work together more closely on the Central European Gas Hub at Baumgarten (Trading hub) and on future gas storage projects. The aim of this is to develop Baumgarten into the most important trading gas hub in continental Europe. Both companies are seeking to strengthen security of gas supply in Europe.