Romanian Oil & Gas: still beyond the horizon (OMV Petrom downgraded to HOLD, Romgaz stays HOLD)
In place of delays and cost overruns, the news on Neptun so far has been reassuring: first well spudded, platform under construction, and the start date unchanged. Nonetheless, we still have a two-year wait for completion. In the meantime, gas prices have been trending lower and oil prices are under pressure. Further deregulation in 2026E should free up the prices paid for gas, following power prices this year. We see the return of Russian gas as an outlier, which would crash gas prices. Romgaz has dipped its toe in the renewable waters, but OMV Petrom is diving in head first and planning 2.5GW of capacity by 2030E. Due to their differing balance sheets, over the next three years, we expect OMV Petrom to pay a dividend yield of 6.9%, on average, and Romgaz only 3.9%. Both companies have seen share prices significantly rise, on a buoyant Romanian market and expectations over Neptun. We have downgraded OMV Petrom to HOLD (from Buy), with an updated 12M price target (PT) of RON 0.88, offering 0.5% upside; while we maintain our HOLD on Romgaz, with an updated 12M PT of RON 8.2, offering 3.3% upside.
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