Upstream

In the Upstream Business Segment, OMV continued to reshape its portfolio in line with the focus on improved asset base quality and reserves growth in 2019. Production reached a new record at more than 500 in the fourth quarter 2019. Production costs fell below  7.0/, while the one-year Reserve Replacement Rate reached 135% at year-end.

At a glance

 

 

 

 

 

 

 

2019

2018

Note: The net result from the equity-accounted investment in Pearl and Severneftegazprom (“SNGP,” operator of the Yuzhno Russkoye natural gas field) is reflected in the Operating Results.

1

Capital expenditure including acquisitions, notably the acquisition of Shell's Upstream business in New Zealand for USD 579 mn in Q4/18 and a 50% interest in SapuraOMV for USD 540 mn in Q1/19

2

Average realized prices include hedging effects.

Clean Operating Result

in EUR mn

1,951

2,027

(4)%

Special items

in EUR mn

(71)

95

n.m.

Operating Result

in EUR mn

1,879

2,122

(11)%

Capital expenditure 1

in EUR mn

2,070

3,075

(33)%

Exploration expenditure

in EUR mn

360

300

20%

Exploration expenses

in EUR mn

229

175

31%

Production cost

in USD/boe

6.61

7.01

(6)%

 

 

 

 

 

Total hydrocarbon production

in kboe/d

487

427

14%

Total hydrocarbon production

in mn boe

178

156

14%

Total hydrocarbon sales volumes

in mn boe

169.3

148.7

14%

Proved reserves as of December 31

in mn boe

1,332

1,270

5%

 

 

 

 

 

Average Brent price

in USD/bbl

64.21

71.31

(10)%

Average realized crude price 2

in USD/bbl

61.66

62.13

(1)%

Average realized gas price 2

in USD/1,000 cf

4.08

4.72

(14)%

Financial performance

The clean Operating Result decreased from  2,027 to EUR 1,951 mn in 2019. There were adverse effects resulting from higher depreciation of EUR (382) mn, mainly related to OMV’s acquisitions in New Zealand (/18), the United Arab Emirates (Q2/18), and Malaysia (Q1/19), as well as higher production in Norway. Net market effects had a negative impact of EUR (80) mn, resulting from lower average realized oil and gas prices. This was partially offset by lower hedging losses and positive effects. Gains resulting from improved operational performance amounted to EUR 386 mn and were mainly a consequence of OMV’s acquisitions in New Zealand, the United Arab Emirates, and Malaysia, as well as higher Norwegian output. These effects were negatively impacted by a natural production decline in Romania and the sale of OMV’s Upstream assets in Pakistan in Q2/18. In 2019, OMV Petrom contributed EUR 599 mn to the clean Operating Result compared to  693 in 2018.

Net amounted to EUR (71) mn in 2019 (2018: EUR 95 mn). The Operating Result decreased to EUR 1,879 mn (2018: EUR 2,122 mn).

Production cost excluding royalties decreased by 6% to USD 6.6/boe as a result of higher production coupled with a positive FX development. At OMV Petrom, production cost decreased by 3% to USD 10.9/boe.

Total hydrocarbon production rose by 60 kboe/d to 487 kboe/d, primarily due to the acquisitions in New Zealand, the United Arab Emirates, and Malaysia, as well as higher production in Norway. This was partially offset by lower production in Romania and the divestment of the Upstream operations in Pakistan in Q2/18. In addition, production from the Libyan El Sharara field was shut in at the beginning of 2019 and only resumed in March. Average production in Libya was 16 kboe/d in Q1/19, compared to an average of around 35 kboe/d in the remaining quarters. OMV Petrom’s total production went down by 8 kboe/d to 152 , mainly due to natural decline. Total sales volumes improved by 14% to 169.3 mn boe (2018: 148.7 mn boe), mainly as a result of the acquisitions in New Zealand, the United Arab Emirates, and Malaysia. These contributions were partially offset by lower sales in Romania and the divestment of the Upstream operations in Pakistan in /18.

In 2019, the average Brent price decreased by 10% to USD 64/. The Group’s average realized crude price declined by 1%. This was mainly due to hedging losses in 2018. The average realized gas price in USD/1,000 went down by 14% caused by warmer than-expected winter temperatures, above-average storage levels all across Europe, and a doubling of imports to Europe. Realized gas prices in 2019 were impacted by a realized hedging loss of EUR (51) mn.

Capital expenditure including capitalized E&A was EUR 2,070 mn in 2019 (2018: EUR 3,075 mn). This also included the payment of USD 540 mn for the purchase of the 50% interest in SapuraOMV in Q1/19. In 2018, capital expenditure including capitalized E&A was mainly related to the acquisition of a 20% stake in two offshore oil fields in the United Arab Emirates from ADNOC for  1.5 in Q2/18 and the acquisition of Shell’s Upstream business in New Zealand for USD 579 mn in Q4/18. In 2019, organic capital expenditure was primarily directed to projects in Romania, Norway, and the United Arab Emirates. Exploration expenditure increased by 20% to EUR 360 mn and was mainly related to activities in Romania, Norway, and Austria.

Production

 

 

 

 

 

 

 

 

 

 

2019

2018

 

Oil and NGL

Natural gas 1

Total

Oil and NGL

Natural gas 1

Total

 

in mn bbl

in bcf

in mn boe

in mn boe

in mn bbl

in bcf

in mn boe

in mn boe

1

To convert gas from cf to boe, the following conversion factor was applied in all countries: 1 boe = 6,000 cf; except for Romania, where the following factor was used: 1 boe = 5,400 cf.

2

The figures above include 100% of all fully consolidated companies.

3

The Upstream business in Pakistan was divested on June 28, 2018.

Romania 2

24.1

156.2

28.9

53.0

24.6

168.7

31.2

55.8

Austria

4.0

29.2

4.9

8.9

4.3

30.9

5.2

9.4

Kazakhstan 2

2.1

1.8

0.3

2.4

2.2

1.7

0.3

2.5

Norway

16.6

90.0

15.0

31.6

17.1

60.9

10.1

27.3

Libya

11.1

11.1

10.9

10.9

Tunisia

0.8

3.2

0.5

1.4

1.3

2.9

0.5

1.8

Pakistan 3

0.1

7.0

1.2

1.3

Yemen

1.8

1.8

1.1

1.1

Kurdistan Region of Iraq

0.9

14.2

2.4

3.3

0.9

11.6

1.9

2.8

United Arab Emirates

8.1

8.1

1.8

1.8

New Zealand

4.6

65.2

10.9

15.5

2.1

16.0

2.7

4.8

Malaysia 2

2.1

15.5

2.6

4.7

Russia

218.0

36.3

36.3

218.4

36.4

36.4

Total

76.1

593.2

101.8

177.9

66.5

518.2

89.5

156.0

Reserves development

Proved reserves (1P) as of December 31, 2019, increased to 1,332 mn boe (thereof OMV Petrom 1: 504 mn ). With a one-year Reserve Replacement Rate () of 135% (2018: 180%), a value of over 100% has now been achieved four years in a row. The three-year RRR reached 166% (2018: 160%). The increase in proved reserves is mainly attributed to the acquisition of the stake in SapuraOMV in Malaysia. Further significant revisions followed successful drilling and development activities and a positive production performance in Russia, Norway, and New Zealand.

Proved and probable reserves (2P) increased to 2,378 mn boe (thereof OMV Petrom 1: 786 mn boe) mostly due to the acquisition in Malaysia and successful development activities in the Ghasha concession in the United Arab Emirates.

1 OMV Petrom covers Romania and Kazakhstan.

kboe/d
Thousand barrels of oil equivalent per day
USD
US dollar
boe
Barrel of oil equivalent
EUR
Euro
mn
Million
Q1, Q2, Q3, Q4
First, second, third, fourth quarter of the year
FX
Foreign exchange
EUR
Euro
mn
Million
Special items
Special items are expenses and income reflected in the financial statements that are disclosed separately, as they are not part of underlying ordinary business operations. They are being disclosed separately in order to enable investors to better understand and evaluate OMV Group’s reported financial performance
kboe/d
Thousand barrels of oil equivalent per day
Q1, Q2, Q3, Q4
First, second, third, fourth quarter of the year
bbl
Barrel (1 barrel equals approximately 159 liters)
cf
Standard cubic feet (60°F/16°C)
LNG
Liquefied Natural Gas
USD
US dollar
bn
Billion
boe
Barrel of oil equivalent
RRR
Reserve Replacement Rate; total changes in reserves excluding production, divided by total production