By Nicole Lundeen
VIENNA--Austrian oil and gas company OMV AG (OMV.VI) is to cut
its investment program over the next three years and will fail to
reach its daily production target of 400,000 barrels of oil
equivalent day by 2016, it said Thursday.
The company now plans to invest between 2.5 billion euros and
EUR3.0 billion a year ($2.84 billion-$3.4 billion) between 2015 and
2017, down from EUR3.9 billion a year for the 2014-2016 period. The
majority of the investment will still go toward OMV's exploration
and production business, it said in a trading statement.
"There has been a seismic shift for the industry in recent
months. OMV has a responsibility to react accordingly and with
caution," OMV's Chief Executive Gerhard Roiss said in a news
release.
The reduction in investments mean there will be a delay in
reaching OMV's 2016 production goal, Mr. Roiss said, while Chief
Financial Officer David Davies said the company is prepared to cut
investments further, if needed.
OMV's fourth-quarter earnings will also be hit with around
EUR700 million in impairments and provisions relating to Petrol
Ofisi in Turkey and a gas-fired power plant in Brazil, it said.
Total hydrocarbon production in the quarter rose 15% on the year
earlier to 318,000 barrels of oil equivalent a day from 277,000
barrels. Most of the increase was driven by OMV's activities in
Norway, the company said.
OMV said the gas market remained difficult in the fourth
quarter. Gas sales and trading volumes increased on the year to
147.19 terawatt hours, up from 118.40 TWh in the year-earlier
quarter. The increase was due solely to higher trading volumes, OMV
said. OMV's indicator refining margin in the quarter was $5.19 a
barrel, up from $1.16 a barrel a year ago, due to lower crude
prices.
OMV will hold a conference call later Thursday and will release
its 2014 earnings on Feb. 19.
Write to Nicole Lundeen at Nicole.Lundeen@wsj.com
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