OMV Petrom SA, Romania’s biggest oil company, said its first-quarter profit fell 68 percent from a year earlier due to lower oil prices and warned it may be forced to reduce investment and production through 2017.
Net income decreased to 349 million lei ($90 million) from 1.08 billion lei in the first quarter of 2014 as the average Urals crude price fell 51 percent to $52.89 a barrel, the company said in a statement on its website on Monday in Bucharest. Sales fell 19 percent to 4.27 billion lei, it said.
Petrom is cutting back investment at a time when it’s searching for new gas discoveries in the Black Sea alongside Exxon Mobil Corp. and setting up partnerships with other international companies, such as Repsol SA to find more onshore reserves in Romania. The company wants to unlock more resources from already-mature fields to offset a naturally-declining production in Romania.
“In response to the low crude price environment, we scaled back our 2015 group investments” and “continued to optimize our cost structure, measures which are expected to protect our free cash-flow position,” Chief Executive Officer Mariana Gheorghe said. “Nevertheless, these initiatives will impact our hydrocarbon production in the future.”
The Bucharest-based company cut its investment plans for this year by about 30 percent and may continue to lower its upstream spending by as much as 35 percent through 2017 due to “a potentially prolonged low price environment,” it said.
Oil and gas production may drop by as much as 4 percent during that period as well, after the company succeeded in boosting its Romanian output in 2014 for a second year in a row, according to the statement.
Petrom plans to invest about 1 billion euros ($1.1 billion) this year, with 85 percent of spending earmarked for upstream operations, including its Black Sea drilling.
As the offshore drilling was completed at two deep-water wells, Petrom and Exxon are considering additional exploration targets for 2015, Petrom said.