WOOD Flash – OMV: act 2 – curtains up for more action
OMV has launched its new strategy, with an emphasis on growth across all segments of its business. The company’s first act under the current management team was about disposing assets that did not fit into its forward vision for OMV, as well as a major play on Russia. Act 2 will be about organic and inorganic growth, big increases in volumes and earnings, and the addition of a new Asia Pacific core upstream region, as well as dealing with European demand stagnation, petrochemicals growth and a European wide dash for gas. In total, management plans to invest EUR 10bn on acquisitions, including EUR 5bn on downstream expansion, as well as the normal EUR 2-2.5bn p.a. organic capex. By 2025E, management sees 600,000boe/day upstream production, and 2bn boe of reserves. With EUR 5bn of downstream acquisitions, it expects to double its refining capacity, entering growth markets away from Europe, while organic investments in petrochemicals will reduce the reliance on automotive fuels.We see the broad thrust of the strategy as positive, building on the existing successes, but considerable questions remain over the acquisitions strategy, particularly downstream. We maintain our HOLD on the stock.
OMV is an international energy company with activities in Exploration and Production (E&P), Refining and Marketing including petrochemicals (R&M), and Gas and Power (G&P). Co. explores and develops oil and gas resources and supply energy to over 100 million people. OMV has three operating segments: Exploration and Production (E&P), Refining and Marketing, including petrochemicals (R&M), and Gas and Power (G&P), as well as the segment Corporate and Other (Co&O).
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