Good afternoon, ladies and gentlemen, and welcome to our conference call for discussing the results recorded by Romgaz Group in the first half of 2026. After introducing the speakers, Răzvan POPESCU, Chief Executive Officer, 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: Răzvan POPESCU, Chief Executive Officer, Aristotel Jude, Deputy Chief Executive Officer, Gabriela TRÂNBIŢAŞ Chief Financial Officer, Radu Moldovan, Energy Trading Director, Ion Foidaş, Production Department Director, and our investor relations department. Now, I would like to give the floor over to Răzvan POPESCU, who will open the conference call with an opening speech.
Good afternoon, ladies and gentlemen. Thank you for joining our conference call to discuss the result recorded by the Romgaz Group in the first half of this year. Today, we release the board of directors report, which comprises a detailed presentation of our economic performance and the consolidated interim financial statements. Also, an overall presentation of the group is available on our website in the Investors section. I will start by highlighting some of the aspects of the gas market environment in the first half of 2026 compared to the same period of the previous year. We estimate that natural gas consumption in Romania increased by around 3% to 60 TWh, while imported volumes declined by 14%, reaching a 22% weight in the total gas consumption.
The European natural gas market remained challenging and highly volatile during the first half of 2026, with prices above the levels recorded in the similar period of last year. Market dynamics continued to be shaped by geopolitical uncertainties, lower storage levels, and Europe's increasing exposure to global energy markets, while security of supply remained a key priority across the region. On the Romanian Commodities Exchange, the trading liquidity remained weak due to the requirement for gas producers to sell part of their production at a regulated price. Regarding the gas sector legislation in Romania, Romgaz activities continued to be influenced mainly by the ordinances issued to regulate the gas prices.
The main legal provisions applicable to gas provisions include regulated gas selling price of RON 110 per megawatt hour applicable starting April 1, 2026, and up until March 31, 2027, for the gas sold to household consumer and their suppliers, and to heat producers for the production of thermal energy for households. The previous regulated price was higher at RON 120 per megawatt hour and was applied to a slightly wider category of consumers. For the gas sold at regulated prices, payment of the windfall profit tax is exempt, and gas royalties are computed based on these regulated prices instead of the reference prices. Regarding the operational and financial performance recorded by the group in the first half of 2026, we can highlight some of the following important results.
We recorded a natural gas production of 2.4 bcm, which exceeded by 22 million or almost 1% the level budgeted for the first six months. In Q2 alone, the natural gas production was 1.17 bcm, and we succeeded to narrow the production decline to 2.8% year-over-year, closer to our strategic annual goal of 2.5%, and an improvement compared to the decline recorded in the first quarter. The six months output results were achieved through steady efforts aiming to consolidate the potential of our onshore production, which included intervention and recompletion operation, which allowed us to resume production at 89 inactive wells that improved production by over 62 million cubic meters. Successful exploration activity and completion of investment to expand the production infrastructure. This resulted in two new production wells, which increased output by 11.6 million in the first half of 2026.
The continuous rehabilitation projects of the main mature gas fields and the optimization of gas field exploitation. Regarding investment in our production facilities, we can point out that we performed reactivation and capitalizable repairs for 104 wells and finalized two surface facilities, while 27 others are in different preparation stages. We can also highlight that all these measures led to a 10% increase in our condensate production to the level of above 27,000 tons in the first half of 2026, mostly due to higher production level in our Caragele commercial field. Regarding Caragele Deep, works are progressing with 76 Rosetti well now in production. Three other wells are already in production from the previous years. 54 Damianca well, which has been successfully tested, waiting for tie-in, and 56 Damianca well, which is actually in drilling as we speak.
Also, we have six other wells in different stages of drilling preparations. We also can add that our gas production was expectedly impacted by major overhauls in a number of wells and by the natural decline, as well by power outages in the first quarter of the year and higher network pressure and by water influx in some of our Caragele Deep wells. We continued to hold a significant position on the domestic gas market in the first six months. Romgaz was the leading gas supplier with a 43% market share in total gas delivery according to our estimates. Regarding gas consumption covered only from domestically produced gas, we have a 55% market share according to our internal assessment.
We recorded total revenues of gas sold of RON 3.34 billion , lower by 10% year-over-year as a result of declining production and volumes extracted and sold from storages, but also a regulated lower price. Revenues from storage services were higher by 3% year-on-year at RON 284 million with withdrawal-related revenues up by 30% and capacity reservation having a 54% weight. As of 30th of June 2026, 86% of the operational capacity of our gas underground storages was already booked. Revenues from electricity added RON 149 million , adjusted by 16% year-on-year due to an almost half production of the old power plant to 182 TWh. Overall, Romgaz Group reported total revenues of RON 3.88 billion , adjusted by 9% compared to RON 4.25 billion in the previous year based on the lower contribution of our gas segment.
Regarding expenses, we recorded windfall profit tax of RON 486 million and royalties of RON 284 million, representing a total expense of RON 771 million, only up 0.4% compared to the previous year. Bottom line, we succeeded to achieve a net profit of RON 1.74 billion, higher than 3.4% compared to RON 1.68 billion recorded in the same period of last year. We also recorded substantial profitability rates in the first six months, an EBITDA margin at above 53%, EBIT rate of over 46%, and a net profit rate at above 44%. In the second quarter alone, we recorded a net profit of RON 763 million, elevated by 4.7% compared to last year and the highest net profit rate ever recorded in the second quarter of the company. On the CapEx side, the first half of 2026, the Romgaz Group invested a total consolidated amount of over RON 2.55 billion.
Of this amount, RON 2.02 billion represented the investment in Romgaz Black Sea Limited, and the RON 429 million, the investment that were made by Romgaz alone. RON 99 million was the CapEx for the Depogaz subsidiary. Regarding our strategic project, Neptun Deep, the progress made this year is in line with the budget and with the execution calendar. The Transocean Barents drilling rig is currently drilling and completing well operations. Six wells have already been completed out of a total of 10 development wells across the project. Installation of the Neptun Alpha offshore production platform was achieved in July, representing a major milestone of the project of an unprecedented magnitude for Romania and the EU. The 160-kilometer offshore main gas pipeline has been installed. This will transport natural gas from the Neptun Deep Alpha platform to the shore at Tuzla, where the gas will be metered and delivered into the national grid.
Also, preparatory drilling works have been performed in H1 for the Anaconda-1 exploration well, with drilling scheduled after the Neptun Deep block drilling is completed. We aim to explore this new prospect in the Neptun Deep block. As a result of this significant development, Romgaz and OMV Petrom are on track to safely deliver the first gas from Neptun Deep in 2027, and the project does remain within our EUR 4 billion guidance for the total investments. Another strategic objective is the CCGT power plant in Iernut. The project has now entered an advanced implementation stage that comprises the execution of already awarded contracts and the procurement procedures for the remaining activities. The multidisciplinary team dedicated to the project is operating at full capacity, simultaneously managing design, procurement, negotiation, contracting, execution, and monitoring activities. A memorandum has been approved by the Romanian government in May, aiming to facilitate the procurement process.
It enabled the initiation and acceleration of award procedures, reduced decision-making times, and facilitated the fast mobilization of all entities. As a result, significant progress has been made in the procurement procedures with the required steps being initiated and advancing at an accelerated pace. We already concluded contracts with companies deemed critical for the completion of the project, including the supplier of the gas and steam turbines, heat recovery boilers, and similar equipment. GE, with the project integrator, Empresarios Agrupados Internacional, and the supplier of the technical equipment, Hanwha Power. The full resumption of on-site activities is also influenced by the status of disputes involving Duro Felguera, both in relationship with Romgaz, but mainly with the subcontractors that previously carried out works on the project. We adopted the necessary measures to limit the impact and allow works to continue.
Provided that ongoing activities proceed according to the agreed schedule and no unfavorable circumstances arise independent of Romgaz, we anticipate that the completion deadline stipulated in the financing contract can be met. Regarding our investment plans, we remind that on July 6, Romgaz shareholders approved the transfer of business agreement between Romgaz as a buyer and Azomureș as a seller. For Romgaz, the agreement scope is to improve the gas value chain, provide new value-added products, and also assure a partial natural hedge against gas price volatility. At the end of the presentation, I would also like to mention the dividends that Romgaz distributed this year.
We remind that on April 29, the shareholders of Romgaz decided upon total gross dividends of RON 606 million, which resulted into a total payout ratio of 90% for the last year, and will allow Romgaz to partially finance its significant investment plans. With this, I would like to close our presentation, and thank you for your attention.
Ladies and gentlemen, the line is now open to take the questions. I would like to remind you that you have two options to address your questions, either to raise your hand and turn on your microphone or write a question. Miss Ioana Andrei, you may now address your question.
Hello. Good afternoon. Thank you for the presentation, and for the results. First, could you please confirm the capped price gas volumes of around 7.9 TWh in the second quarter? If you could provide the expectations for the third quarter and the fourth quarter. This would be my first question. Second, if you could please share with us if you still expect for 2026 a gas production of around 4.8 bcm. This would imply, in the second half of the year, a decline of around 3%. Is this the correct profile for the second part of the year? Should we see productions stabilizing around to 2026, also in 2027, before Neptun Deep starts contributing? My last question is regarding the Iernut Power Plant. In the presentation, it appears that it has been shut down till August.
Has the electricity production now resumed and the plant is fully operational? Regarding the new power plant, we are already in the third quarter, and we are moving really close to year-end. Is commercial operation in the first half of 2027 a realistic target? Or should we expect a meaningful contribution from the new plant in 2027, or maybe later from 2028? That is all. Thank you.
Thank you for the questions regarding the quantities that were sold in the second quarter of 2026. On the ordinance, we sold 7.84 TWh. In the third quarter, we are estimating somewhere above 7.5 TWh. For the fourth quarter, we estimate that quantity to rise at over 9.9 TWh. This is for the gas at regulated prices.
Okay. Thank you.
Regarding the decline for the entire year 2026, we estimate that the decline versus 2025 will be below 3%, so we are trying to catch up a bit in the second and third quarters of this year. Continuing from then, the target is under 2.5% decline. So probably, yes, the production will stabilize but again, this depends on a number of factors. Regarding the Iernut Power Plant, we are now producing with one group from the old power plant. It is working at full capacity and will work at full capacity throughout the month of August. It has also worked at full capacity through parts of July. So we do not expect the old power plant to stop this summer.
Probably we will have a maintenance period for it somewhere in mid-September. Regarding the new Iernut power plant, we are moving as fast as we can given the fact that it is also August. A lot of companies that we are working with haven't mobilized yet. Starting on the of September 1st, we should see a meaningful advance in works in the power plant. The fact that we had this memorandum, this memorandum was very helpful in respect to the procurement process, and we managed to reduce the procurement time significantly. At this point in time, we view the synchronization with the grid to happen this year, and for the power plant to inject the first megawatts. Regarding commercial operations, we will have an update in the third quarter of this year.
Okay. Thank you very much.
You're welcome.
We received three written questions from Mr. Vladimir David. Hello, Romgaz team. Three questions, please. One, the first one, can you please tell us what percent of gas sales was done at regulated prices in Q2, and in the future, include that number in your presentations? The second question, can you please also include the forecast percent of gas to be sold at regulated prices? These two questions already received an answer from Mr. POPESCU previously. The third question, do you foresee any delays for Neptun from what is happening in the Black Sea?
For the entire semester of 2026, for the first semester. The entire regulated prices gas sold was 73%, and for the Q2 alone, it was almost 67%. We will not include in the presentation the forecasted amounts. We do not foresee any delays for the Neptun with what is happening in the Black Sea. The Romanian institutions are taking every precautionary measure, and Romgaz with OMV Petrom and the subcontractors are taking all necessary measures in order to mitigate what is happening in the Black Sea.
Another written question from Mr. Liviu Popescu. Hello. What clients do you have for the gas in Neptun Deep? How many contracts did you sign? The second one, what is the status regarding the gas supply for population?
We haven't signed any contracts regarding the gas in Neptun Deep for now, and when that will happen. It will be in a transparent manner respecting the Offshore Law. For the gas supply to the population, we expect the first offers from Romgaz to be made in December, with deliveries starting from 1st April, 2027.
We received a further written question from Mr. Adam Milevic. What was the reason for decline in average gas selling price in Q2 versus Q1, despite increase in market gas price?
The first reason is the fact that the regulated price declined from RON 120 - RON 110 megawatt hour. As a gas company, we sold some of the gas both on the stock market and had some bilateral contracts that were concluded at the beginning of the year for Q2 as well. Given the fact that we had a decline in production in Q2, we didn't have available quantities to sell on the BRM market. We, as a strategy, all the quantities that we have available, we injected them into deposits in order to have them for the cold period.
Another written question from Miss Ioana Andrei. What was the RON 51 million deferred tax income recognized in Q2? Mainly a catch-up, or should we expect further deferred tax income in the second half?
The deferred income tax recognized in Q2 was generated by the fiscal loss recorded by Romgaz Black Sea, which was generated mainly by the increase in foreign exchange rates. Currently, the exchange rates appear to be quite stable, so we don't expect a significant impact on the results of Q3.
We have a raised hand by Mr. Oleg Galbur. Please turn on your microphone and address the question.
Yes, good afternoon. I hope you can hear me well. I have several questions. First of all, two specific ones. Could you explain what is the nature of almost RON 128 million reported under the net impairment gains on trade receivables in the upstream segment in the second quarter? Secondly, on the income tax in the second quarter, it went down to just 4%. Maybe you can explain as well what is the reason behind this drop. Lastly, on Azomureș, if you could provide an update on the asset takeover process following the shareholders' approval from July. Basically, starting when should we see these costs related to the employees of Azomureș to be booked and reported by, or covered better say, by Romgaz? Also, if you could provide an estimation, when do you expect to actually start operational activities at Azomureș under Romgaz umbrella?
Lastly, could you also disclose what was the realized gas price in the second quarter alone, and remind us what was it in the first quarter of this year? Thank you.
Impairment gains. If you recall, last year in December, we reported an impairment on receivables from the Ministry of Energy related to the capped prices related to sales to household consumers. According to legislation issued in 2022 and then updated, continued-
Excuse me. There is a background noise and it is very hard to listen to what you are saying. Thank you.
Sure. Let me start over. In Q4 of last year, we recorded an impairment for receivables from the Ministry of Energy. In 2022, an ordinance was released, which said that we should sell gas to household consumers at a regulated price. Whatever difference between this price and the price we had contracts already signed would be recovered from the Romanian state. In 2025, we decided to record an impairment as three years had already gone by, and we didn't receive anything from the Romanian state. However, in this June, we received a significant amount of the outstanding receivable, so we released that impairment.
Okay, that's fine.
Yeah. Regarding the income tax, this release of impairment generated a non-taxable income, which reduced the income tax. Also, we recorded a deferred income tax related to the fiscal loss in Romgaz Black Sea.
Okay.
Regarding Azomureș, we are currently waiting for clearance from the Competition Council and from the Foreign Investment Commission. If these clearances will be issued this month, closing of the transaction will occur in September. That's when we should have the first cost related to the plant.
What cost level are we talking about, please?
Sorry?
What is the cost level you are expecting to incur?
We are-
On a quarterly basis or nearer things?
We cannot give this information now. What I can say is that we are working on a revised budget, and you will have this information when we will come out with this revised budget.
Okay. Thank you. On the realized prices, if you can say a word.
The realized gas prices for the second quarter, and this includes the gas sold at regulated prices, it is around RON 124. For the first quarter, and that includes the gas at regulated prices at 120, was somewhere over RON 130.
Okay, let's say the weighted average realized price in the second quarter was lower than the first quarter. Despite the up-price movement, right?
Correct.
At this point,
Which was impacted mainly by the reduction of RON 10 in the regulated gas price.
Okay. Not by these bilateral agreements that you have signed for the delivery during the year?
Yeah. Some of them were impacted by those as well, because most of the contracts were concluded in the beginning of the year before the Iran war has started and before the European gas market went completely higher.
Would you expect, please? Sorry, it's a follow-up. Would you expect these contracts to further impact negatively your realized prices during the year?
They are long-term contracts on yearly basis that will probably have an impact on the gas price for the remaining part of the year. For the entire year, we expect a slightly higher price than the one that we had for the Q2.
Understood. Thank you very much. That's very helpful.
We received another written question from Vivian. Could you please let us know if there is any update in CapEx guidance for this year, for next year? Does it change due to Azomureș now?
As Gabi has said, we are redoing Romgaz budget, and you'll have all these numbers the moment that we will publish the updated budget that will encompass the Azomureș take-over.
We pass on to another written question from Mr. Radan Milevitz. Should we expect higher dividend payout next year given decrease in Neptun Deep CapEx?
This is something that the Romgaz shareholders will approve on after we will do the revised budget, after Neptun Deep will be put into production, then we'll have more visibility regarding the dividend. It's too early to discuss the dividend for next year.
Another written question from Mr. Vladimir David. Hello, for the bilateral gas sales agreement, can you please share the volumes and prices on quarterly basis in Q3 and Q4? The answer is provided by Mr. Radu Moldovan. The figures would be for Q3, 7.56 TWh, and for Q4, 9.97 TWh. For the moment, we do not have the quantities for Q3 and Q4. Another written question from Mr. Cristian Petre. Hi, can you repeat the realized prices for Q1 and Q2, including the regulated prices? Sorry, I missed the answer.
124 for Q2 and 132.7 for Q1.
Mr. Oleg Galbur, you may now address your question.
Thank you. I have a follow-up on an earlier question, but I missed the answer and just want to make sure that I don't use the wrong information. There was a question about when do you expect to start production at Neptun and to deliver the first gas to the market. Could you please repeat your answer? Thank you.
2027. When we will have a different date as the project progress, we will inform the investors and the market. For now, 2027 is the date that we have.
For this.
Okay. Thank you.
We received another written question from Mr. Ciprian. Hello, in which period of the year are the majority of the annual contracts concluded or negotiated?
Usually, that used to happen before the winter period on the annual basis, so into the summer but because of the distortion from the government ordinances and the fact that in the year starting from 2022, Romgaz was under the auspices of the gas pricing ordinances, and more than three-quarters of the production was allocated on the ordinances. These dates were, let's say a bit changed and some of the contracts were concluded both in the summer and both in the winter. It wasn't an exact timing for the contracts. But usually, after the ordinance was given, all the quantities that Romgaz had available for the coming year and up to 31st March, 2027 were allocated on this ordinance.
Mr. Milevitz wrote another written question. Do you expect any Neptun Deep CapEx next year?
Yes, we expect Neptun Deep CapEx for next year as well, and it will be shown in the revised budget.
Another written question from Mr. Cristian Petre. You mentioned 9.9 TW for Q4 regulated price. Can this quantity change? What would be the factors to increase or to decrease it?
No, this quantity should be set. It is set under contracts, and it shouldn't change. Only if some of the suppliers may not want to receive the gas in that quarter and would ask for movements, but basically, this is the quantity that we will have in the fourth quarter of 2026 under the ordinance. Given the fact that it is also a winter quarter, we do not expect it to change.
The next received written question from Divya. How much have you already spent for Neptun Deep in CapEx, and how much is remaining now?
So far, we spent around RON 7.5 billion. We expect another RON 2.5 billion to be spent until the end of the project.
If there are any other questions, please feel free to ask or write them down. Another written question from Mr. Liviu Popescu. Is anything changing in Iernut strategy now that Prime Minister Ilie has said he discussed this with you? Are you setting new priorities or allocating new investments?
The strategy is to be able to synchronize the power plant as soon as possible to have it in commercial operations as soon as possible, and use it to balance the grid as it was intended to do, and make it a recouped project after all the problems that we've encountered with the EPC company.
The next written question from Mr. Cristian Petre. Can you talk about demand for Neptun gas? How would you sell the excess?
There is demand for Neptun gas, and the excess of gas that we'll have from Neptun Deep will be sold according to the Romgaz commercial policy and according to the Offshore Law, and it will be done in a transparent manner.
If there are any other questions, we have some other minutes to discuss them. If there are no further questions, we will conclude this conference call. Thank you for your questions. 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.