Release Date: October 29, 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 robust operational performance despite lower oil and gas prices, supported by integration benefits.
- The company is progressing well with its Neptun Deep project, maintaining its schedule for drilling the first well in 2025 and achieving first gas in 2027.
- OMV Petrom SA is on track to achieve its renewable power capacity target of 2.5 gigawatts by 2030, with significant progress in photovoltaic projects.
- The company has positioned itself as the largest player in e-mobility in Romania, aiming to reach around 1,000 fast and ultra-fast charging points by the end of the year.
- OMV Petrom SA continues to focus on reducing greenhouse gas intensity, with a year-on-year decrease in GHG intensity across all business segments.
Negative Points
- OMV Petrom SA's clean CCS operating result decreased by 36% year on year, reflecting lower oil and gas prices and regulatory impacts.
- The company's refining margins dropped significantly, with a 58% decrease year on year, mainly due to weaker gasoline and middle distillate spreads.
- The gas and power segment faced challenges with decreased prices and margins, alongside negative effects from regulatory changes.
- OMV Petrom SA's operating cash flow declined by 22% year on year, impacted by higher inventories and increased excise payments.
- The company faces high regulatory and taxation burdens in the Romanian gas and power sector, affecting financial results.
Q & A Highlights
Q: Can you provide guidance on portfolio optimization and potential divestments?
A: We are continuously assessing our E&P portfolio for potential high-grading opportunities. However, there are no specific divestments to announce at this time. We will inform stakeholders when there are developments. - Christina Verchere, CEO
Q: Could you clarify the taxation changes, particularly the turnover tax?
A: The 0.5% turnover tax applies for 2024 and 2025. Starting in 2026, OMV Petrom Marketing will be subject to a higher tax, either 1% of sales or 16% of profit tax. The impact is estimated at up to RON250 million annually for 2024 and 2025, and less than RON100 million annually from 2026. - Alina Popa, CFO
Q: What is the outlook for refining margins in 2025 and 2026?
A: We have lowered our 2024 refining margin estimate due to weaker gasoline and middle distillate spreads. For 2025 and 2026, we will provide updated guidance in February. - Christina Verchere, CEO
Q: Why has the depreciation expense in the E&P segment decreased in recent quarters?
A: The decrease is due to lower production volumes, which reduce unit of production depreciation, and the absence of one-off impairments that were present in Q3 last year. Future depreciation will depend on production levels. - Alina Popa, CFO
Q: How do you see gas prices and regulatory changes affecting profitability in Q4?
A: We expect gas prices to increase in Q4, although BRM prices remain lower than other benchmarks. Regulatory changes since April 2024 have negatively impacted us, particularly in the power sector. Higher storage obligations may affect profitability depending on gas sale levels. - Alina Popa, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
