Record production helped Austrian oil and gas group OMV top second-quarter core operating profit and cash flow expectations, sending its shares up 3.6 per cent in early Wednesday trade.
Clean current cost of supplies (CCS) earnings before interest and tax (EBIT), which exclude special items and inventory gains or losses, came in at 1.05 billion euros (£962.16 million), beating an average forecast of 966 million euros in an OMV poll of 16 analysts, published on the company’s website.
That was mainly thanks to greater diversity in OMV’s production base, including Russian gas, its stakes in two Abu Dhabi oilfields, and a 15 per cent stake in Norway’s Aasta Hansteen gas field, which started producing in December.
OMV’s performance echoed BP’s, as the British major’s second quarter profit also beat expectations thanks to strong oil and gas production growth, contrasting with France’s Total and Norway’s Equinor, which posted steep earnings declines.
OMV’s cash flow from operating activities was 1.14 billion euros in the quarter, significantly above the expectations of analysts at Jefferies and Berenberg.
“We expect this strong cash flow generation to translate into strong shareholder returns and consider this to be a main catalyst for the stock,” Berenberg wrote in a note to clients.
OMV shares were up 3.2 per cent at 44.80 euros at 0727 GMT, while the Austrian blue-chip index was flat. The stock, which shed 28 per cent in 2018, has gained around 14 per cent this year, outperforming the European sector index, which is up 7 per cent.
Depending on the security situation in Libya, the company said it now expected 2019 total production to be slightly below 500,000 barrels of oil equivalent per day (boe/d), compared with a previous forecast of around 500,000 boe/d.
OMV resumed production at Libya’s El Sharara in March after state guards and tribesmen had closed the country’s biggest oil field in December seeking salary payments and development funds.
The field was shut again for several days this month after an unidentified group shut a valve on the pipeline.
OMV said it hoped to reach an average production rate in Libya of 35,000 barrels of oil per day for the rest of the year from April after previously hoping to reach that from March.
OMV’s overall oil and gas output in the second quarter was up 3.4 per cent on the first quarter and 17 per cent on the second quarter of 2018, at 490,000 boe/d.