OMV, the Austrian integrated oil company which is part-owned by Abu Dhabi's Ipic, said lower oil prices hurt third-quarter performance, prompting it to write down the value of its assets by about €1 billion (Dh4.16bn).
The company’s interim trading report, released yesterday ahead of full third-quarter results on November 5, said that lower production volumes and oil prices “significantly burdened the [third quarter] performance”.
OMV said oil and gas production was down 6 per cent compared with the same quarter last year, at 292,000 barrels per day. Oil prices were about half their level compared with last year, at around US$50 per barrel during the quarter.
On the plus side, the company’s downstream was faring better as refining margins remained strong compared with last year, and plants were running at a rate above 90 per cent of their capacity. But OMV followed many other oil companies in deciding that the slump in oil prices will not be reversed soon, and therefore it should lower the value of its assets.
The company said oil and gasfields that are producing as well as those under development were re-evaluated assuming benchmark North Sea Brent crude prices will average $55 per barrel next year and rise only gradually to $85 in 2019 and beyond.
The revaluation will result in a charge in the third-quarter accounts.
Separately, OMV announced yesterday it would sell up to 49 per cent of its Gas Connect Austria subsidiary, which operates a pipeline.
The sale is part of OMV’s previously-announced strategy to divest its downstream gas assets.
OMV’s shares were little changed on the news at €24.675.
In its annual accounts last year, Ipic said the “carrying value” of its stakes in various companies, including OMV, was substantially above their market value on various exchanges. At that time, it was recording a value for the OMV stake at a little over $3.4bn.
Although OMV’s shares have risen since the end of last year, they have fallen overall by about 40 per cent in the past two years as it underperformed integrated companies of similar size.
amcauley@thenational.ae
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