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 kboe/d in the fourth quarter 2019. Production costs fell below USD 7.0/boe, while the one-year Reserve Replacement Rate reached 135% at year-end.
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2019 |
2018 |
∆ |
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Clean Operating Result |
in EUR mn |
1,951 |
2,027 |
(4)% |
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Special items |
in EUR mn |
(71) |
95 |
n.m. |
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Operating Result |
in EUR mn |
1,879 |
2,122 |
(11)% |
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Capital expenditure 1 |
in EUR mn |
2,070 |
3,075 |
(33)% |
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Exploration expenditure |
in EUR mn |
360 |
300 |
20% |
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Exploration expenses |
in EUR mn |
229 |
175 |
31% |
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Production cost |
in USD/boe |
6.61 |
7.01 |
(6)% |
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Total hydrocarbon production |
in kboe/d |
487 |
427 |
14% |
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Total hydrocarbon production |
in mn boe |
178 |
156 |
14% |
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Total hydrocarbon sales volumes |
in mn boe |
169.3 |
148.7 |
14% |
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Proved reserves as of December 31 |
in mn boe |
1,332 |
1,270 |
5% |
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Average Brent price |
in USD/bbl |
64.21 |
71.31 |
(10)% |
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Average realized crude price 2 |
in USD/bbl |
61.66 |
62.13 |
(1)% |
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Average realized gas price 2 |
in USD/1,000 cf |
4.08 |
4.72 |
(14)% |
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Financial performance
The clean Operating Result decreased from EUR 2,027 mn 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 (Q4/18), 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 FX 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 EUR 693 mn in 2018.
Net special items 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 kboe/d, 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 Q2/18.
In 2019, the average Brent price decreased by 10% to USD 64/bbl. 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 cf went down by 14% caused by warmer than-expected winter temperatures, above-average storage levels all across Europe, and a doubling of LNG 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 USD 1.5 bn 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.
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2019 |
2018 |
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Oil and NGL |
Natural gas 1 |
Total |
Oil and NGL |
Natural gas 1 |
Total |
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in mn bbl |
in bcf |
in mn boe |
in mn boe |
in mn bbl |
in bcf |
in mn boe |
in mn boe |
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Romania 2 |
24.1 |
156.2 |
28.9 |
53.0 |
24.6 |
168.7 |
31.2 |
55.8 |
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Austria |
4.0 |
29.2 |
4.9 |
8.9 |
4.3 |
30.9 |
5.2 |
9.4 |
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Kazakhstan 2 |
2.1 |
1.8 |
0.3 |
2.4 |
2.2 |
1.7 |
0.3 |
2.5 |
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Norway |
16.6 |
90.0 |
15.0 |
31.6 |
17.1 |
60.9 |
10.1 |
27.3 |
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Libya |
11.1 |
– |
– |
11.1 |
10.9 |
– |
– |
10.9 |
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Tunisia |
0.8 |
3.2 |
0.5 |
1.4 |
1.3 |
2.9 |
0.5 |
1.8 |
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Pakistan 3 |
– |
– |
– |
– |
0.1 |
7.0 |
1.2 |
1.3 |
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Yemen |
1.8 |
– |
– |
1.8 |
1.1 |
– |
– |
1.1 |
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Kurdistan Region of Iraq |
0.9 |
14.2 |
2.4 |
3.3 |
0.9 |
11.6 |
1.9 |
2.8 |
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United Arab Emirates |
8.1 |
– |
– |
8.1 |
1.8 |
– |
– |
1.8 |
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New Zealand |
4.6 |
65.2 |
10.9 |
15.5 |
2.1 |
16.0 |
2.7 |
4.8 |
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Malaysia 2 |
2.1 |
15.5 |
2.6 |
4.7 |
– |
– |
– |
– |
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Russia |
– |
218.0 |
36.3 |
36.3 |
– |
218.4 |
36.4 |
36.4 |
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Total |
76.1 |
593.2 |
101.8 |
177.9 |
66.5 |
518.2 |
89.5 |
156.0 |
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Reserves development
Proved reserves (1P) as of December 31, 2019, increased to 1,332 mn boe (thereof OMV Petrom 1: 504 mn boe). With a one-year Reserve Replacement Rate (RRR) 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.