OMV Petrom anticipates 3.7 bln lei worth of CAPEX this year, H1 investment up 130 pct

OMV Petrom anticipates CAPEX (including capitalized exploration and appraisal) to be around 3.7 bln lei this year, of which around 75 percent will be in the Upstream exploitation and production segment; the company reported investments of 2.1 billion lei in H1 2018, up 130 percent compared to the same period last year, as per the Group's consolidated financial statements (unaudited), released on Thursday. 

The increase in investments is mainly due to a ramp-up in drilling of development and exploration wells, and intensified works in facilities projects in the Upstream segment. 

Upstream investments over January - June 2018 amounted to 1.44 billion lei, compared to 797 million lei in the same period last year. For the entire year, the company estimates 2.8 bln lei worth of investments in this segment, including more than 100 new wells and sidetracks, about 1,000 workovers and the Neptun Deep project. 

"We are aiming a final investment decision this year [regarding Neptun Deep], depending on a stable fiscal regime, gas market liberalization and gas infrastructure development," the company document states. 

The company also plans divesting another 50 - 60 fields, as it focuses on the most profitable barrels. 

In Downstream Oil, the increase was mainly due to investments directed to the Petrobrazi refinery turnaround, tie-in projects and the Polyfuel growth project. Downstream investments amounted to 661 mln lei in H1, as to 115 mln in the same period of the year before; thereof, 635 mln lei were in Downstream Oil (105 mln lei in H1 2017). 

Investments in the Corporate and Other were nil, compared to one million lei in the first six months of 2017. 

The Group's total hydrocarbon production in the first half of this year was 29.18 million boe (barrels of oil equivalent). In Romania, total oil and gas production was 27.90 mln boe, 5 percent lower compared to 29.39 mln boe in H1 2017. Crude oil and NGL production in Romania was 12.20 mln bbl, 3 percent lower compared to H1 2017, mainly due to the natural decline. Gas production in Romania decreased by 7 percent to 15.70 mln boe, due to the natural decline in the main gas fields (Totea Deep and Lebada East), the one-time effect of works and equipment replacement in the Totea-Hurezani area, and maintenance activities. 

Oil and gas production in Kazakhstan decreased by 4 percent to 1.28 mln boe. 

According to OMV Petrom Group's latest risk assessment exercise conducted in February 2018, the main uncertainties that can influence the company's results remain those related to the commodity price risk, operational risks, and political and regulatory risk. 

"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 company said.