- Brent Price: Averaged $85 per barrel for Q2 2024, a 9% increase year on year.
- Indicator Refining Margin: $9.60 per barrel in Q2 2024, 14% lower year on year.
- Clean CCS Operating Result: RON1.4 billion, 15% lower year on year.
- Operating Cash Flow: RON1.1 billion, 156% higher year on year.
- Clean CCS Return on Average Capital Employed: Almost 24 percentage points.
- Hydrocarbon Production: Decreased by 3% year on year.
- Production Cost per Barrel of Oil Equivalent: Increased by 1% to $15.62.
- Refinery Utilization Rate: 98%.
- Total Refined Product Sales Volumes: Increased by 24% year on year.
- Total Gas Sales Volumes: 18% lower year on year.
- CapEx: RON2.4 billion for H1 2024, slightly increased year on year.
- Sales: Increased by 4% year on year.
- Clean Operating Result in Exploration and Production: RON0.8 billion, 29% lower year on year.
- Clean CCS Operating Result in Refining and Marketing: RON0.7 billion, 5 times higher year on year.
- Clean Operating Result in Gas and Power: Negative, at minus RON51 million.
- Clean CCS Net Income Attributable to Stockholders: Decreased by 19% year on year to RON1.2 billion.
- Cash Generated from Operating Activities: RON1.9 billion, 37% higher year on year.
- Net Payments for Investing Activities: RON0.7 billion, lower by 56% year on year.
- Net Cash Position Including Leases: RON12.1 billion at the end of June 2024.
- Base Dividends for Financial Year 2023: RON2.6 billion, paid starting June 5, 2024.
- Special Dividends: RON1.9 billion, to be paid starting September 3, 2024.
Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- OMV Petrom SA (BSE:SNP, Financial) reported a 156% year-on-year increase in operating cash flow for Q2 2024, reaching RON1.1 billion.
- The company achieved an excellent refinery utilization rate of 98%, with total refined product sales volumes increasing by 24% year on year.
- OMV Petrom SA (BSE:SNP) made significant progress in its Neptun Deep project, remaining on schedule for drilling the first well in 2025 and first gas in 2027.
- The company secured feedstock for its SAF and HVO production in Petrobrazi refinery starting 2028, ensuring a sustainable supply chain.
- OMV Petrom SA (BSE:SNP) announced the distribution of a special dividend of RON0.03 per share, with payment starting from September 3, 2024.
Negative Points
- The clean CCS operating result for Q2 2024 was 15% lower year on year, at RON1.4 billion.
- Hydrocarbon production decreased by 3% due to natural decline in main fields, despite good results from workover jobs and new wells.
- The gas and power segment reported a negative clean operating result of minus RON51 million, impacted by market developments and regulatory changes.
- OMV Petrom SA (BSE:SNP) faced a high double-digit million euro negative net impact from regulatory changes for April to December 2024.
- Production cost per barrel of oil equivalent increased by 1% year on year to $15.62, driven by lower volumes available for sale and higher personnel costs.
Q & A Highlights
Q: Regarding the gas storage obligation, is this a one-off due to current regulatory framework? Or should we consider higher storage obligations further on as well? And what is the storage obligation for the full year?
A: The increase in gas storage obligation is linked to the EU regulation due to the Russian gas crisis, requiring 90% of storage filled by the end of the storage season. This obligation will terminate at the end of this gas year and should not repeat next year. The storage obligation for this year is around 5 terawatt hours, up from 2.1 terawatt hours last year.
Q: Can you provide details on the renewables pipeline, specifically how much of the 2 gigawatts are attributable to Petrom and the timeline for commissioning?
A: The portfolio includes 1.1 gigawatts with Renovatio, 450 megawatts with Oltenia (50% stake), and 710 megawatts in Teleorman (100% OMV Petrom). Most of the power should come online in 2027, with some projects in 2026 and others in late 2027 or early 2028.
Q: Did you have any power sales on March this quarter? And what were the royalties and windfall tax paid in the second quarter?
A: Power sales on matches were lower in Q2 due to a shutdown and no additional contracts. Royalties paid in Q2 were approximately RON190 million, with an additional RON75 million in supplemental gas tax. The new royalty rates apply to new concessions or those without stipulated rates.
Q: What are the regulated gas volumes for the following quarters?
A: For Q3, the regulated gas volume is 1 terawatt hour; for Q4, 2.3 terawatt hours; and for Q1 2025, 2.6 terawatt hours. The full-year 2024 estimate is 7.9 terawatt hours, down from 10.4 terawatt hours in 2023.
Q: Could you provide more granularity on the loss reported by the G&P segment? How much was due to legislative changes and other factors?
A: The loss was mainly due to the reversal of a provision and the inability to recover CO2 costs. The high storage obligations also impacted the segment. Q3 is expected to be better than Q2 due to full operation of the power plant, but Q4 will depend on winter temperatures and demand.
Q: Do you expect the regulation impacting CO2 cost recovery to change next year?
A: The current regulation ends this year, and we do not expect any negative impact next year. From Q1 next year, we will have a free market, eliminating this issue.
Q: What are your estimates for Brent and power prices for 2030, and what justifies these estimates?
A: Our estimates are based on market intelligence, supply and demand analysis, and geopolitical context. We expect significant growth in electrification to drive power prices up. Our strategy is robust even in downside scenarios.
Q: How do you plan to achieve the reduction in E&P OpEx to $8 per BOE by 2030?
A: We aim to maintain OpEx around USD6 per barrel through strict cost management, optimizing shutdowns, and managing deferments and declines. We will provide further details if needed.
Q: Do you plan any divestments of oil and gas assets this year?
A: No, we do not have any plans for divestments in 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
