OMV Warns of Impairments on New Oil Price Outlook
Austrian integrated energy company OMV has cut its long term Brent oil price assumption from $75/barrel to $60/b in line with its belief that the energy transition is accelerating, it said late September 21. It also announced non-cash impairments for the third quarter to reflect this loss of value.
It said it would position its portfolio towards products that "are also essential in a widely decarbonised world. With this strategy, we are building on OMV’s proven concept of integration and make our company less vulnerable to the long-term oil price development. The recently announced acquisition of a controlling interest in Borealis, which extends OMV’s value chain towards high-value chemical products, is an important milestone for this ambition,” said the company's newly reappointed CFO Reinhard Florey.
For 2021, the company expects a continued macroeconomic impact of the Covid-19 pandemic and confirms its oil price forecast of $50/b. For the following two years it will be $60/b, down from $70/b in 2022 and from $75/b in 2023. For the years 2024 to 2029 it is working on $65/b, down from $75/b, which is expected to gradually decline to $60/b until 2035 but to stay at that level thereafter.
The updated price planning assumptions are expected to result in non-cash net impairments of around €600 ($700) mn post-tax in the third quarter results, net of minor impairment reversals. The impairments in Upstream are roughly equally ascribed to tangible assets and write-offs of exploration intangibles.
OMV is aiming to achieve net-zero operations by 2050 or sooner but it says its new outlook will ensure profitability "in a lower oil price environment."