OMV Drops 2016 Output Goal, Takes 4Q Charge
VIENNA, Jan 29 (Reuters) – OMV will take a 700 million euro ($790.5 million) charge in the fourth quarter, the Austrian energy company said, adding that lower investment due to fallen oil prices and uncertainty in Libya would prevent it from reaching its 2016 output target.
"Net special charges of approximately 700 million euros were recorded in the operational result for the quarter, mainly due to impairments in Petrol Ofisi and in the power business of OMV Petrom," it said in a trading statement on Thursday.
The charge for the Turkish and Romanian businesses is higher than the net profit of 665 million euros after minority interests the group made in the first nine months.
OMV said it had scaled back projections for average annual capital expenditure from 2015 to 2017 to 2.5-3.0 billion euros, of which the lower end represented an oil price assumption of approximately $50 per barrel for the next three years.
It had previously targeted 3.9 billion in annual capex.
"While we remain committed to the major projects expected to contribute to our previously stated 2016 production target of around 400,000 kboe/d, the changes to the investment program will inevitably lead to a delay in reaching this production level," it said.
Spending cuts would help it hit its mid-term target of broadly neutral free cash flow after dividends, it said.
"We continue to stay committed to our long-term gearing ratio target of 30 percent or less and to our dividend policy (a payout ratio of 30 percent)."
OMV said it produced 318,000 barrels of oil equivalent per day (boe/d) in the quarter, up from 311,000 in the third quarter and 277,000 a year earlier. Production growth in Norway more than offset a decline in Libya amid security issues.
Its refining margin rose to $5.19 per barrel from $4.90 in the third quarter due to lower crude prices and improved middle distillate spreads.
($1 = 0.8855 euros)
(Reporting by Michael Shields; editing by Jason Neely)
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