OMV AG (OMV), central Europe’s biggest oil company, said second-quarter profit dropped 29 percent as production fell in Libya and its gas-trading unit lost money.
Net income, excluding the cost of revaluing inventories, fell to 321 million euros ($427 million) from 455 million euros a year earlier, the Vienna-based company said today in a statement. That compared with the 318 million-euro average estimate of 10 analysts surveyed by Bloomberg.
Chief Executive Officer Gerhard Roiss is shifting OMV’s focus to exploration and production where he sees higher profits in the long term. It’s investing in oil and gas finds in the Black Sea, North Sea, and the Kurdistan region of Iraq, while selling assets like gas stations in southeast Europe and Austrian gas storage facilities.
Earnings before interest and taxes in its exploration and production unit declined by 20 percent to 597 million euros in the three months to June. Production fell 2.6 percent to 297,000 barrels of oil equivalent per day in the second quarter after fields came to a standstill in Libya due to violent attacks on the oil industry. Floods in Austria also curbed production, the company said last month.
OMV’s gas and power unit swung to a loss of 30 million euros, caused by its Econgas gas trading business. Econgas is burdened by loss-making supply contracts, linked to oil prices, which it is renegotiating with Statoil ASA (STL) and OAO Gazprom, it said in the statement.
OMV also wrote down 55 million euros in the quarter because the Nabucco pipeline project lost its bid to transport gas from the Caspian Sea to central Europe. The demise of Nabucco means OMV will concentrate more on finding its own gas, Roiss said June 26.
OMV has risen 26 percent this year, making it one of the best performers in the 27-company Bloomberg European Energy Index, which has lost 4.2 percent.
To contact the reporter on this story: Boris Groendahl in Vienna at firstname.lastname@example.org
To contact the editor responsible for this story: Frank Connelly at email@example.com