OMV Q2 production drops but refinery margins widen
Austrian oil and gas group OMV on Friday reported a surprise decline in Q2 production due to technical problems, but its refining margin widened on higher diesel and kerosene spreads.
OMV said oil and gas production declined 3.4% from the previous quarter to 311,000 barrels of oil equivalent per day (boe/d), as Romanian gas production was hit by pipeline problems and due to shutdowns at North Sea and Austrian plants.
Analysts said the market had expected production to remain unchanged from the previous quarter, but pointed to additional capacity due to go online in the second half of the year. “I was negatively surprised by the production level, but this should be a one-off,” said Erste Bank analyst Jakub Zidon. “The lower production should also be more than compensated by the higher crude price.”
OMV’s reference refining margin widened to $6.76 per barrel in the Q2 from $4.24 in the first, helped by higher spreads on kerosene and diesel, while margins at its Petrom were hit by weaker gasoline and heavy product margins. Total refining sales expanded to 5.75 million tons, from 5.36 million tons in the Q1, despite a shutdown of its Neustadt refinery, OMV said in its quarterly trading update.
Shares in OMV declined as much as 2.7% after the results, trading down 1.4% at €42.91 by 0850 GMT and slightly underperforming the DJ Stoxx European Oil & Gas index , which was down 0.9%.
OMV also said it would have to set aside “significantly higher” additional provisions due to litigation in Romania on employee bonus payments, but declined to quantify the charge. OMV built a €36 million ($57 million) provision regarding this case in the Q4 of last year. (Reuters)
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