Austrian integrated oil and gas company OMV has deepened its losses in the fourth quarter of 2015 due to low oil price and impairment charges.
OMV on Thursday posted a loss of EUR 1 billion for the fourth quarter of 2015, compared to a loss of EUR 404 million in the corresponding period of 2014.
Total OMV daily production of oil, NGL and gas was 309 kboe/d. This was 3% lower than 318 kboe/d in 4Q 2014, driven by the shut-ins in Libya and Yemen. Production increases in Norway (up by 32%) and New Zealand (up by 19%) partly offset this decline.
In the fourth quarter of 2015, the average Brent price in USD was 43% lower than in 4Q 2014. The Group’s average realized crude price, which reflected the positive impact of the oil price hedges, decreased by 42% and the average realized gas price in USD/1,000 cf decreased by 24% compared to Q4/14.
Rainer Seele, CEO of OMV, said: “The year 2015 was dominated by the reduction in the oil price of close to 50%.
“Despite OMV’s strong integrated business model, providing some resilience in this very challenging market environment, the drop was inevitably reflected in the financial results with OMV’s Clean CCS EBIT down by 38%. The low level of profits in Upstream was partly compensated by a strong contribution from Downstream Oil.
Seele added: “In Upstream, measures were taken to reduce costs and investments, achieving an OPEX decrease in USD/boe of 20% and a CAPEX reduction of 28% vs. 2014.
“We also continued to deliver projects in execution and started production at the Edvard Grieg field in Q4/15. The sharp decrease in oil and gas prices during the year, however, has led to the revision of our future price assumptions, triggering special charges of EUR 3 bn during 2015. Despite these special charges, gearing improved to 28% at year-end, supported by the issuance of hybrid notes in December 2015.
OMV’s capex for 2016 is expected to be around EUR 2.4 billion.
In 2015, OMV implemented a cost reduction program yielding savings of approx. EUR 200 mn compared to 2014. Cost reduction efforts continue, to reflect the current difficult environment, with additional savings of EUR 100 mn targeted in 2017 vs. 2015, OMV said.
Seele also said that the company would cut dividend: “The continued volatility in the market outlook has led the Executive Board to propose a reduced dividend of EUR 1.00 per share for the financial year 2015.
“With our new strategy, we will focus on cash and costs, pursue a sustainable position in Upstream focusing on value over volume growth, continue to strengthen the competitiveness of the Downstream Oil business and restructure the Downstream Gas business to position it for the future.”
For the year 2016, OMV expects the Brent oil price to average around USD 40/bbl. The Brent-Urals spread is anticipated to be wider than in recent years. The gas market environment is expected to remain challenging in 2016.
Offshore Energy Today Staff