The low oil price strongly impacted Romanian OMV Petrom’s financial results in the first quarter.

Oil&gas group OMV Petrom saw its net profit decline by 68% in the first quarter of 2015 compared to the same period of 2015, to EUR 77.5 million. The group’s consolidated sales went down by 19%, to EUR 960 million, according to the group’s quarterly report.

“On the back of previous investments, Romanian hydrocarbon production advanced in Q1/15 by approximately 2% yoy, on higher contribution from well workovers and field (re)developments. Nevertheless, the Upstream result was affected by the sharp drop in oil prices, which was only partly compensated by positive FX effects and slightly higher sales volumes,” said Mariana Gheorghe, OMV Petrom CEO, in a statement to investors.

The lower oil and fuel prices were partly offset by higher oil and gas production, on the upstream segment, and by higher gas and fuel sales on the downstream segment.

“In Downstream Oil, refining contribution was strong, triggered by solid refining margins and improved operational performance, while in marketing, retail sales volumes advanced by 4% yoy,” said Mariana Gheorghe.

Gas sales volumes to third parties also increased by 33% while average gas prices went up by 5%.

However, although the downstream operational profit (EBIT) tripled to EUR 77.5 million, the upstream result was eight times lower, at EUR 36.8 million. The group’s EBIT thus dropped by two-thirds, to EUR 111 million.

“In response to the low crude price environment, we scaled back our 2015 group investments by about 30% yoy and continued to optimize our cost structure, measures which are expected to protect our free cash flow position. Nevertheless, these initiatives will impact our hydrocarbon production in the future,” OMV Petrom’s CEO explained.

OMV Petrom share price declined by 0.5% on Monday, May 18, after the company announced its results, as most investors expected the lower profit. The company’s shares have lost 11% in the last 12 months.

OMV Petrom’s market capitalization currently stands at EUR 4.95 billion.

Romania’s OMV Petrom cuts dividends on lower profits, shares drop

Andrei Chirileasa, andrei@romania-insider.com