Romanian Oil & Gas: just have a little patience (OMV Petrom stays BUY, Romgaz downgraded to HOLD - transfer of coverage)
To be the owners of the biggest gas project in the EU, at a time when the former biggest supplier is threatening, once again, to cut supply off, is perhaps an enviable situation to be in, in our view. The contracts have been signed, construction has begun, and the drilling rig has arrived. However, we still need to wait until 2027E for completion, and the partners are boosting their capital expenditure to record levels. While the future is being constructed, the past continues to fade, with both companies suffering production declines. Gas prices are inflated currently by winter fears, but we expect the downward trend to continue next year. On the flipside, the regulated prices for households should become history in 2Q25E. OMV Petrom is adding renewables capacity and we expect to see the impact of this by the end of the decade. Over the next three years, OMV Petrom will pay a dividend yield of 8.8%, on average, and Romgaz only 4.3%, on our estimates. We transfer coverage of both OMV Petrom and Romgaz in this report, maintaining our BUY on OMV Petrom, with an updated 12M price target (PT) of RON 0.86, offering 19.1% upside; and downgrading Romgaz to HOLD (from Buy), with an updated 12M PT of RON 5.5, offering 3.8% upside.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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