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    OMV Q3 Gains Almost Equal UK Asset Loss

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Summary

austrian energy firm makes profit

by: William Powell

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Natural Gas & LNG News, Corporate, Mergers & Acquisitions, Exploration & Production, Financials, Infrastructure, Pipelines, News By Country, Austria, United Kingdom

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OMV Q3 Gains Almost Equal UK Asset Loss

Austrian energy giant OMV reported a Q3 2016 profit before tax and interest of €415mn ($460mn) November 9. It also recorded a €458mn impairment in Q3 in relation to the "up to"  $1bn (€0.9bn) sale of its UK assets in their entirety. That sale has now been confirmed on the same terms NGW reported November 8, suggesting the company received only about two-thirds of their book value. The amount paid will depend on the Rosebank final investment decision.
 

OMV generated a positive cash flow, with an operating cash flow of €652mn and a free cash flow of €239mn. In Q4 OMV will receive another boost from the sale of its 49% stake in Gas Connect Austria, the gas transportation business. “This will bring us sales proceeds of €601mn,” said CEO Rainer Seele.

OMV expects total production to be slightly above 300,000 boe/d. In Norway, average production is expected to increase to above 65,000 boe/d owing to the ramp-up of Edvard Grieg and better performance from Gullfaks and Gudrun fields.

OMV has continued to “stringently implement" its cost reduction program. Upstream investments will be focused on projects delivering “profitable barrels,” Seele said. This has led to an upstream cut from the planned €2.4bn to €2.0bn in 2016. In 2017, it now plans to invest €2.2bn, a decrease of €200mn against the plan.

“All our efforts are reflected in OMV’s resilient earnings development despite the continuously challenging market environment,” he said.

The improved results of the retail and commercial businesses as well as the higher downstream gas result, almost offset the sharp decline of the OMV indicator refining margin.

For the full year, OMV expects the average Brent oil price to be $44/b. The Brent-Urals spread is anticipated to be wider than in recent years due to increased supply from Saudi Arabia and Iran. The gas market environment in Europe continues to be characterized by oversupply. However, gas prices on European spot markets are expected to show a seasonally upward trend in Q4 16 compared to Q3 16.

 

William Powell

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