Good afternoon, ladies and gentlemen, and welcome to the OMV Petrom's Earnings Call. Today's presentation will last around 30 minutes and will be recorded. By now, you should have received the presentation by email. The slides and the speech are also available online on www.omvpetrom.com in the Investors section. These also include the cautionary statement regarding forward-looking statements. Now, let me hand over to Simona Cruțu, Manager of the Investor Relations and Stakeholder Engagement Department, who will moderate the event.
Good afternoon, ladies and gentlemen, and thank you for joining us. We'll have a presentation followed by a Q&A session. Christina Verchere, Chief Executive Officer, will provide some key highlights about our 2030 strategy, the macroeconomic and regulatory environment, and the performance of our business segments. Alina Popa, Chief Financial Officer, will give you more details on our financial performance and the brief outlook. Afterwards, all executive board members will be available to answer your questions. We recommend you to register for the Q&A session during the presentation by pressing star one one on your telephone keypad. You can also register during the Q&A session itself. I'm now handing over to Christina.
Good afternoon, ladies and gentlemen, and a warm welcome to our conference call that will take you through our performance in the fourth quarter of 2025. Please let me first draw your attention to our legal disclaimer, which you can read in detail on slide 2. Ladies and gentlemen, let me open our presentation with a summary of progress in our Strategy 2030 implementation in 2025. In our strategic pillar for regional gas, our Neptun Deep project is on track and progressing well for first gas in 2027. Drilling is ongoing with the 4 wells in Pelican South complete. We are now moving to the Domino Field for the remaining 6 wells. In addition, we maintain progress of the offshore equipment installation and natural gas metering station construction. We also continue gas marketing activities.
With regard to further exploration of the Black Sea in the Han Asparuh block of Bulgaria, adjacent to the Neptun Deep block, exploration drilling started in December 2025. We aim to drill two exploration wells in the first half of 2026. Last month, the Bulgarian state, through Bulgarian Energy Holding, BEH, entered the exploration joint operating agreement with a 10% interest. In the new partnership structure, OMV Petrom is operator with a 45% stake, NewMed Energy holds 45%, and BEH holds 10%. In the remaining waters, we have secured the Transocean Barents rig to start exploration drilling immediately after the completion of the Neptun Deep development drilling. The Anaconda-1 well is to be drilled in approximately 1,500-meter water depth, exploring a new prospect in the Neptun Deep block.
Total depth of the well is expected to reach almost 3,800 meters. The total planned well cost is up to EUR 90 million. Thus, with 2 rigs active in the Black Sea, we have a marked increase in the intensity of our exploration, regional exploration operations. Regarding our strategic pillar transition to low and zero carbon, we made significant progress on many projects, particularly in renewable power. We are now targeting more than 2.5 gigawatts of solar and wind capacity installed by 2030, including partnerships, and we have already built a substantial portfolio of projects. In 2025, we advanced our project execution and regional expansion, further strengthening our position as a key player in the energy transition within the region.
By the end of 2025, with more than a third of our capacity target for 2030 was under construction and approximately 70 MW capacity operational. We are also advancing with our SAF/HVO project, aimed to support the decarbonization of transportation sector. Construction works for the production unit in Petrobrazi Refinery are underway with the main foundation poured. Over 80% of feedstock contracts were signed for the first eight years of operations. In the area of e-mobility in 2025, we inaugurated the largest electric charging hub in Romania for all types of vehicles, including for heavy transportation. By the end of the year, we had around 1,350 charging points installed, and our plan is to reach around 1,500 by the end of 2026.
In 2025, we continued to optimize our traditional business, focusing on value over volume and operational excellence in all business segments and capitalizing on our integrated business model. In E&P, the hydrocarbon production decline was 4% year-on-year, marking the second-best result in the last 8 years. The reserve replacement rate increased to 140%, mainly reflecting the Neptun Deep project maturation due to drilling activities. We continue our onshore exploration activities, enabled by the recent extension of the onshore exploration licenses in 7 blocks, and in December, we agreed the principles for a 15-year extension of our production licenses. In R&M, our strategic priorities in refining are to maximize Petrobrazi profitability and to build a sustainable refining business. We continue to invest in several ongoing projects, finalizing the new aromatic complex and the sulfur recovery unit in Petrobrazi.
In retail, in 2025, we achieved a throughput per filling station of 5.9 million liters in Romania. We also achieved a 76% increase in non-fuel business margin versus 2020, progressing towards our target to double this margin by 2030. In G&P, we continued consolidating our regional activities in gas and power transactions in neighboring markets such as Bulgaria and Hungary. In addition, we continue to diversify our gas supply portfolio from third parties, especially in terms of import sources. Our 48 terawatt hour total gas, gas sales were 12% higher year-on-year, representing the highest yearly level since 2021. An excellent result, especially considering the highly challenging regulatory and market context. We are also delivering on our commitment to offer attractive shareholder returns. In 2025, our strong performance enabled us to pay RON 4 billion in dividends to our shareholders.
The market also recognized our performance and strategic progress in 2025, by virtue of a 40% increase in our share price over the year, leading to a total shareholder return of 49%. For the year 2025, we propose a total dividend per share of 0.057 RON, of which Alina will go into more details later. On slide 4, we present the key highlights of the fourth quarter. Our fourth quarter results reflect robust operational performance, driven by our integrated business model and resilience amidst a challenging market environment. At RON 1.4 billion, our fourth quarter Clean CCS Operating Result was 41% higher year-on-year, with improved G&P and R&M results offsetting a lower E&P result.
Following the agreed principles with the Romanian state for 15-year extension of production licenses, our operating result reflected an impairment of other financial assets in E&P related to abandonment obligations. In addition, in the context of this agreement, triggering higher E&P taxation and due to higher production decline for some mature fields, we also recorded a net impairment related to E&P tangible assets. As a consequence, our operating results for the fourth quarter was negative at RON -0.6 billion. Again, Alina will provide more details later. Our operating cash flow in the fourth quarter of 2025 increased by 337% year-on-year and reached RON 2.1 billion. The Clean CCS return on average capital employed reached 13.9 percentage points. I will go into the details on each business division later on in this presentation.
However, I would like to point out that in a volatile market, our results reflect the benefits of our business integration, with increased refining margin offsetting lower crude price. Gas and power result was very strong, reflecting the power market deregulation and the highest level of gas sales volumes for fourth quarter since 2019. In today's highly inflationary environment, prioritizing cost efficiency and optimizing our operations remains essential to sustaining our financial performance. To deliver on our objectives, we will continue our optimization programs by assessing selective field divestment opportunities, streamlining and automating our processes, and enhancing contractor management across the organization. In HSSE, the Total Recordable Injury Rate for 2025 was 0.57. Moreover, we continued our efforts to reduce greenhouse gas intensity with projects in all three business segments.
Based on our preliminary data in 2025, our Scope 1 to 2 GHG absolute emissions went 19% lower compared to 2019, reflecting our focus to reduce carbon emissions. Now, let us take a look at the evolution of commodity prices in the fourth quarter of 2025. Oil prices were impacted by weak short-term demand outlooks and rising OPEC+ output perspective, as well as the ceasefire in Gaza and renewed peace talks regarding the Russia-Ukraine war. While countering these effects were supply concerns on the new U.S. sanctions on major Russian oil exporters. On average, Brent Crude was priced at $64 per barrel in the fourth quarter, representing a decrease of 15% year-on-year and 8% quarter-on-quarter.
OMV Petrom indicated a refining margin with $16.75 per barrel in the fourth quarter, more than double year-on-year, in the context of strong gasoline and diesel crack spreads amid tight supply conditions in the region. European gas prices declined by almost 10% quarter-on-quarter, despite the start of the winter season and storage levels significantly below the average of the past three years. This was supported by the ample supply of LNG into the European market at relatively lower prices and less strict regional storage mandates compared to the last couple of years. The CEGH price averaged 33 EUR per MWh during the quarter, 26% lower year-on-year and 9% down quarter-on-quarter. Gas prices on the Romanian centralized market followed the same trend and declined quarter-on-quarter by 4%.
Day-ahead prices average around EUR 32 per MWh, marking a 20% decrease year-on-year. Based on electricity prices, Romania increased by 29% quarter-on-quarter, but decreased by 9% year-on-year, to an average of 120 euros per megawatt hour. The average CO2 price increased by 16% quarter-on-quarter and by 23% year-on-year, reaching EUR 81 per ton. This increase was due to colder weather, which boosted fossil demand in power, as well as speculative trading of certificates. Looking now at the Romanian macroeconomic environment, the latest available data shows that in the third quarter of 2025, GDP increased by 1.6% year-on-year. In November, the European Commission reduced its projected GDP growth for 2025 for Romania, from 1.4% to 0.7%.
For 2026, Romanian GDP is now forecast to grow by 1.1%, reduced from the previous forecast of 2.2%, and for 2027, the commission foresees a 2.1% growth in GDP. The consumer price index for the month of December 2025 versus December 2024 was 9.7%, driven by the removal of the electricity price cap starting on July 1, 2025, and by the increases in the VAT and excise rate starting on the first of August, 2025.... Looking at the Romanian energy sector in the fourth quarter of 2025, based on our internal estimate, the demand for our products started to reflect the lower economic growth. Demand for retail fuels was slightly lower year-on-year.
Commercial total demand was down by 8% year-over-year due to declining industrial, construction, and transport activities under weaker economic development. Gas demand decreased by around 2% year-over-year, driven by mild weather, declining households and district heating consumption, while the gas to power consumption increased. Power demand was 2% lower year-over-year, while domestic production increased by 10% year-over-year. Romania was a net importer of power in the fourth quarter of both 2025 and 2024. The contribution from all sources increased year-over-year, but especially from hydro, gas, and solar. Let me now summarize the key highlights of the Romanian fiscal and regulatory framework. As of the first of July, the power market was deregulated, while in parallel, the government introduced a series of measures aimed at protecting vulnerable consumers.
As for gas, Ordinance 620/2025 maintains the regulations until the end of March 2026, after which the gas market is also set to be liberalized. We continue to emphasize that free market principles are essential for fostering investment, and that any market interventions should remain temporary, and we welcome the state's efforts to establish mechanisms to safeguard vulnerable consumers. In December 2025, the government issued a new fiscal package. The 0.5% tax on the net value of certain construction, introduced in 2025 for an indefinite time, is now set to be eliminated as of the first of January 2027. The annual impact of this tax is estimated to be mid-double-digit million RON for 2026.
Also, as part of this package, the 0.5% tax on turnover, introduced in 2024, initially for two years, was extended for another year. This tax is estimated to have an impact on our 2026 results of below RON 250 million. The fiscal measures effective since August 2025, which include, among others, increases in VAT rates and excise duties, have begun to impact the demand for our products. Looking ahead, these fiscal adjustments may potentially influence product demand also in the medium term. Let me now move to the performance of our divisions, starting with exploration production. Clean operating result in exploration production was more than halved year-on-year, reaching RON 253 million in the fourth quarter of 2025, driven by lower oil and gas prices, lower crude oil sales volumes, and unfavorable foreign exchange effect.
These were partially compensated by lower E&P taxation, mainly following lower prices. Total production cost, depreciation, and exploration expenses decreased. Hydrocarbon production in the fourth quarter decreased by 3% year-on-year, mainly due to natural decline and planned maintenance activities, partly offset by the contribution of workovers and new wells. This translates into a full year decline of 4.2%, the second-best result recorded in the last 8 years. Production cost per barrel of oil equivalent increased year-on-year by 4% to $17.67, reflecting unfavorable foreign exchange and the construction tax, which together accounted for $1.40 per barrel of oil equivalent, partly compensated by cost optimization measures. For the full year 2026, we expect the Brent oil price to be around $65 per barrel.
We expect to produce more than 100,000 barrels of oil equivalent per day, with no divestments impact considered. In the context of persisting inflationary pressure on our costs and the construction tax introduced last year, we continue our cost management measures, aiming for a production cost above $16 per barrel of oil equivalent. E&P CapEx is estimated to be around RON 5.6 billion, of which Alina will go into more details later on this. In refining and marketing, the Clean CCS Operating Result increased by 57% year-on-year to RON 673 million in the fourth quarter of 2025, reflecting higher refining indicator margin and refining utilization and strong retail sales contributions. These were partially offset, mainly by higher depreciation. Our refining utilization was excellent at 100%, allowing us to capture the high refining margin environment.
Retail sales were 1% higher year-on-year, while non-retail volumes were flat. For the full year of 2026, we estimate the indicated refining margin to be around $9 per barrel, lower compared to last year. The refining utilization rate is estimated to be above 95%, in line with our strategic targets. We estimate demand for retail fuel products in Romania to be stable year-on-year, with similar evolution for our retail fuel sales. For total refined product sales, we anticipate higher year-on-year performance due to higher expected equity product available in a year without a planned shutdown. In gas and power, we achieved excellent performance in both business lines, and especially in power, supported by deregulation of the electricity market, effective from July this year.
The clean operating result was RON 344 million, compared to a negative result of RON -76 million in the same quarter of the previous year. In the gas business, we had outstanding operational performance, with gas sales volumes up 10% year-on-year. Our realized margins were higher year-on-year, despite a downward trend in prices. The power result was built on excellent operational performance and market deregulation starting July 2025. We achieved very good results from higher production, improved margin from volume bought from third parties, and strong contribution from the balancing and ancillary services markets.
The Brazi Power Plant generated 1.56 terawatt-hours in the fourth quarter, second highest level for fourth quarter since the start of operations, accounting for 11% of Romania's generation mix. For the full year 2026, we expect gas demand to be slightly higher year-on-year, while demand for power to be stable. Our total gas sales volumes are envisaged to decrease, mainly on lower supply, both from equity and third parties. The net electrical output is expected to be higher year-on-year, despite a longer planned shutdown. Ladies and gentlemen, in 2025, we delivered tangible results for all our strategic projects. We drilled the first well at Neptun Deep, started construction works for the SAF/HVO, progressed our renewable power projects, and expanded our footprint in Bulgaria.
Since our strategy 2030 was announced in 2021, the world has been witnessed unprecedented geopolitical and economic volatility and fluctuating commodity prices. This complex external environment has shifted priorities in the energy landscape. Energy affordability and security are being prioritized as the energy transition proves longer and more complex. Against this backdrop, our strategic ambition remains unchanged: to lead the energy transition in Southeast Europe through three key strategic directions, transition to low and zero carbon, grow regional gas, and optimize traditional business. OMV Petrom will continue to offer competitive base dividends and discretionary special dividends, and to distribute total dividends, base and special, of around 50% of the operating cash flow on average over the strategy cycle. Looking ahead, in the context of increased energy security focus and solid hydrocarbon demand, we have fine-tuned several strategic targets in line with expected market dynamics.
To support the implementation of our strategy, we maintain our plan to invest around EUR 11 billion from 2022 until 2030. However, reflecting the energy transition pace, we are reallocating around EUR 1 billion of CapEx to our traditional business and regional gas growth, mainly to support E&P production. While CapEx beyond 2030 are spent on lower carbon technologies that are not yet economically proven for investment. Enabled also by the agreed principles for 15-year production license extension with the Romanian state, our 2030 hydrocarbon production target is increased by 10,000 barrels of oil equivalent per day to around 170,000 barrels of oil equivalent per day. Conversely, less mature technologies such as carbon capture and storage, CCS, are disadvantaged due to low market readiness.
While we believe CCS remains critical for the long-term decarbonization, it is no longer deemed commercially viable or feasible by 2030. Hence, our CCS plans have been replaced to post-2030. With this, our investments into low and zero carbon will make up approximately 25% of our total investments, versus the 35% as previously announced. We remain committed to pursuing sustainable decarbonization. We are reaffirming our target of net zero operations by 2050. Our commitment to reduce scope one to two GHG absolute emissions by 2030. So, sorry. Our commitment to reduce scope one to two GHG absolute emissions by 30% by 2030, compared to the baseline year of 2019, and methane intensity target of 0.2% by 2030.
However, to reflect shifting market demand and evolving decarbonization priorities, the reduction target for carbon intensity of our energy supply, Scope 1 to 3 by 2030 versus the baseline year of 2019, has been replaced from 10-20% to 10%. We are withdrawing the absolute Scope 1 to 3 reduction target as we steer our products portfolio in line with market demand. We will provide more details at our Capital Markets Day, which we envision to take place in the second half of the year. Please let me now hand over to Alina for more details on the financial results of the fourth quarter of 2025.
Thank you, Christina, and good afternoon also from my side. I will continue our presentation with slide 14, starting with some highlights on the income statement and also presenting key developments in our cash flow statement. Group Clean CCS Operating Result increased by 41% year-on-year to RON 1.4 billion, with lower resulting E&P and improved results in refining and marketing, and gas and power. The clean consolidation line was RON 110 million in the fourth quarter of 2025, mainly as a result of lower natural gas and crude stock volumes and lower margins for crude and fuel products in stock.
For the fourth quarter of 2025, we recorded inventory holding losses of RON 64 million, compared with losses of RON 6 million in the fourth quarter of 2024, mainly as the result of the downward price evolution for crude oil in both periods. Following the agreed principles between OMV Petrom and the Romanian state for production licenses extension announced in December 2025, we recorded an impairment of other financial assets of approximately RON 1.5 billion in E&P related to abandonment obligations. In addition, in the context of this agreement, triggering higher E&P taxation and due to higher production decline for some mature fields, a net impairment of around RON 0.6 billion related to E&P tangible assets was recorded in the fourth quarter. This was partly offset by the net temporary gains from forward contracts in gas and power segment.
Thus, we recorded net special charges of RON 1.9 billion in the fourth quarter. For comparison, in the fourth quarter of 2024, we recorded net special charges of RON 0.6 billion, mainly related to impairments of some producing oil and gas assets, being driven by the general increase in operating costs in the context of high inflationary pressures. The net financial result was a positive RON 89 million, mainly due to positive effect from the discounting of receivables. As a result, in the fourth quarter of 2025, the net income attributable to stockholders was negative RON 375 million. The 0.5% tax on revenue introduced in 2024 amounted to around RON 54 million for the fourth quarter of 2025, mostly booked in the refining and marketing segment.
As for the 0.5% tax on construction, we booked in the fourth quarter around RON 17 million, mostly in exploration and production division. With regard to our cash flow statement, in the fourth quarter of 2025, the cash generated from operating activities before net working capital changes was RON 1.8 billion. For comparison, the amount recorded in the fourth quarter of the previous year was RON 1.2 billion. Working capital changes led to a cash inflow of RON 372 million in the fourth quarter of 2025, compared to a cash outflow of RON 734 million in the fourth quarter of 2024.
The cash inflow reflects mainly an increase in liabilities, mostly from trade payable and advances received for future gas delivery, as well as a decrease in inventories due to lower volumes of imported crude oil and seasonally lower gas volumes. These were partly offset by an increase in receivables, mostly in gas and power segment, reflecting higher sales volumes triggered by seasonality. Overall, the operating cash flow in the fourth quarter of 2025 amounted to RON 2.1 billion, compared to RON 0.5 billion in the previous quarter. Our net payments for investing activities amounted to RON 1 billion, reflecting a cash outflow for organic CapEx of RON 1.9 billion and a cash inflow of RON 0.8 billion, mainly from treasury bills maturing during the quarter and non-reimbursable EU funds received for our PV parks in partnership with CE Oltenia.
The net cash position, including these, decreased to RON 5.2 billion at the end of 2025 versus RON 8.1 billion at the end of 2024. Our special dividends, amounting to RON 1.2 billion, were paid starting December 3, 2025. Moving now to slide 15. Total CapEx for 2025 at RON 7.8 billion was 9% higher year-on-year. 72% of this amount was spent in exploration and production, mainly for Neptun Deep, as well as drilling 31 new wells in Ciuresti and performing more than 540 workover jobs. In refining and marketing, investments increased by 15% to RON 1.8 billion, mainly for ongoing projects related to transition to low and zero carbon activities, such as SAF-HVO units and e-mobility.
In gas and power, we invested RON 309 million, reflecting the progress made on the renewable power portfolio. For the full year 2026, assuming a predictable and competitive regulatory and fiscal environment, we plan net organic CapEx of around RON 9 billion. Additionally, potential inorganic CapEx is estimated at up to RON 0.4 billion. Moving now to slide 16, we present our executive board initial dividend proposal. Let me start by reminding you our dividend policy and guidance. We have a progressive base dividend policy with a guidance that indicates base dividend increase between 5%-10% versus previous year, and the total distribution to dividend every year between 40%-70% of the operating cash flow.
In the context of record-high investments in the period in 2025, 2026, and the challenging environment expected for 2026, our dividend proposal is set at the low end of the ranges mentioned in the dividend guidance, namely the base dividend per share of 0.0466 RON increased 5% year-on-year. The total dividend, base plus special, at 40% of 2025 operating cash flow. The special dividend per share amounts to 0.0112 RON, 44% down year-on-year, leading to a total dividend per share of 0.0578 RON, 10% lower year-on-year. The proposal for the total dividend per share of 0.0578 RON translates into a dividend yield of 5.8% using end 2025 closing share price of 0.995 RON.
We believe that our proposal remains competitive compared to regional peers in terms of payout ratio from the operating cash flow, while our company is going through the most intensive investment period in its history. Since launch of our strategy 2030, in December 2021, our total dividend yield averaged around 13% per year, and the operating cash flow distribution averaged slightly above 50%. The proposed dividend is subject to the approval of the supervisory board and the general meeting of shareholders, which will take place in April. To conclude our presentation today, let's take a look at our outlook for 2026, as well as guidance for 2027, 2028, on slide 17. We have presented already our expectations for the relevant indicators for 2026. Overall, this year, in the context of higher planned investments, we expect free cash flow before dividends to be negative.
Moving now to the 2027-2028 period, we estimate oil prices of around $70-$75 per barrel. As we expect production from Neptun Deep to start in 2027, our hydrocarbon production is estimated to be higher than 130,000 barrels of oil equivalent per day on average in 2027-2028, before potential divestment. We expect inflationary pressure on our costs to persist, and therefore, with support of intensive efficiency program started, we see the production cost at above $16 per barrel of oil equivalent until Neptun Deep comes on stream. In 2028, the first year of Neptun Deep full production, the average production cost is expected to decrease to high single-digit $ per barrel. In refining and marketing, we currently estimate an average refining margin of around $8 per barrel in 2027-2028.
In 2027, we plan the next major turnaround, resulting in an expected utilization rate of around 85% that year. The refinery utilization rate is estimated to return to above 95% in 2028. CapEx is expected to be around RON 6 billion in 2027 and 2028 on average, and we reiterate that investments require a predictable and competitive regulatory and fiscal environment. The years 2027, 2028, are the beginning of a new chapter for OMV Petrom, with major projects coming on stream and contributing to strong operational performance. In this context, we expect a positive free cash flow before dividends for both 2027 and 2028. With this, we conclude our presentation, and thank you for your attention. We are now available for your questions.
Thank you, Alina. Let me remind you that if you want to ask a question, you need to press star one one on your telephone keypad. We kindly ask you to limit to three questions per participant. Once again, to ask a question, please press star one one. We'll pause for a moment to assemble the queue.
We will now take the first question from Oleg Galbur from ODDO BHF. Please go ahead.
Yes, good afternoon, and thank you for the presentation and for the opportunity to ask questions. I have three. I'll ask the first two one by one, because they're long and I don't want to lose some details. So my first question refers to your CapEx for 2025. Can you comment on the difference between your most recent guidance for 2025 from last October, when you guided for an organic CapEx of RON 8 billion, and today's reported figure of 7.7? Where does the difference come from? Also, can you explain why the cash flow statement shows a significantly lower CapEx for 2025 of only RON 6.8 billion?
Does it mean that the cash outflow in 2026 might be significantly higher than your guidance of an organic CapEx of RON 9 billion? So that would be my first question.
Alina, do you want to?
Yes. Thank you, Oleg, for the questions. So, yeah, we always try the best we can to estimate as reliable as possible. However, you know, in real life, there are a lot of things that can happen. So, indeed, we are slightly below our CapEx estimation with the latest. I mean, we have a lot of projects, as you might appreciate, a lot of projects ongoing and a lot of estimation going on with percentages of completion, and that's why we cannot be exactly precise, and we try, we try our best. So there is no particular reason I can highlight there, from this today perspective, it's just a normal reality is not a spot on estimation all the time.
When it comes to cash flow statement, we have, you know, the CapEx number is always adjusted with the level of payables at the end of the period and the beginning of the period. So from that perspective, of course, we have milestone payments on many of our major projects, while CapEx is recognized based on a percentage of completion. Now, yes, we can see the same in 2026. I cannot say that I expect a significant difference with this RON 9 billion from today's perspective, but we always have the difference between CapEx recognized on percentage of completion and then cash outflows based on milestones, depending on how the contracts are.
Okay, understood. Thank you. Then my second question refers to upstream production costs. I'm having a bit of difficulties in understanding your guidance for OpEx per BOE, especially when comparing it with OMV's guidance, which expects higher OpEx per BOE this year. So maybe you could provide a bit more details on the different moving parts behind your guidance to understand why you expect lower average number this year versus last year, especially when we look at the economic environment, and when we expect still quite a high inflation in Romania, probably more than 5%, and also your production stays on the declining rate while the construction tax is still in place. And third question is very short one on your production guidance.
If you could provide a split by oil and gas, production decline for 2026, that would be very helpful. Thank you.
Okay, Alina will take the production cost one, and, Cristi on the production guidance for 2026. Mm-hmm.
Oleg, on the BOE, what we have ongoing are a significant number of efficiency and cost programs that we are running. Now, this covers various topics, trying to simplify our footprint, trying to automate, trying to reduce complexity and so on. So depending on how successful we will be on all these efficiency programs, we will see to what extent we will be going down below 17. We put in our guidance above 16, saying above just to signal that we aim to go with costs lower, and it all depends on how successful we will be in all these efforts that we are doing in order to improve our performance on production cost.
Okay, understood. Good luck with that.
Thank you. We need it.
I would like, regarding the guidance for the, for the production, as you know, as mentioned, 2025, it was the second best year in term of decline in the last eight years, something which we're proud of. During the year, you know, that we're accommodating different shutdowns on the facilities, which is a normal process in order to maintain the safe operation. In Q4 2025, the production was mainly affected by the natural decline of our mature fields and, as well, one of our biggest facility turnarounds, which was basically, compared with last year, with 2024 was coming later or coming in Q4.
This is compensated with recovery and drilling performance. However, the production of oil and liquids basically dropped by 7% year-on-year. A much better performance was almost stable on gas. So basically for 2026, we're maintaining 100,000 cubic per day, considering as well the weather impact, which we have in Q1, which is quite severe, and we have some hiccups. Yeah, that will be me answering.
Excuse me. Maybe I will just quickly rephrase my question. Do you expect the gas production to decline or to stay flat in 2026?
We are expecting a better performance on gas than on the oil. Yeah, which is proved as well by the performance in 2025. Yeah.
Thank you.
Thank you. We will take our next question. The next question comes from the line of Ioana Andrei from UniCredit Bank, Romania. Please go ahead.
Good afternoon. Thank you for the presentation. I have a few questions. First, regarding the new royalty quotas and the changes to supplementary gas taxation, as outlined in the report, could you elaborate on the specific changes in the, in respect to the gas windfall tax? And, can you please give us guidance regarding the impact on the new, onshore royalties quota for 2026? Second, regarding the updated, ENP production guidance for 2030, at 170,000 barrels of oil equivalent per day, could you clarify what is driving the increase? Is this, the, from reduced natural decline or maybe higher output from Neptun Deep? And if you please, could give us the new guidance on the natural decline for, more than one year, at least. And if I may, one more on dividends.
Of course, it was a pleasant surprise to see the special dividend proposal at this stage. Does this reflect a change in timing, or do you still take into consideration potential other special dividends in the second half of the year? Thank you.
Alina, maybe you want to take question one and four-
Yes
-on the royalties, and then coming into dividends, and then, Cristi.
... on the E&P production.
Thank you, Anna, for the question. So indeed, the end of December, we have announced this set of principles that we have agreed with Romanian state. Basically, the main objective for us was clearly to have a 15-year prolongation of our production licenses, which is very important considering the level of investment that we want to continue in this area. Now, what we did, we have agreed the principles and the objectives, but not all the details are fully established. We are working with Romanian authorities and expecting first quarter this year, 2026, that we will have all the necessary details that we can provide to you in order to estimate a proper impact.
Now, we have communicated, and when it comes to royalties, we are talking about a 40% increase in royalty rates, but no details we can provide at this stage with regards to supplementary taxation. All this will be available, we believe, at the end of Q1, when we will finalize all the legal and contractual matters related to this agreement with Romanian state. Thank you.
But, in the end, we should expect a positive impact from the on the windfall tax or neutral? How should we see it?
So we have an adjustment in windfall tax in the sense of decreasing this tax, but overall, will not compensate the increase of royalties. Yeah, so overall, it's a negative impact for the company.
Okay, thank you.
Now I'm going to the second question, with regards to dividends. So what was the logic of our announcement today was that, in this context of record high investment, we want, in the same time, to give and provide clarity that we respect our dividend policy. So respecting our dividend policy means not only giving progressive base dividend, but also giving a special to achieve this minimum 40% of operating cash flow, what we have announced. That's why we thought, okay, it makes sense and it's better for clarity and transparency to announce both numbers together this time, just to give clarity on that.
Because in such a year with record high investments, it's important to have the dividend at the minimum level, yeah? We don't say we don't give, but we give it at the minimum level, respecting in the same time the dividend guidance and dividend policy, and also considering the macroeconomic challenging environment we have around us. So for this year, this is the announcement which contains both base and special dividend.
Yes, hi, Anna. With regard to production, 2030 target above 170,000 BOE per day. It's an ambition. I think we mentioned that in the previous session as well. It's a very ambitious target from our side. It's focusing to compensate basically the decline throughout drilling, workover and NFOs. You know that our campaigns of NFOs are quite successful in the last years. In term of traditional gas, as said before, basically, we're expecting the lower decline. We're seeing better results. Compounding annual decline is positive. We're targeting the +1% with the rate of gas of 60,000 BOE per day in 2030.
As regards oil, we're expecting the -2% decline, with the production in 2030, around 40,000. All the numbers are excluding Neptun.
Can you please repeat for the gas side, for the traditional, gas side? What is the-
It's traditional. It's traditional, as I said, 60,000, excluding Neptun.
Okay, thank you.
Thank you. We will take our next question, and the question comes from Jonathan David Lamb from Wood & Co. Please go ahead.
I find my question already answered, but I have an additional question about dividends. I was actually expecting to see dividends basically the same as they were for 2024. Does the fact that you've reduced dividend by 10%, what does that tell us about how you see cash flows this year? And are you worried about getting too much leverage? Which I wouldn't think you are, because you seem to have a very strong balance sheet. Thank you.
Thank you, Jonathan. Good to hear you. Indeed, I mean, we thought it's right that lower results are being reflected in lower dividends as well, considering also that our CapEx level is significantly higher. Nevertheless, what we expect from this year, we are on a net cash position, but we expect by the end of the year-
... we will be close to a net debt or a zero level. So we are coming to net debt, probably end of this year, beginning of next year position. This year, we see a lot of challenges, many from macro perspective, from commodity price perspective, and considering the high investment cycle we are in, we thought, okay, we go to the minimum level of our dividend guidance. That was the logic. We keep overall our promise, and that we will be in average 50% of our cash flows are given to the shareholders over the strategy period, but in the highest year of investment, we go to 40%.
Okay, thank you.
Thank you. We will take our next question. The question comes from the line of Daniela Mandru from Swiss Capital. Please go ahead.
Hi, hello, everybody. Thank you for the presentation. I have a question regarding still regarding the dividends. I've seen that you estimate for next year, the free cash flow dividend before free cash flow before dividends to be negative. So within this context, so out of next year profits, it would be normal to pay no dividends or otherwise, you probably will need debt to pay dividends. So the question is, so you will pay dividends also next year out of 2026 profits?
Yes.
Then this is the first question. The second question regards the results for the last quarter. So I didn't understand, so for me, sincerely speaking, was a surprise that you recorded that deferred tax of close to RON 350 million. So my assumption was that part of those special items have been deductible. So I don't know, maybe you clarify this. And then, a follow-up question regarding the OpEx. In fact, what are your targets? Okay, I understand that you will reduce, you hope to reduce operating costs this year, but I don't know, you have a minimum, maximum. So because you expressed that everything will depend on, but maybe you have some scenario.
A minimum reduction, a maximum reduction, something like this, in order for us to, to be able to, estimate the OpEx level for 2026. Thank you.
Okay, Alina, maybe you want to take the first two on dividend and on the different types of the OpEx.
Yes. Hello, Dana, from my side. So on the dividend, we will continue to respect our dividend policy, which says that we provide minimum 40% of our operating cash flow. So what we have guided when we said free cash flow negative, this means operating cash flow minus investment cash flow. Because we have a highest investment in our history, yes, we will have a free cash flow negative. But the dividend will be given based on operating cash flow at a level of minimum 40%. So the straight answer is yes, we will continue to give dividends and respect our dividend policy at a minimum of 40% of operating cash flow. With regards to the second question on the deferred tax, it's basically indeed part of the special items.
You always judge what is the expectation based on the preliminary information available. When it comes to environmental and abandonment costs that we announced, that we will have, we will take on our own cost, our estimation at this point in time is that this will be treated from a tax perspective like our own, or like we treat all our environmental cost, we meaning that they will be deductible, and that's why, based on this, we have a different tax asset created for these figures. Thank you.
I'll talk about the operating cost a little bit here. I think we announced previously that our goal is to take EUR 150 million out of our cost base from 2024 to 2027. This is approximately 20% of the cost base overall. It is, there is no doubt that it's challenging, but I think part of the DNA of OMV Petrom is very, very strong financial and capital discipline, and so we are working hard on that. Alina and Cristi have talked about some of the aspects that we're working on it to be able to do that. But we're looking at our efficiency, we look at our contracting, we also look at our headcount.
We have decreased the size of the company by about 1,000 people this year, as well, predominantly through voluntary programs and retirements as well. So we're pulling all the levers we can, to be able to make sure we get the cost base right for the size of our company. It's a lot of focus and a lot of work that we do on it, but I remain confident that we will be able to deliver it. So if I wanted to give you a model, take 2024 and state it until 2027, we're taking RON 150 million of savings out. Yes, there will be some upward pressures on top of that as well, but that's the bulk of what we're looking to achieve.
Yeah, but here, for example, in 20, so last year, so if I'm looking at OpEx, it increased in absolute terms, so there is no decrease in raw terms, I mean. So there is no decrease. So-
Mm-hmm.
Yes, you have. If you say RON 150 million decrease per year in three years, I should expect that to decrease this OpEx. This OpEx will decrease by around, on average, by RON 50 million per year, so RON 10 million.
Yeah. I can understand that. Of course, we're focusing on what we can impact. We unfortunately can't impact the foreign exchange. We cannot impact Construction Tax, these kinds of things. We're focusing on what we can impact. So yes, I agree, there will be some sort of headwinds on that. Some things that are not necessarily in our control, but these are the underlying performance targets that we have.
Okay, thank you. May I ask another question? If not, I will revert after you will take all the other questions. It's okay?
Dana, if you want to go ahead and ask the question, yes.
Oh, okay. I've seen that this year will be impacted also by you guided increased capital expenditure of RON 0.3 billion. Yes, but I would like to... It's hard to estimate, but I'm trying to estimate the exploration expenses derived from the by this capital exploration expenditures. Sorry, I think I said initially capital expenditures.
You said capital expenditure. You refer to exploration, Dana?
Yes, yes. So you, you guided 300 million RON in capital, in capital expenditure, in exploration expenditure. And, I would like to know what would be the exploration expenses for this year, because, this for, 2026. Yes. Yes, I,
Yeah, I think that you'll find in the-
What will be, what will be passed through P&L?
Yes, that, that is the question.
Okay. Okay. All right. So actually, you're right. So just... Sorry, I think something happened to the volume, at least in our room. I don't know for others. So you're right. On page 11 of the investors news, we estimate that it's about RON 300 million, 0.3 billion RON of exploration expenditure. The P&L impact will depend on the results, of course. So,
Yeah.
Of course, I would like it to all to be a success, but this is exploration. This is deep water exploration, has quite a different risk profile. So, that the P&L effect will have to come once the results come in, I'm afraid, Dana. So...
Yeah. Okay.
I think, I mean, I think it's fair to say, you know, when you look in the past, our exploration activity has been much smaller exploration activity. We did a lot of exploration activity during getting ready and discovering the Pelican South and Domino fields for Neptun. We've been meanwhile doing onshore stuff, but it's quite small, actually, the onshore, compared to the deep water. So this is much more significant, what we've got, what we've got ahead of us. So, let's see what happens. Yeah.
Okay. And if I may, now, regarding 2026, do you have-
Dana? Dana, that's the last one.
Yeah.
Interrupted.
Okay. That'll be the last question, that one?
Thank you.
Okay.
Excellent.
No, okay. I understood. Okay, thank you very much.
Thank you. Any others, we can take offline, of course, Dana, with you. So thank you for your questions.
Let me remind you that if you want to ask questions, you need to press star one one on your telephone keypad.
We will take our next question. The question comes from Laura Simion, from BRD Groupe Société Générale. Please go ahead.
Good afternoon. Thank you for taking my question. First one, regarding the relocation of CapEx for this year, over RON 1 billion, to traditional and regional gas segment. This implies an increased cost for the Neptun Deep project, or where will be directed this additional CapEx? And the second question is related to refining segment. You guided to flat retail sales and higher total refining sales, which means the growth is from commercial side.
Okay. Hi, Laura. Those are your two questions, just to clarify?
Thinking it got interrupted something.
Do you think she got-
Have disconnected.
Okay. Okay. It's a shame then if we answer them when she's not on the line. So, but, we have a wider audience here, so I think we will, we will go with that. So just a quick one on the CapEx reallocation. This is, not a reallocation of CapEx to Neptun Deep. Neptun Deep project stays on, on track, on course, and on schedule for that. This is, ultimately a movement of CapEx, but only into E&P. It keeps doing very well, E&P. So, both in the onshore side, but also let's see how the exploration plays out, with regards to that. But no, it's not for Neptun Deep. Refining?
Yeah. So indeed, we have indicated flat retail in 2026, in the context of the pressure that comes from pricing, especially on the increased excise in the last year and also from as of January. So that's what we expect from retail and higher refinery sales overall, indeed, because-
... we are going to have the refinery back on full production, while in 2025, we're having a few weeks of planned shutdown and therefore a bit lower volume. So we are going to recover these volumes and put them into the market, and that's the reason for higher refinery sales.
We will take our next question. The question comes from Tamas Pletser from Erste Bank. Please go ahead.
Yes, thank you very much. Good afternoon. Two questions from my side. First, when do you expect the Han Asparuh operation results to be announced? The second question would be, what is your expectation on the liberalization on the gas side? Can we expect a similar impact on the gas and power on EM segments as the power liberalization or not? I presume not, but I'm very curious what you are going to say on this. Thank you.
Okay. On Han Asparuh, I'll let Cristi talk, because we are in, we're in real time today, with regards to Han Asparuh in the first well, and then after that, Franck will talk about gas liberalization.
Hi, Tamas. As you know, practically, we have a campaign of exploration in Bulgaria and Han Asparuh with two wells. We started with spuds Vineh in December 2025. We reached the TD for the moment. First results of the wells, of the well, are not coming as expected. Anyhow, drilling data are under review and, as well, we're testing if we need to do additional testing in the well. Our next prospect in the campaign is in Krum, where we're targeting different reservoir and sands. We're planning the spudding in Q1 2026.
Yeah, given the farm down on the Han Asparuh and Han Asparuh farm down strategy, the costs of the Vineh well allocated to us is basically around EUR 30 million.
Do you see any dates when you can come out to the market and say something on this potential?
As soon as possible. Yeah. I don't want to commit and to be late after that.
Mm-hmm.
Just a short correction. It's EUR 15, not EUR 30, is the Vineh cost.
So, EUR 50 million, you said? Okay.
5, 1, 5. 15.
15, okay. So that's, that's your share of the exploration for this, yeah?
Indeed. Indeed.
Thank you.
I think the reminder obviously is that we did a farm down strategy, and in doing that farm down strategy, obviously when new partners come in, they have a tendency to carry you. Therefore, the financial exposure for us is lower in this situation, which is normal in a farm down strategy and as a sense of risk management overall. So, okay?
Yeah. Okay.
Great.
Hello? Yeah.
Gas liberalization.
Yeah, good afternoon, Tamas. So in term of gas liberalization, so that's what we are forecasting from first of April 2026. So we still have Q1 on a regulated market with a cap for our gas production for the B2C and the district heating. So we expect this to be relieved, sorry, from first of April. In term of financial impact, yes, it's not going... I mean, it's difficult to judge, but it's completely different than for power. For gas and power, it's not a significant impact because, you know, we're a sales organization for upstream. For upstream, of course, the impact is different between the cap and having access to the free market.
It will depend on the free market price. I mean, at the moment, we are around 150 RON per megawatt hour, if you look at summer and winter price. But of course, there's also some impact of taxation and what will be the final taxation, what Alina was mentioning, by the end of Q1. So we need to understand this before looking what the final impact of this liberalization versus regulation. That's difficult to judge at the moment, yeah.
As there are no further questions online, we got several questions offline via email, and I will read them out loud, if that's okay with you. The first one refer to refining margins. You're guiding to $9 per barrel for 2026 versus $12.4 in 2025. What's driving this down, crack spread or company specific issues? Second, when will you drill Anaconda-1? What's the resource potential, if successful? And third, production trajectory for Neptun Deep. Any additional color on when does it start producing, and what's the ramp-up profile? What first gas date is assumed in the 2027, 2028 average guidance of more than 130?
... Excellent. Okay, okay. Final question?
Yeah, sure.
Do we know who the questions are from? Mm-hmm. Okay.
We do not talk about specific Petrom company related reasons for this refining margin indication. Actually, it's market fundamentals. We are seeing the 2026 on a downward trend, while the road transport remain under pressure. But still they will be above the 5-year average. In January, the refining margin was kind of confirming our assumption, and most probably is going to be further soften in February, March, versus previous year. So we believe that this our indication around $9, it's a robust one, considering again, market fundamentals.
While we could see some potential improvements of the margin on the context of Russian refinery outages, capacity rationalization in Europe and U.S., and of course, the geopolitical uncertainties.
Thank you.
Cristi? Anaconda.
Anaconda. Anaconda, you know, basically, it's a exploration well, which we're pursuing. It's around 40 kilometer southeast from the Neptun Deep block. Basically, we are planning to drill that after we're finishing the drilling in the Neptun Deep. Which is... You can extrapolate when this will be.
Neptun Deep first gas. The question was
Neptun Deep first gas. Yeah. So that's why, as you know, we said 2027. Allow us to progress with the project. It's a very intense project. It's a very intense year for us in terms of execution in the field. And once we're progressing into the project, we'll come with more detail throughout the year. I'm as well keen to communicate where, but we need to make some progress.
If there are no more questions, I want to thank you again for taking part in our conference call. For further information, please do not hesitate to contact our investor relations team. Until our next call, we wish you all the best. Thank you.
Thank you. Bye.
That concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.