OMV CEO Sees Investors Regaining Trust in Company

TL;DR

OMV CEO Rainer Seele discusses investor trust, strategy, and plans in Russia.

Transcript

what brings you to London I'm guessing you're here talking to investors and putting your case putting the investment case behind over these what kind of feedback you're getting for investors what work is still to be done at omv I think investors are regaining trust in a MBE and they realized that they are working hard on our strategy and it's bring... Read More

Key Insights

• OMV is regaining investor trust by effectively managing costs and cash flow, which has led to analysts showing renewed interest in the company.
• The company plans to use cash from divestments to pay dividends, reinvest in reserves, and reduce debt, rather than focusing on mergers and acquisitions.
• OMV is in negotiations to sell its stake in Petrol Ofisi in Turkey, with expectations to raise significant funds from the sale.
• OMV is interested in expanding its operations in Russia due to its low-cost production environment and long-standing partnership with Gazprom.
• The company is compliant with international sanctions on Russia and focuses on projects that can be executed within these constraints.
• OMV plans to increase production by 10% by 2019, with significant contributions expected from Libya, Kurdistan, and new projects in the North Sea.
• OMV is planning for oil prices of $55 per barrel in 2017 and $70-$75 per barrel in the mid to long term, reflecting a conservative approach to pricing.
• The company has successfully reduced upstream operating expenses, achieving cost-cutting targets and focusing on strong free cash flow.

Questions & Answers

Q: What is OMV's strategy for regaining investor trust?

OMV is focusing on effective management of costs and cash flow, which has led to renewed interest from analysts and investors. By demonstrating financial discipline and strategic planning, the company aims to reassure investors of its commitment to growth and stability.

Q: What are OMV's plans for the cash from divestments?

OMV plans to use the cash from divestments to pay dividends, reinvest in reserves, and reduce debt. The focus is on strengthening the company's financial position rather than pursuing mergers and acquisitions, which aligns with their strategy of maintaining a strong balance sheet.

Q: Why is OMV interested in expanding operations in Russia?

OMV is interested in expanding operations in Russia because it is one of the lowest-cost production environments. The company has a long-standing partnership with Gazprom and sees opportunities for growth in natural gas production, despite the challenges posed by international sanctions.

Q: How does OMV plan to comply with international sanctions on Russia?

OMV is committed to full compliance with international sanctions on Russia. The company carefully selects projects that can be executed within the legal framework of these sanctions, ensuring that its operations remain within the boundaries set by international regulations.

Q: What are OMV's production targets for the coming years?

OMV aims to increase production by 10% by 2019, with significant contributions expected from Libya, Kurdistan, and new projects in the North Sea. The company is focused on ramping up production in these areas to achieve its growth targets.

Q: What is OMV's outlook on oil prices?

OMV is planning for oil prices of $55 per barrel in 2017 and $70-$75 per barrel in the mid to long term. This conservative approach reflects the company's expectation that three-digit oil prices are unlikely to return in the near future.

Q: How has OMV managed to reduce operating expenses?

OMV has successfully reduced upstream operating expenses by implementing cost-cutting measures and achieving set targets. In 2016, the company cut costs by 200 million euros and has set a target of 250 million euros for 2017, focusing on maintaining a strong free cash flow.

Q: What is OMV's stance on European political developments?

OMV is committed to the European Union and values political stability within Europe. The company is focused on operating within a unified Europe and is concerned about the potential impacts of populist politics and events like Brexit on the European economy.

Summary & Key Takeaways

• OMV CEO Rainer Seele discusses the company's efforts to regain investor trust by effectively managing costs and cash flow, which has led to increased interest from analysts. The company plans to use cash from divestments to pay dividends and reinvest in reserves.

• OMV is negotiating the sale of its stake in Petrol Ofisi in Turkey and is interested in expanding operations in Russia due to its low-cost production environment. The company is compliant with international sanctions and focuses on projects that can be executed within these constraints.

• OMV plans to increase production by 10% by 2019, with contributions from Libya, Kurdistan, and new projects in the North Sea. The company is planning for oil prices of $55 per barrel in 2017 and $70-$75 per barrel in the mid to long term, reflecting a conservative pricing approach.