Romgaz S Regulatory News (SNGR)

QUARTERLY REPORT

ON THE ECONOMIC-FINANCIAL ACTIVITY OF ROMGAZ GROUP

ON SEPTEMBER 30, 2023 (January 01, 2023 - September 30, 2023)

IDENTIFICATION DETAILS ON REPORT AND ISSUER

ROMGAZ GROUP [1] PERFORMANCES

In the first nine months of 2023, Romgaz Group recorded a revenue of RON 6,810.27 million, a drop of 37.02% as compared to RON 10,812.55 million recorded in the first nine months of 2022. 

Net profit of RON 2,168.69 million was lower by 3.09%, namely RON 69.12 million, as compared with the similar period of the previous year.

Consolidated net profit per share (EPS) was RON 5.6, by 3.09% lower than the one recorded in the first nine months of 2022.

For the reporting period, Romania's estimated natural gas consumption[2] was 69.25 TWh, approximately 11.7% lower than the consumption recorded in the similar period of 2022.

Romgaz market share estimated for the first 9 months of 2023 is 55%, by 3.6% higher than the market share recorded in the same period of the previous year.

Natural gas production for the first 9 months of 2023 was 3,515 million m3, by 4.67% lower than production recorded in the similar period of last year, namely 172 million m3.

Electricity produced in the reporting period was 641.466 GWh, 23.59% lower (-197.999 GWh) as compared to the same period of the previous year. This production places Romgaz at a 1.52% market share.

In Q3/2023 Romgaz produced 143.887 GWh, decreasing by 150.919 GWh, namely 51.19% less than in Q3/2022.

Relevant Consolidated Financial Results

*RON million*

A brief overview of the Group's main indicators during the 9M period ended September 30, 2023:

ü Total revenue for the reporting period is lower by RON 4,002.28 million, recording a drop of 37.02% due to the following factors:

· decrease of revenues from natural gas sales (RON 5,912.94 million in the nine month period ended on September 30, 2023 as compared to RON 9,282.16 million in the similar period of 2022). The provisions of GEO No. 27/2022 had a significant impact on the decrease by 36.30% of revenues from natural gas sales, as these set the obligation for Romgaz to sell most part of the natural gas production at the regulated price of 150 RON/MWh;

· electricity revenues dropped (RON 288.48 million for the 9M ended September 30, 2023 as compared to RON 1,008.73 million for the similar period of 2022). According to GEO No.27/2022, as of 2023, 90% of Romgaz electricity production is sold at 450 RON/MWh;

· revenue from underground storage activities increased by 31.00% (RON 424.29 million for the 9M ended September 30, 2023, as compared to RON 323.88 million for the similar period of 2022), mainly due to the increase of capacities booked by clients for underground gas storage;

ü Total expenses decreased in the 9M period ended September 30, 2023 by 62.47%, mainly due to the decrease of windfall tax on revenues from natural gas (RON -3,980.46 million) and royalty expenses (RON -1,066.91 million). The Group recorded in January-September 2022 expenses of RON 293.87 million with the windfall tax on electricity sales, which became subsequently a contribution to the energy transition fund. Taking into account that 90% electricity was sold at 450 RON/MWh, this contribution is insignificant for the reviewed period;

ü Following electricity sales at 450 RON/MWh, GEO No.27/2022 enforced a mechanism by which, if the monthly value of CO2 certificates for the electricity sold at such price, is higher than the contribution to the energy transition fund, electricity producers receive the difference between the two items. The Group recorded an income of RON 119.17 million from electricity sales at 450 RON/MWh. But until this date, the law does neither provide the reimbursement procedure nor the authority responsible for payment of such amounts;

ü Increase of the consolidated gross profit by 51.62% as compared to the similar period of the previous year was offset by the profit tax. Profit tax includes the solidarity contribution introduced at the end of 2022, for the 9M period ended September 2023, the expense recorded with this contribution is RON 1,388.39 million;

ü Net profit is RON 2,168.69 million, lower by RON 69.12 million (-3.09%) than the one recorded in the previous period due to the above mentioned reasons;

ü Labour productivity decreased by 36.80%, as compared to the previous period, from RON 1,810.84 thousand revenue/employee in the first 9M/2022 to RON 1,144.39 thousand revenue/employee in the similar period of 2023 due to the above mentioned reasons;

ü EPS is RON 5.63, 3.09% lower than in the first 9M/2022.

Operational Results

Note: the information is not consolidated, transactions between Romgaz and Depogaz are included.

During the first 9 months of 2023, Romgaz produced 3,515 million m3 natural gas, 172 million m3 (- 4.67%) less than in the similar period of 2022.

Gas production for the first 9M of 2023 was influenced by:

ü production decline specific for exploitation of hydrocarbon reservoirs;

ü gas consumption dynamics in some subsystems of the National Gas Transmission Systems;

ü execution of well workover operations in low productivity or inactive wells;

ü continuous rehabilitation projects of the main mature gas reservoirs;

ü production optimization of natural gas reservoirs;

ü completion of investments for the development of production infrastructure and connection of new wells to this infrastructure.

The volume of gas sold by Romgaz in the reporting period, representing deliveries to customers, without CTE Iernut consumption, decreased by 4.0% as compared with 9M/2022.

The volume of electricity produced as shown in the table below is in close connection with the energy demand, the evolution of prices on competitive markets and the quantity of natural gas allocated to the production of electricity and the efficiency of said activity.

*MWh*

The full version of the Quarterly Report on the Economic-Financial Activity of Romgaz Group on September 30, 2023 (January - September 2023) and the Consolidated Condensed Interim Financial Statements for the Nine-Month and Three-Month Periods Ended September 30, 2023 (Unaudited), Prepared in Accordance with International Accounting Standard 34, are available on company's website www.romgaz.ro - Investors - Interim Reports and on Bucharest Stock Exchange website, at the link below.

http://www.rns-pdf.londonstockexchange.com/rns/5255T_1-2023-11-15.pdf