Higher oil price helps oil company OMV to profit jump

Thanks to a higher crude oil price and a strict austerity program, business at the Viennese oil and gas group OMV (DE: OMVV) is running smoothly.

Shareholders are therefore to receive a dividend of EUR 1.50 (1.20) per share for the past financial year, which is a quarter higher. “2017 has been a successful year for OMV, we have implemented a rigorous cost-cutting program, and we now have production costs below $ 9 a barrel,” Group CEO Rainer Seele said Wednesday in a video message.

Adjusted for inventory effects, operating income (CCS EBIT) rose to 688 million euros in the first quarter, after 412 million euros in the same quarter last year. Below the line, the profit (CCS surplus) more than doubled to 367 million euros after 153 million euros. In the past financial year, 330 million euros in cost savings compared to 2015 have been achieved. In the current year soul wants to continue the austerity program.

The Austrians are thus joining the ranks of the major European energy and oil companies, which were able to bring rich profits. They mostly benefited from higher oil and gas prices. Industry leader Royal Dutch Shell (DE: RDSa) earned more than twice as much as in 2016 with the equivalent of 13 billion euros. It was the highest profit since the beginning of the oil crisis in 2014. Also the French oil giant Total (PA: TOTF) and the Norwegian Statoil earned significantly more last year.

Above all OMV’s upstream business, the search for and production of oil and gas, benefited from the higher oil price. In the fourth quarter, the average price of North Sea oil Brent rose by 24 percent to around $ 61 per barrel, mainly due to lower inventories. For 2018, OMV expects the price of oil on average at $ 60. Operating income in the Upstream division more than tripled in the fourth quarter to € 344 million (Q1 2008: € 91 million). The total production of OMV increased last year in the daily average by a fifth to 377,000 barrels per day. On the one hand, 36,000 barrels were added by the entry into the Russian natural gas field Yuzhno Russkoye, and on the other, production in crisis-stricken Libya increased by 29,000 barrels a day. In the North African country, the drilling rigs have stopped again and again in recent years due to ongoing unrest. In 2018, total production is expected to increase to 420,000 barrels per day. From Russia, a contribution of around 100,000 barrels per day is expected. In Libya, OMV expects similar support as last year.