OMV Petrom also said in its financial report that it registered a net profit attributable to shareholders of RON854 million in the first quarter of 2018, compared with RON619 million in the year-earlier period.
Consolidated sales slightly increased by 5% to RON4.875 billion year-on-year in the first quarter of 2018, supported by higher prices for petroleum products and natural gas and by higher electricity sales volumes, partly offset by lower sales volumes of natural gas and lower electricity prices. Downstream Oil represented 70% of total consolidated sales, while Downstream Gas accounted for 28% and Upstream for 2% (sales in Upstream being largely intra-group sales rather than third-party sales).
The group’s overall income stood at RON4.9 billion in the first three months of 2018, compared with RON4.7 billion in the same interval a year before.
The Clean CCS net income attributable to shareholders (excluding special items) was RON752 million, compared with RON586 million in the first quarter of 2017. In the first quarter of 2018, special items comprised a net income of RON71 million, while inventory holding gains amounted to RON50 million. In the first three months of 2017, net special income amounted to RON5 million and inventory holding gains totaled RON26 million.
The Reported Operating Result for the first quarter of 2018 increased to RON 1,080 million, compared to RON798 million in the same period in 2017, driven mainly by higher sales revenues and cost optimization.
The net financial result slightly deteriorated from a loss of RON56 million in the first quarter of 2017 to a loss of RON63 million in the first quarter of 2018, reflecting mainly higher FX losses partially offset by the net increase in interest income. As a result, the profit before tax for the first quarter of 2018 amounted to RON1.017 million and increased by 37% compared with the first quarter of 2017.
Income tax amounted to RON163 million, while the effective tax rate was 16% in the first quarter of 2018, versus 17% in the same period in 2017. The net income attributable to shareholders was RON854 million, versus RON619 million in the first three months of 2017.
Capital expenditure increased to RON843 million in the first quarter of 2018, compared with RON353 million in the first three months of 2017, consisting mainly of Upstream investments to the amount of RON653 million in the first quarter of 2018, compared to RON324 million in the same period in 2017. Downstream investments amounted to RON190 million, versus RON29 million in the first quarter of 2017, of which RON189 million were in Downstream Oil.
”According to the last OMV Petrom Group risk assessment exercise in February 2018, the main uncertainties that could impact the Company’s performance remain the commodity price risk, operational risks as well as political and regulatory risk. Through the nature of its business of extracting, processing, transporting and selling hydrocarbons, OMV Petrom is inherently exposed to safety and environmental risks. Through its HSSE and risk management programs, OMV Petrom remains committed to being in line with industry standards. In terms of regulatory risk, the Company is in dialogue with the Romanian authorities on topics of relevance for the industry. In recent months, we have seen a number of fiscal and regulatory initiatives discussed and/or implemented. This increases legislative volatility and influences the overall business environment”, the report also reads.
For 2018, OMV Petrom expects to generate a positive free cash flow after dividends supported by the favorable commodity prices. CAPEX (including capitalized exploration and appraisal) is currently expected to reach nearly RON 3.7 billion, of which around 75% in Upstream. As regards the Neptun Deep project, a final investment decision is expected in the second half of 2018. On the Upstream segment, investments are envisaged at nearly RON2.8 billion (excluding E&A), including more than 100 new wells and sidetracks, around 1,000 workovers and the Neptun Deep project. Exploration expenditures are estimated at nearly RON 230 million.
On the Downstream segment, the company expects the refinery utilization rate to exceed 85%, which includes the impact of the planned six-week full-site turnaround scheduled for the second quarter of 2018 and relatively similar gas sales volumes and higher net electrical output versus 2017.