16 Feb 2017 07:13
OMV Petrom Strategy Update 2021+
Sustainable access to energy for every day modern life
OMV Petrom, the largest integrated oil and gas group in Southeastern Europe, today announces the Strategy Update 2021+. The strategy builds on the strong foundation of the 2012 - 2016 performance to deliver sustainable value creation and attractive shareholder returns. Leveraging its Romanian skills and expertise, OMV Petrom is committed to maintain and strengthen its position as a leading energy player in the region, ensuring its long-term growth, focusing on opportunities that Romania still offers while enhancing customer experience and developing its portfolio through regional expansion.
The strategy will drive performance through three key pillars:
" Enhancing competitiveness in the existing portfolio
" Developing growth options
" Regional expansion
With a clearly defined execution plan, the strategy will address the sustainability of the reserve base, target the maximization of operational efficiency and explore opportunities along the value chain, preparing the company for new developments in the energy sector. Strategy implementation will ensure improved profitability while maintaining a strong balance sheet and offering attractive shareholder returns.
Enhancing competitiveness in the existing portfolio
OMV Petrom will continue to deliver operating efficiencies across all business segments through operational excellence, with focus on value over volume, while technology initiatives will help create a more agile and efficient organization.
Realizing the potential of the existing Upstream fields and streamlining the portfolio contribute to long-term sustainability. Maximizing economic recovery from our current producing assets will be a key contributor to 100% RRR target by 2021.
In the Downstream business, the focus remains on capturing the highest integrated operational value. Programs started to maximize the availability and utilization of the Petrobrazi refinery and Brazi power plant will be continued as part of the Strategy Update 2021+. In Retail, the increase of the throughput per filling station will contribute to enhancing the competitiveness of the business.
Developing growth options
One of the most important pillars for growth in Romania is the Neptun Deep project. Subject to commercial viability, the final investment decision is expected in 2018 and first production should start by 2021 - 2022. Beyond Neptun, several prospects in deep onshore Romania and shallow offshore will rejuvenate the portfolio and offer development opportunities over the next several years.
In Downstream Oil, the Polyfuel project will generate a competitive advantage through increased output of high value products and a more flexible production structure by 2019. The modernization of the fuel storage network will end in 2018, leading to higher efficiency of operations. Exploring value-adding opportunities for gas and niche technological opportunities for oil will enhance the production mix.
Profitability will increase by enhancing the offer and customer experience through the two distinct retail brands, Petrom and OMV.
Regional expansion
Opportunities for regional expansion in Upstream and Downstream Gas will complement the existing portfolio. OMV Petrom's extensive experience of operating mature assets in Romania and Kazakhstan creates a unique position to expand regionally through selective investments. The near-term priorities lie in the Caspian and Western Black Sea and could extend further over time.
In Downstream Gas, structural changes in the market create opportunities for expansion outside of Romania. OMV Petrom intends to diversify sales channels for the current Upstream production as interconnectors are developed for the transport of gas. As Neptun Deep comes on stream, subject to confirmation of commercial viability, regional expansion will be an important aspect of monetizing the project.
Successful strategy implementation
Strategy Update 2021+ provides Management with a clear mandate to focus on evolving customer needs and demands, whilst ensuring that financial discipline remains strong. Clear, robust targets for returns, cash flow, CAPEX and balance sheet prove OMV Petrom's focus on generating value:
u 100% RRR by 2021
u CAPEX of EUR ~1 bn as annual average over the 2017 - 2021 period
u Clean CCS ROACE to increase to > 10% by 2021
u FCF after dividends positive for majority of 2017 - 2021 period
u Strong balance sheet
u An attractive dividend
Success of the strategy is fueled by three enablers:
u People and Organizational Culture
u Sustainability
u Technology and Innovation
"Over the past five years, we have worked hard to make OMV Petrom a leaner, more efficient and more resilient business in a challenging environment. Our Strategy Update 2021+ reaffirms current directions of the company, ensuring continuity in generating sustainable performance. It takes us to the next level of ambition in our development journey rather than being transformational.
We will drive efficiencies and integration, maximize our Upstream portfolio's potential, pursue growth that Romania still offers and pursue selective regional expansion opportunities. We shall do so by leveraging the power of our people and assets, with sustainability at the core of our business and embedding technology and innovation in our daily operations. Enhancing our offer to meet customers' evolving demands is critical to the company's success. For our shareholders we are committed to deliver attractive returns. We set for ourselves clear targets to measure the strategy success. We are confident that all our stakeholders will see the benefits of our long-term, value-creating strategy, which we believe is well matched to an industry evolving at very rapid pace." says Mariana Gheorghe, CEO.
For more details please see the attached "Strategy Update 2021+" presentation.
Disclaimer
The information herein represents the strategic directions of OMV Petrom and may be interpreted as
forward looking statements subject to uncertainties, risks and regulatory changes which may cause the actual results/performance of OMV Petrom to be materially different. Under no circumstances may be deemed as representation/warranties of OMV Petrom or of its management regarding the company's' future results as well as a recommendation/ offer / invitation to subscribe for or purchase any securities.
About OMV Petrom
OMV Petrom is the largest integrated oil and gas group in Southeastern Europe, with an annual oil and gas production of approximately 64 mn boe in 2016. The Group has a refining capacity of 4.5 mn tons / year and operates an 860 MW high efficiency power plant and a 45 MW wind park. The group is present on the oil products retail markets in Romania and neighboring countries through 783 filling stations, as at end-2016.
OMV, one of Austria's largest listed industrial companies, holds a 51.01% stake in OMV Petrom. The Romanian state, via the Ministry of Energy, holds 20.64% of OMV Petrom shares, Fondul Proprietatea holds 12.57%, and 15.79% is free float on the Bucharest Stock Exchange and London Stock Exchange.
Starting 2007, OMV Petrom has integrated the principles of corporate responsibility into its business strategy. In this period, the company has allocated more than EUR 40 mn for the development of communities in Romania, focusing on environmental protection, education, health and local development.
Contact:
OMV Petrom Investor Relations
Tel: +40 372 161 930E-mail: investor.relations.petrom@petrom.com
The Strategy Update 2021+ presentation is available on company's website at: http://www.omvpetrom.com/portal/01/petromcom/petromcom/OMV_Petrom/Investor_Relations/OMV_Petrom_Strategy
Click on, or paste the following link into your web browser, to view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/0477X_1-2017-2-16.pdf