Romanian Media: OMV Might Cash in Extra USD 2 Billion due to Faulty Valuation of Petrom

28. Juni 2006, 00:00

In the next ten years, the Austrian group OMV might cash in extra USD 2 billion for its natural gas...

In the next ten years, the Austrian group OMV might cash in extra USD 2 billion for its natural gas fields in Romania, Bucharest-based economic and financial weekly Capital reveals on Wednesday, June 28. The extra proceeds would be a result of adjustments to the faulty evaluation of natural gas reserves owned by Petrom prior to its privatisation back in 2004.

Last week, Capital revealed that the market value of the largest oil and gas company in Romania was undervalued by the consortium of consultants formed by Crédit Suisse First Boston, ING and Jacobs Consultancy.

OMV took over Petrom at a market value of EUR 2.23 billion or USD 2.76 billion. This value, at the current quotation of the Brent crude oil of around USD 70 per barrel, would translate into the growth of Petroms valuation by at least USD 5 billion.

Capital circulated this week with new information, saying that consultants also undervalued the natural gas capacities of Petrom, 1,000 cu m of natural gas being evaluated at maximum USD 75 in 2006 and 2007.

Currently, Petrom-OMV sells natural gas for over USD 130 per 1,000 cu m. Consultancy company Jacobs evaluated Petrom’s stock of natural gas at some 110 billion cu m in 2003. Capital claims that a new evaluation, based on international standards and to this date points to an additional 70 billion cu m.
According to the authorities, Romania has natural gas reserves of 370 billion cu m. Another fact pointed out by the economic weekly is that in 2005 , according to OMV-Petrom data, the price of the natural gas obtained by OMV from the domestic production was of USD 100 for 1,000 cu m, which stands for over 25 per cent above the consultant’s estimations.

In 2005, Petrom sold 6 billion cu m of natural gas produced by all its 1.321 drilling facilities located in Romania.

The weekly says that both the consultant and the former Social Democrat minister refuse to comment.
In December 14, 2004, OMV closed the acquisition of a 51-per-cent stake in the largest Romanian company, SNP Petrom SA. For the acquisition of 33.34 per cent of Petrom’s shares, OMV paid EUR 669 million. Within the framework of an increase in share capital of EUR 830 million, OMV’s stake was subsequently raised to 51 per cent.

Currently the shareholders structure is: OMV – 51 per cent, the Romanian Government 40.74 per cent and EBRD 2.03 per cent, with a free float of 6.23 per cent.

By buying a majority stake in Petrom, OMV has become the largest oil and gas group in Central Europe, with oil and gas reserves of around 1.4 billion barrels-oil-equivalent (boe), daily production of approximately 340,000 boe and an annual refining capacity of 26.4 million metric tonnes.

OMV now has 2,382 filling stations in 13 countries. The group’s market share in the Refining & Marketing business segment in the Danube region is up to around 18 per cent. The Exploration & Production portfolio acquired from Petrom encompasses approximately 1 billion boe of oil and gas reserves and daily production of around 220,000 boe from around 300 oil and gas fields, including around 15,000 onshore Romanian production wells as well as offshore assets in the Black Sea and exploration and production concessions in Kazakhstan.

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