OMV joins line of oil and gas operators making budget cuts for 2020
Joining other oil and gas operators in actions to safeguard their businesses amid coronavirus crisis and the oil price war, Austrian oil and gas company OMV has decided to reduce its investments in 2020 by 20 percent, cut costs by around $217 million, and delay acquisition projects.
The global spread of the coronavirus has abruptly transformed people’s lives and significantly worsened the economic environment. OMV said on Thursday that it is responding to this situation with targeted measures to safeguard the company’s economic stability and the secure supply of energy.
Rainer Seele, Chairman of the Executive Board and CEO of OMV: “We made provisions for every employee to work from home parallel to the national exit restrictions in movement. Employees who are critical to the business or supply security are the only ones working in the field and they are subject to stringent safety and hygiene standards – to protect them and to protect all of our partners and customers”.
At the same time, OMV said it is implementing targeted measures to safeguard the company’s financial strength. In this context, the executive board has approved an action plan of more than EUR 4 billion ($4.4B) for the year 2020.
This includes a reduction of around EUR 500 million ($547.7M) in organic investments to below EUR 2 billion ($2.19B) in 2020. This is a reduction of more than 20% compared with the originally planned investments of EUR 2.4 billion ($2.6B) for 2020.
It also includes cutting costs by around EUR 200 million ($216.5M) compared to 2019 (opex and exploration expenditures).
Furthermore, OMV’s measures include payment of the purchase price for the additional 39% share in Borealis in two tranches, whereby more than EUR 2 billion ($2.2B) will not be due until the end of 2021. The effective closing date of this transaction is unaffected.
Finally, it includes postponing investment and acquisition projects totaling EUR 1.5 billion ($1.6B), in particular the interest in Achimov 4/5 in Russia.
“These measures will safeguard OMV’s ability to act in this challenging situation. Specially established task forces are monitoring developments very closely in order to make any necessary strategic adjustments at the right time”, said Rainer Seele.
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