RO oil&gas group OMV Petrom expects its profit to increase by a third this year

Romanian oil and gas group OMV Petrom (SNP), the most valuable company listed on the Bucharest Stock Exchange, projects for this year a 32% rise of its net profit to RON 1.824 billion (EUR 370 million) - or roughly half of the bottom line posted in 2019.

Last year, the group's consolidated earnings shrank by two-thirds (-64%) to RON 1.3 bln (EUR 266 mln).

The sales revenues are projected to rise marginally by 3% to RON 15.9 bln (EUR 3 bln) due to price increases and higher sales volumes of electricity and petroleum products, partially driven by low base effects. Meanwhile, the gas sales to third parties are expected to drop by over a quarter (26.5%).

The company's management expects operating results in 2021 to benefit from an improved market environment, increased demand for electricity and oil products, and continued cost optimization programs.

The hydrocarbon production projected for this year is 45.8 million boe, 9.3% lower than in 2019, with a steeper decline for gas production (-14%) and a lower one for oil production (-3.8%). Part of the decline is due to the sale of 40 marginal fields as OMV Petrom plans to focus on the most profitable barrels.

"Full-year average production decline is estimated to be around 5% compared with 2020, excluding portfolio optimization," reads the company's report.

OMV Petrom built its budget on an average Brent oil price of USD 50/bbl, refining margins above USD 4/bbl, and lower gas prices than in 2020. A drop in the average Brent oil price of USD 1/bbl would have a negative impact of EUR 20 mln on the group's operating result.

(Photo: OMV Petrom on Flickr)