OMV Petrom 2014 Profit Falls 56% as Oil Prices Prompt 4Q LossAndra Timu
OMV Petrom SA, Romania’s largest oil company, said its 2014 net income declined 56 percent from a year earlier as falling oil prices caused a loss in the fourth quarter.
Profit dropped to 2.1 billion lei ($539 million) from 4.8 billion lei in 2013 because of cheaper oil and higher production costs, the company said in a statement to the Bucharest bourse on Thursday. Sales fell 11 percent to 21.5 billion lei from 24 billion lei. Company turned to a loss of 304 million lei in the fourth quarter compared with a profit of 1.16 billion lei in the last three months of 2013.
“In light of the volatile and potentially prolonged weaker market fundamentals, we are scaling back our investment plans for 2015 and have intensified cost optimization programs while maintaining our potential growth projects in the Black Sea,” Petrom Chief Executive Officer Mariana Gheorghe said in the statement.
Petrom and Exxon Mobil Corp. are searching for oil and gas off Romania’s Black Sea coast after starting drilling operations in the Neptun block in 2011. OMV AG, Petrom’s majority owner, made a preliminary estimate for the Domino-1 well in 2012 of gas accumulation ranging from 1.5 trillion to 3 trillion cubic feet (42 billion cubic meters to 84 billion cubic meters).
The two companies may have encountered a new gas discovery of about 20 billion cubic meters after drilling a third well, Ziarul Financiar said on Thursday, citing unidentified people in the energy market. Petrom and Exxon denied the estimate.
“Further exploration and appraisal drilling is expected in 2015,” Petrom said in the statement, adding that it plans to invest between 800 million euros and 1.1 billion in Romania this year, with 85 percent of the amount going to exploration and production.
Discoveries in the Black Sea may help Romania, which imports less than 20 percent of its natural gas from Russia, become energy independent by 2020, according to government estimates.