OMV issued trading statement for 1Q07 this morning.
According to the company, total hydrocarbon production averaged at 322kbpd in the quarter, down 2.1% q/q and down 4.5% y/y due to maintenance outages in UK, lower production levels in Libya on the back of the reduced OPEC quotas and temporary outages in Tunisia due to technical problems. Petrom production of 202kbpd represents a minor 1.5% decline q/q but a more significant 6.0% erosion y/y. While refinery utilization rate of 90% is pretty in line with the respective period of last year,
OMV reports a decent 47% increase in its indicative margin to 5.3 US$/bbl.
Our view: Upstream volumes are pretty unimpressive for us given the fact that we expect 2.7% y/y increase in
OMV's hydrocarbon production projecting the new additions to compensate for the natural decline in Petrom lifting volumes. Since the 4.5% decline in the first quarter was partly due to one-offs, we would like to hear management's comments on the FY07 outlook before adjusting our forecasts. Downstream performance of
OMV, however, is seemingly impressive on the back of the sharp margin improvement. This could limit the potential negative market reaction today, what we expect due to the weak production volume figures. In case of a decent negative market reaction, we see a good buy opportunity of
OMV shares.