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OMV Petrom is not well positioned so as to take advantage of the changes within the market, according to a Wood & Company brokerage house report published on InvestingRomania.
"We like Petrom's leadership, its diversified low-risk business model and long-term prospects. In our opinion, the company is not well positioned so as to take advantage of the changes in the market. However, although Petrom has a price-performance ratio from the SPO (e.n. Secondary Public Offering), it has reduced the growth potential level since October 2016, and from our point of view, the company is still underestimated," reads the document.
According to the source, the natural gas price has benefited from a recovery starting with October 2016 and that should save the Romanian market and its investors from the asymmetric risk associated with an import-only market.
"In the period ahead, we will see a recovery in volumes and prices, a renewal of the tax and copyright system, investment in infrastructure and new development projects from both companies (Romgaz and OMV Petrom - e.n.), and namely the production and income volume. Of the two companies, we prefer Romgaz, a larger beneficiary of recovery, with the opportunity to capitalize more quickly on new markets when the infrastructure is completed," the source quoted.
According to the source, Petrom has done a very good job by maintaining production, but has lagged behind with the replacement of reserves in recent years, only the Neptun project being able to solve this.
"We see Petrom as a disciplined low-cost producer with a balanced business model. It has a small but profitable downstream business where risks can arise from," the report further says.
As far as Neptun Deep is concerned, the document says that this investment could change the company's prospects, but the realization of this project will be carried out in the future.
Last year's spring, the OMV CEO, Reiner Seele declared in Bucharest that Petrom and ExxonMobil will not start gas production in the Neptun perimeter of the Black Sea sooner than 2020 as no final investment decision has been made so far.
OMV Petrom and the Americans from ExxonMobil have invested a total of 1.5 billion euro from 2008 until now in the Neptun perimeter.
Mariana Gheorghe, CEO of OMV Petrom, announced this February that the Group targets investment in advanced technologies for the next few years, anticipating an industrial revolution as well as expansion in the Black Sea, the Mediterranean Sea and the Caspian region.
According to Mariana Gheorghe, Petrom aims one billion euro investment per year and the target is a reserve replacement rate of 100 pct in 2021.
