Good afternoon and, ladies and gentlemen, and welcome to our conference call for discussing the financial results recorded by Romgaz Group in the first quarter of 2022. After introducing the speakers, Mr. Răzvan Popescu, CFO, will make an opening speech. Thereafter, the Q&A session will take place. Please be advised that this conference is being recorded for internal purposes. On behalf of the company, the following speakers attend this conference: Mr. Răzvan Popescu, Chief Financial Officer, Mr. Radu Moldovan, Energy Trade Director, Mr. Marius Veza, Accounting Department Director, Mr. Ion Foidaș , Production Department Director, Mr. Păunescu Octavian, Exploration Appraisal Director, Mr. Dan Cornea, Head of Investment Project Management, Ms. Gabriela Trâmbițaș, Head of Financial Reporting and Accounting Methodologies, Mr. Mircea Faur, Head of Electricity Market Development, and our Investor Relations Department. Now, I would like to give the floor over to Mr.
Răzvan Popescu, who will open the conference call with an opening speech.
Good afternoon, and thank you. Good afternoon, ladies and gentlemen. Thank you for joining our conference call to discuss the economic and financial results of the first quarter of 2022. We released the quarterly report of the Romgaz Group at the end of last week, and this includes the presentation of our economic and financial performance and the consolidated, condensed interim financial statements. Also, a presentation of the group activities is available on our website in the Investors section. I would like to emphasize some aspects regarding the gas market environment and also to highlight the group's operational and financial performance. Let me start with some aspects regarding the market context that have impacted the first quarter of this year, including the latest regulatory changes. According to our assessment, national gas consumption in Romania decreased by 11% year-over-year.
Nevertheless, imported gas volumes recorded an increase during this period and still accounted for about 22% of total consumption, compared to around 18% in the first quarter of 2021. Still, Romania enjoys a low degree of dependency on gas imports compared to other European countries. Wholesale average weighted gas prices on the Romanian Commodities Exchange, both spot and forward and balancing markets, continued their steep upward trend, with an average price higher over five times year-on-year in the first quarter of 2022 compared to the same period of last year. These prices are considered as of the month of delivery for transactions concluded on this market segment. On the Central European Gas Hub, the reference price followed a similar trend in Q1, higher over five times year-over-year.
Regarding the gas sector regulation, during the first quarter of 2022, the gas release program was still in force. Please recall that according to the Romanian Energy Regulatory Authority, Order no. 143/4 for 2022, large gas producers had the obligation to offer 40% of the previous year's gas production on centralized market, with a discount of at least 5% from the previous 60 days' average price for the standardized products. It is important to mention the fact that the gas release program is no longer in force starting with the first of April, as the government has issued an emergency ordinance number 27 for 2022.
Starting with the second quarter of 2022, and until the end of the first quarter of 2023, the ordinance enforces capped prices for some categories of consumers, like gas and electricity producers and final suppliers. We want to note that gas volumes sold at regular, regulated prices are to be exempt from the windfall tax, and gas royalties will be computed at these prices instead of those of the Central European Gas Hub. Regarding the operational and financial performance recorded by Romgaz Group in the first three months, we can point out the following aspects. Natural gas production was reported at 1.31 bcm , with a marginal adjustment of just 0.3% compared to the same period of 2021, but slightly above our annual budget.
We continued our efficient measures to support production development, and here I could mention only a few specific activities such as optimization of gas well production, extension of rehabilitation projects of the main mature gas fields, execution of workover operation in inactive or low productivity wells, completion of investment works to extend the production infrastructure, and connection of new wells to this infrastructure. With respect to the investment in our gas production facilities, we completed works for surface facilities to stream into production four wells and are in progress with surface facilities for another six wells. We performed recompletion, reactivation, and repairs for a number of 46 wells in this period. We continue to hold a significant position on the Romanian gas market.
According to our estimates, we achieved a market share of 36% of total gas delivered in Romania, this impacted by higher imported volumes, as I stated a bit earlier, but improved our position to 40.46% in terms of consumption covered from domestic gas. Regarding gas sales to third parties, volume decreased by 16.7% year-over-year in Q1 as a result of lower gas consumption in Romania. Nevertheless, total revenues from gas sold in the first quarter increased to RON 3.44 billion, over three times higher compared to the same period of last year, and at a historical high due to significant increase in our average realized gas selling price that overcompensated for the volume sold.
Revenues from electricity added RON 321 million, almost eight times higher year-over-year as a result of a higher production and favorable prices in the gas market. Revenues from storage services increased 11% year-over-year to RON 88 million, mainly due to higher revenues from capacity reservation and injection services. Overall, in the first quarter of this year, we succeeded to record total revenues of RON 3.93 billion, almost three times higher year-over-year and at a quarterly record high for the group. On the expenses side, the main two taxes, including the other expenses categories, increased substantially. The windfall profit tax has increased approximately 11 times, and the petroleum and UGS royalties increased over five times year-over-year.
Jointly, these two taxes accounted for almost 60% of total revenues and represented an expense of RON 2.3 billion in the first quarter, compared to only RON 0.2 billion in the first quarter of 2021. Bottom line, we reported a record high net profit of around RON 980 million, higher by 111% compared to the same period of 2021. Profitability rates continued to be strong as well, although unfavorably impacted by the higher tax expenses. We recorded an EBITDA margin of 31.2% and an EBIT margin of 29% and a net profit margin of 25%.
On the CapEx side, Romgaz Group invested a total amount of RON 108 million in Q1, focused 31% on geological exploration, 67% in equipment upgrade, and 2% balanced in the storage and electricity segments. Regarding the strategic development of our company, I would like to mention that the latest achievements are in line with the development strategy for 2021-2023 that received the green light from our shareholders on November 4, 2021. Please note that our strategy includes as important objectives development of onshore blocks under concession of new perimeters and exploitation of offshore gas in the Black Sea, and an overall annual decline of the natural gas production below 2.5%. Production of sustainable energy and a 10% reduction of carbon, methane, and other gas emissions.
The most important point in our strategic development is the well-known project known as Neptun Deep. In this respect, on the 3rd of May 2022, Romgaz has signed a share purchase agreement for the acquisition of all the shares issued by ExxonMobil Exploration and Production Romania Limited, a company that owns 50% of the acquired rights and obligation under the petroleum concession agreement for the east area, the deep water zone of Neptun. Legal advisor for Romgaz was Dentons and Suciu Popa in the law department, and also Deloitte for the fiscal and financial and the due diligence assistance. This represents the most important transaction to perform in the energy sector in the past 30 years. For Romgaz, the project represents a milestone in the corporate transformation and development.
We will significantly increase our natural gas production and consolidate our position as a top player on the Romanian and the European oil and gas markets. The SPA received the green light in the extraordinary general meeting of shareholders of Romgaz on April 28, and the completion of the transaction is subject to the fulfillment of the suspensive conditions in the agreement. The acquisition, as you know, will be partly financed through a credit facility in the amount of EUR 325 million that has already been signed by Romgaz on the 30th of March this year. We are implementing step by step our ambitious strategy that will ensure the development and the continuation of our company. In the end of this presentation, I would like to mention the approval of dividends to be paid this year.
On 28th of April, the shareholders meeting decided upon total gross dividends of RON 1.46 billion, or a gross dividend per share of RON 3.80 to be paid to shareholders in the registry on 6th of July. Dividend will be distributed to shareholders also in July. With this, I would like to close our presentation, and thank you for your attention.
Thank you very much. The Q&A session will start now. The line is open to take the questions. I would like to remind you that you have two options to address questions, either to raise the hand and turn on your microphone or to write a question. Miss Iuliana Ciopraga, if you turn on your microphone, you'll then you can address your question.
Hi. Hi. I have a couple of questions. Can you hear me?
Yes, we can hear you.
Okay. I have a couple of questions. First, on the price, in the first quarter of this year. Based on my calculations, the price was close to RON 235 per megawatt, if you could confirm. Somewhere close to this number, if you could confirm the number. You included in the presentation a graph with how prices evolved in the first quarter. If you look at that graph, prices were much higher than what we are seeing in the first quarter results. It would be helpful if you could provide some explanations on that. Secondly, regarding deliveries and drop in deliveries, we see that you extracted less from storage. Did you have less gas in storage? Could you please provide us some explanations why deliveries dropped in the first quarter?
Yes.
That is kind of it for now.
To start with your first question, yes, your calculations are close to what we have managed, but this is because we cannot think that our delivery is just in Q1. There are a lot of historical contracts, especially the big historical contracts with ELCEN București, as you know, and other municipalities that come from last year when the formula and the price were different. For us to sell everything on the BRM and to just be linked at the BRM is quite difficult. Yes, your assessment is correct, but this is something that Romgaz has to do because we also need the visibility and stability for our future cash flows.
Having the yearly contract, of course, if the price is upwards trending on the stock market or on the market, we cannot follow the price exactly. Going back to the extractions and the deliveries, we have informed the stock markets, and we have informed our investors that the gas that has not been delivered is in storage, and it has not been extracted because of the high flexibility that was given because our biggest consumer is in insolvency. Due to a court ruling, we had to give that flexibility to them.
They have not used all the flexibility, and we could not sell that gas because we needed to have it available if they would have used it, and also because of the gas release program that had been extended, as you know, at the end of the last year. We have offered the quantities on the gas market, but they were not acquired by the market participants. Because of the flexibility that was given to both the big consumers and municipalities, we have had a bit lower volumes that we have sold. That gas is in storage and will be sold at a later date and is available for the extraction period of the next winter.
Can you disclose how much gas you have right now in storage and how much you had at the end of the first quarter of last year?
Radu, am dat informația asta către bursă.
Iuliana, the information is public on the Transgaz site. We can come back with the answer later, if it's okay for you.
Sure. Thank you. To finalize, last and follow-up questions then. Regarding prices, what should we expect for the following quarters? I mean, in the following quarters, increase for a lot of sales to the district heating producers should be lower. Increasingly should expect prices to get closer to the ones from BRM, right?
Well, not necessarily. In my view and because of the ordinance and the fact that the ordinance has allocated all our production to the consumers, the gas consumers and the municipalities and the final consumer, I think there will be a disconnect from the BRM at the moment, and I think the BRM will be impacted and will have lower liquidity than we are expected. We also see that the BRM should still be linked with the European gas hubs. I don't think that the BRM and the prices that have been given in the ordinance will be the same or converge.
Right. Will you report them separately? I mean, will you report separately the volume sold under the ordinance? You can get a bit more visibility to the board. If you can, do you have any estimate on where these volumes sold under the ordinance might be?
Yes. Regarding the ordinance, all the volumes available that Romgaz will have and will have during till the end of the ordinance have been already allocated. Any other volumes that might become available during this time will be probably sold at market prices. Until then or until we have seen, of course, we are doing our own calculations at the moment to see how the ordinance will impact our production. Of course, our deliveries have to be made in respect with with the ordinance. Yes, we will probably come to the stock market and inform the stock market and all our shareholders on how this will impact in the future. From just let's say a preliminary view, the impact for us is positive because of course, the prices are exempt from the windfall tax and the royalties are paid at the cap prices.
Thank you. Can you detail what the volumes would be? I mean, is it public information what volumes will be selling under the ordinance?
The information is not made publicly, but we can offer a percentage how much of the quantity is offered on the GRP program.
No. I meant the ones from the ordinance, the ones that need to be sold at a fixed price.
It's a bit difficult because it's not until the end of the year, and it also covers the first quarter of 2023. I could give you a percentage, but it won't be exactly. I think from our production, but you would not be able to extract much from it. Because of course, we have gas being sold from contracts that are coming from last year, that are ending this year. Of course, these have been taken into consideration. It's not something that you could extract and extrapolate, just because I know what you are thinking, but probably you would not be able to extrapolate from that.
I can provide you an answer from Mr. Radu Moldovan. There is around 32% of the total gas deliveries that is made according to Government Emergency Ordinance 27/2022. This is 32%, approximately, out of which 85% is for households and 15% for power plants produced.
Of total gas deliveries over which period? Over the period.
2022. The current year.
Only for the current year.
Yes.
30% of gas deliveries estimated for this year.
For this year, yes.
Including the first quarter of 2022. Okay.
Yes. We have a hand raised from Ms. Irina Răilean . Please, turn on your microphone. Ms. Irina Răilean, if you would like to address the question, please turn on your microphone. In the meantime, we received written questions from Mr. Tamás Pletser . The first one is related to what is the current status with Iernut Power Plant upgrade?
At the moment, we have had a legislative ordinance that so we can also use for restarting the works. We are in active discussions with the previous entrepreneur that has started, and we're hoping to finish the power plant with. At the same time, we have taken every measure to have the project in auction if it will not be possible. We are actively working on both fronts, also trying to have it figured out how we can end it and how we can make the commercial terms benefit for Romgaz. Nevertheless, we are committed in having it started.
We have included in the works different ways to start the power plant, either to start it with one cycle or both cycle as one. We have different technical approaches that we can take. I think that in the near future, we will announce to the stock market what the executive board decision is.
The other question from Mr. Tamás Pletser . Also, when will you close the acquisition of ExxonMobil's stake in Neptun?
Can you please repeat the question?
When will you close down the acquisition of Exxon's stake in Neptun?
We hope, as we have announced, to have the acquisition completed by mid-year. It's not up to us. There are some suspensive conditions in the SPA that of course are regulatory, that we need to have an order for the National Agency for Mineral Resources. Also, we need to have a decision from the Supreme Council of National Defence of Romania, and also we need a government decision regarding the change of control. We have done everything that we can regarding this. We are actively working in taking over all the assets of the company that we have bought, including the personnel, the staff, and everything that Exxon has been doing, and all the know-how that comes along with this company. Ultimately, it is in the state decision to have everything ready for the completion.
Miss Irina Răilean , will you try again to address the question?
Yeah. Hello. Do you hear me now?
Yes, yes. We can hear you.
Sorry, I was not able to unmute myself. Just a follow-up question on the Ordinance 27. This 32%, it's just to make sure I understand correctly, it's out of deliveries for the entire 2022 year, or is it for the period starting with April till December?
It is for the entire year, 2022.
The entire year. Okay.
Mr. Radu Moldovan provided the answer in Romanian.
Okay, thank you. Any visibility for the first quarter of 2023? I guess the figure is higher because probably you didn't manage to secure any or to sign any contract for this period. If you have any visibility for the first quarter of next year.
According to Mr. Radu Moldovan, 80% from the gas quantities for the first quarter of 2023 are gas that is going to be sold under the Government Emergency Ordinance 27/2022.
Okay, thank you. The same split probably applies here for households and thermal power producers.
It's the same percentage split.
Okay.
Around, yes, 85 and 15%.
Okay. Thank you. One update maybe on Caragele, if you have any update regarding this development. For example, how much of the current production comes from Caragele, and what could we expect in the future? We noticed special provisions regarding deep onshore development in the current amendments to the Offshore Law. If you could provide us any details regarding this, what should we expect in the future? How important is Caragele now for Romgaz? How much of the production comes out of this project? That would be very, very useful.
As we have stated also in our strategy, Caragele is a very important project. It's of strategic importance both for Romgaz and for Romania. We are actively exploiting it at the low levels. We have not taken at the moment and before that into account the Offshore Law or the, let's say, probable benefit that could come out of it. But if the law will be given in this respect, of course. We'll have a look, but we are actively investing in Caragele at this moment. We are looking at having more drillings being done there as soon as possible, even in the first part of this year. We have already production coming from Caragele.
I don't have an exact number, I think our production manager can help. Yes, we are definitely looking at it as a strategic project that will complement the gas that will probably be flowing from Neptun Deep. We hope that from Caragele, the gas, let's say, the new and additional gas will flow much sooner.
Okay. Thank you. Any idea of how much the production right now comes from Caragele?
Production from Caragele is around 850,000 m³ per day.
Thank you. Given that at this stage or in the future, you expect even higher flows from Caragele, their role will be just to maintain the production decline? Or can we see a reverse in the production, the trend of production of Romgaz? Can we see in the future, except from Neptun, of course, higher production volumes from onshore, or will its role be just to maintain or mitigate the production decline of natural gas?
In the near future from all the investment that we have made, we also have in the new wells that I have told you, and the surface works that we have been doing, the improvement of the old wells, we are just in the strategy in Romgaz strategy, we have tried to keep production at a decrease of maximum 2.5%. We are hoping that this year there will be no decrease. We are looking quite good in the first quarter, but of course Caragele will probably come on top of this. It is not an exact science because we need to see exactly how much gas will flow. We will see how many wells will be successful, but the most probable, the production decrease will revert if this project is to be truly successful.
Okay. Thank you. Thank you very much for your answers. One more question regarding the depreciation and amortization. We saw some lower figures this quarter, especially, 47 year-on-year decline in the upstream depreciation. If you could please explain us a little bit what happened there and what should we expect. Should we expect such lower figures in the following quarters, or was this just a one-off?
Gabriela Trâmbițaș, sure.
Depreciation in the upstream segment is based on the current level of production and on the reserve. Also, some of the producing assets were fully depreciated, so there's no more depreciation on those assets.
Okay. It's just a ratio for production to reserves that reduced the amortization because production was broadly flat. That's why I'm asking.
I don't have the information, but I will get back to you.
Okay, thank you. Regarding the reserves, do you have any updated figures? I mean, I guess I think the latest figure we have from 2017. If you have any updates regarding the current level of reserves or the level from the end of the year, if you have it, I think here.
Unfortunately, that's classified information. We of course have the reserves continuously monitored. Right now we are in the process of reevaluating all Romgaz's reserves and if and when that will conclude, we can inform the stock market. Of course, we cannot give any kind of, let's say, classified information to the stock market at this point in time, or information that has not been audited by a third party. We are in the process of auditing as we speak.
Okay, thank you. We could see some figures probably in the next report this year, maybe.
Yes, I think during this year we will see some figures.
One last question regarding the current situation of the gas or general energy prices. What do you think could be Romgaz role will be to secure the energy supply in Romania? Should we expect higher volumes of production in the following years, or how do you see this situation? I mean, is this an opportunity for Romgaz, or how do you see the situation?
Of course, in this changing landscape and in this change of environment, let's say, political environment, we need to be extremely active. We need to be adaptable, to say so, and we need to change and help the macro environment situation. At this point, we are running with the full steam ahead. We are trying to put in production everything that we can. We are trying to speed up works, and we are trying to speed up drilling. Unfortunately, we are also being impacted by the problems in supply chain. We are having a lot of acquisitions that are going ahead a bit difficult because the suppliers are not able to find the raw materials so they can ship.
Of course, we are encountering this high inflation as well, the rise in prices as well. We are trying to mitigate all of this, and we are trying to make, let's say, to have a better percentage of our investment that we have had during the past years. We definitely see a necessity of upgrading our production. We definitely see a necessity of continuing to be the one of the biggest players in the gas market in Romania, and we are very committed in going forward with all of this.
Thank you. Thank you very much for your answers.
We go on with another written question from Ms. Laura Simion. Can you disclose how much of 2022 production was already contracted? The answer is provided by Mr. Radu Moldovan. It is all the gas quantities available until March 21st, 2023, is already contracted. Another written question from Ms. Ioana Andrei. I have some questions regarding the production. First, please explain the 70% growth in power output. Are you still operating only one 200-megawatt unit? What to expect for the next quarters? A similar growth pace?
No. This is just a one-off because in the beginning of last year, the Iernut power plant was closed for works. We are still operating with only one section. It's nothing that should impact in full. It's just, as I said, a one-off because the operation was on and off of the power plant that have not been very linear due to the very old age of the power plant. We are always, let's say, exposed to the possibility of, let's say, any kind of technical difficulties. We have great confidence in our team at Iernut to keep everything up and running until the new power plant will be put into production.
There's a second question from Ms. Ioana Andrei. Please give us a clue on what are your expectations regarding gross production this year. The answer is provided by Mr. Ion Foidaș. It's approximately 5 bcm .
We are trying to keep production at the same level as last year as we have had in the first quarter. Yes, deliveries have been lower due to what we have just stated before, but production has been kept at a similar level.
Another question from Ms. Ioana Andrei. Please confirm if my understanding was correct. Only 32% of gross production refers to the capped prices under OUG 27, that's the question, or 32% of 2022 production or 32% of April-December production?
No, it's production for the whole year. For the 2022, 32% of total production of the year 2022. Because of course we had had gas sold before the ordinance, and contracts concluded before the ordinance was given. Also contracts on the Romanian stock exchange, also contracts on, of course, on the GRP and also bilateral contracts.
Thank you.
That 32% that our co-commercial director was talking about was the uncontracted quantities that were allocated. Of course, that will be a lot higher, as he has stated earlier, for the first quarter of 2023. Because we have had, of course, a lot lower allocations then.
Thank you. We go on with another question from Mr. Krizsák István. The question relates to national gas consumption in Romania. You stated in your current results that Q1 2022 consumption was 44 TWh, some 11% less than last year, same period. Do you see or predict same pace of deterioration in consumption throughout the rest of the year? Thank you. The answer is provided by Mr. Radu Moldovan. The gas consumption for 2022 is expected to be at least the same quantities as in 2021. Miss Ioana Andrei has another written question. Can you share with us some information regarding Neptun Deep numbers or otherwise, given OMV Petrom disclosed figures, can you give us your take?
New numbers on what? I mean, can you be a bit more specific?
Sorry. Another written question from Irina Răilean . Could you detail the condition for the loan taken to finance the acquisition of Exxon regarding maturity, interest rate, currency?
Yes, they are all detailed and have been informed to the stock market. The stock market has been informed. They have all been, let's say, approved by general shareholders meeting. I can disclose that the maturity is fiv years. I can disclose that there are absolutely no fees involved except the Euribor plus the margin that we've negotiated with the financing bank. They will be paid quarterly, and the denomination is euro. It's EUR 325 million. That's all the information I can give at this time. There are no other obligations. There are absolutely no assets that have to be put as collateral. The loan is a very, very simple and general corporate loan with a very, very good interest rate that unfortunately I cannot disclose.
Given that it was, let's say, taken in August, and we would have finalized somewhere in September when inflation was not already creeping up and interest rates in the euro area were still very, very low and not impacted by it, and there was no indication that the European Central Bank will raise rates. You can imagine that the conditions are much better than the conditions we would have had today.
Coming back to the question from Ioana Andrei related to Neptun Deep numbers, there's an explanation related estimated resources production at plateau or maybe even something for expected OpEx or prices.
No, it is too early at this moment to have this kind of discussion. We have only signed a couple of weeks back the SPA. That will. Of course, as I said, the completion rests on the approval that we'll get from the Supreme Council of National Defence and also from government decision for the change of control. Only after that, we can have this type of discussion on specific numbers. Of course, we have the estimates. Of course, we have all the, let's say, work that Exxon has done. Of course, we have both their estimates and OMV's estimates as well. We have analyzed both of them. We have analyzed everything that was in the VDR. At that point in time, that has been analyzed also, under very strict conditions, by our consultant.
At this point in time, I cannot give you any indication. After we will be an integral part of the project, and after we will have, let's say, the proper, communication channels with ONBP, that will be the operator of the project. I think this is a bit too early to give, and I think this type of questions may be asked after we have completed the acquisition.
We have another raised hand from Miss Iuliana Ciopraga. You can turn on your microphone.
Hi. Regarding it as a follow-up to Irina's question, the interest rate from the loan, is it fixed or floating? You mentioned Euribor, and then you mentioned you had very good conditions, but is it Euribor plus a margin, or is it a fixed rate?
No, it's Euribor, it's Euribor plus a margin. Of course, just the margin is fixed. As you know, the Euribor is negative at this point. Any bank in Romania caps it at zero. It will be just the margin until the Euribor surpasses the zero threshold. Of course, it's a variable if you take into account that the Euribor is variable. It's three-month Euribor, to be exact.
Mm-hmm. Mm-hmm. Thank you. Regarding Caragele Deep, can you discuss anything about reserves? Are they already included in the reserve in the latest report on reserves?
No. At this point, yes. Of course, when we do the reserves there, they will probably be included in the audit. They have to be audited, of course. We know that there has been a lot of speculation and talks regarding that. That's why we want to have that third party that doing the audit, being a very big and let's say the biggest auditor in the world that does this kind of reserves assessment. We want it to be very clear, and we will inform the stock market when the time is right. I cannot give you any type of speculation at this point, and I cannot give you a straight-up answer over this.
Iuliana, for the latest audit, you know that it's very old.
Mm-hmm.
End of 2017. At that moment, on the resources side, we included there 8 BCF from the Caragele Deep discovery, and the information was given to the market at that moment.
Of course, and then we have done more, let's say, exploration. We have done a lot more works that imply all of this. We are waiting to see if our technicians with the auditor, with what numbers they will serve us.
Thank you. Now, I was just wondering what the reserve base for the whole. I mean, 8 BCF is relatively low, and I was wondering if there's more there. Regarding one more thing. Regarding the reference price for royalties, there was a proposal to change that to executive price, if I remember correctly.
Sure.
Has anything happened with that?
I honestly, probably the ordinance has, let's say, postponed any type of any such change. When of course, we have had talks with the National Agency for Mineral Resources, it makes sense to do that. At this point in time, having OUG 27, let's say, surpass everything else, I think, everything has been put on hold. This is not something that I can answer. I think you should, let's say, direct this question to the National Agency for Mineral Resources. At this point in time, from my knowledge, there is nothing, there hasn't been any change to that.
From your discussions with the government, is there a plan to change this to the executive price? Or there are no discussions on that point?
I think that.
This doesn't apply for the volumes for the other ordinance, but going forward, what to be expected?
Yeah. I think that everyone is very, very focused on trying to have the ordinance as, let's say, as effective as possible. I think that it is just normal that the discussion is to be postponed. We are hoping, of course, after, let's say Q1 2023 to be able to have. Of course, as a producer, we would like to have effective prices. But this is not. We can come up with a proposal, the government can come up, but it's definitely in the ballpark of the National Agency for Mineral Resources, and I cannot speak on behalf of them. It's something that is out of our power.
Thank you.
Welcome.
I've seen also that salary personnel costs were rather flat in the first quarter of this year compared to last year. What to expect going forward?
Personnel costs, you mean?
Yes.
We're trying to have implemented a policy that is in accordance with the collective work contract. The issue is that there have been some leaves, and we've tried to digitalize a bit. We've tried to have some processes a bit more digitalized. We have not found the need to reinstate those positions that were left with people going into retirement. I think it's a normal trend that should be kept by a company that wants to digitalize, that it's hard to find manual labor, that manual labor is not so easily found or so, let's say, attractive for younger people. We are having a lot of programs that are going on with the universities.
We have programs with the schools that we try to give scholarships to some students that are very interested in the energy market and in the gas market. We are trying to show them part of the company. I think it's something that the company should develop on. The digitalization, I think it's one of the biggest and one of the most challenging things in the oil and gas industry, when we are trying to have raw data having been supplied in real time and as soon as possible to have, let's say, manual labor being reduced. For, let's say, also the sake of the personnel and trying to have more automized processes. This is I think it's a normal trend not seeing the number go up.
Thank you.
Welcome.
We received another written question from Ms. Irina Răilean . How much additional investment needs Caragele to unlock more volumes?
I have spoken to my general manager, and in the near future, he will hold a press conference regarding Caragele where he will, let's say, address all these questions. It's not exact science. I mean, we have tried to have investment strategy, and we know how much that investment strategy, especially for Caragele, is. Of course, when we will start drilling, then we need to see where and if we will hit gas and how low we will have to go and how deep we'll have to drill. It's something that he will and we will together probably in a press conference or will hold a press conference in the near future to address all of the Caragele Deep questions.
Thank you. Another written question from Mr. Krizsák István. We have seen many Romanian companies shares to be included in FTSE Russell Emerging Market Index from previous frontier market. Do you predict that Romgaz could also be included in this index in the near to medium term or small free float, and liquidity does not make this possible? Thank you.
I mean, it is a matter of liquidity, as you have said it, and you are completely correct. We also have the ADR listed in London, and the liquidity has not been great for the past years. I think it's this is something that has happened to the whole oil and gas sector because this sector has been overlooked for the past five to 10 years because, of course, everyone was very interested in technology. Everyone was interested in the FANG and different other, let's say, investments.
I think and looking also at our peers that are trading on other markets, I think that Romgaz has the opportunity to be included because right now, as our share price has gone up, of course our capitalization has gone up. We currently are the second listed company on the Bucharest Stock Exchange at this time. Of course, another oil and gas company is the first. I think the whole sector will benefit from this exposure at this time. I think that yes, it is a possibility that Romgaz will be included, and we are looking forward if that will happen.
If there are any other questions, please feel free to address them. If there are no further questions, we will conclude this conference call. Thank you very much for your questions and for your presence. If you need further information, please contact our investor relations team. The conference is now concluded. On behalf of Romgaz team, thank you for attending today's conference call. You may now disconnect. Goodbye, and thank you all.