Petrom Bucharest (SNP), the largest company in Romania, posted record net profit in the first quarter, 977 million RON (265 million euros), 156% higher in RON than in the same time of last year, given that oil price has reached new record highs on international markets this year, recently overshooting the 120 dollar/barrel mark.
Petrom's business went up by 35% during the same interval, to 3.72 billion RON (1.01 billion euros).
The increase was exclusively generated by the exploration and production segment, where Petrom posted EBIT worth 1.094 billion RON (297 million euros), 74% higher than in the January-March 2007 period, despite the 1% decline in total output, to 17.57 million barrels. The largest investments Petrom made in the first quarter were directed to this segment, as well.
The average price realised by Petrom from the sale of oil in the first quarter stood at 85.15 dollars/barrel, an increase of 76% on the first quarter of 2007 The increase in RON stood at 66% from 126 RON/barrel to almost 210 RON/barrel, given that the RON has gained 4% on the American currency over the past year.
During the same period, domestic production costs went up 11% in dollars and 6% in RON, from 15.4 dollars (39.8 RON) per barrel, to 17.08 dollars (42.09 RON) per barrel.
"The good results in the first quarter in 2008 are due to the favourable oil price on the international markets and to the progress of the restructuring and upgrade programmes. The re-launch programmes on the Exploration and Production segment have started to pay off, and the integration of the recently acquired oil services of Petromservice in the new E&P Services unit is going as scheduled and will help boost efficiency of the Exploration and Production activity," stated Mariana Gheorghe, general manager of Petrom.
Out of the over 2 billion RON (545 million-euro) investments conducted by Petrom in the first quarter, investments in exploration and production amounted to 1.76 billion RON (almost 480 million euros), more than four times higher than in the same time in 2007. Total investments scheduled for this year on this segment amount to more than 1 billion euros.
The company is investing in exploration and product to maximise production in Romania, by redeveloping the main 50 deposits and upgrading drills, as well as to cut costs, by reintegrating the oil service unit taken over from Petromservice, company officials say.
The high oil price, however, does have a negative effect on the refining margins Petrom derives from oil processing, which fell from 4.33 dollars/ barrel in the first quarter of 2007 to 0.65 dollars/barrel in the same time of 2008.
The decline in refining margins was, however, offset by the reassessment of the petroleum product stocks, given the increase in pump prices. EBIT from refining and marketing fell to 118 million RON (32 million euros), from 300 million RON (90 million euros).
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