Good afternoon, ladies and gentlemen, and welcome to the OMV Petrom's Earnings Call. Today's presentation will last around 20 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 Investor 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 the key highlights about the macroeconomic and regulatory environment, as well as our operational performance in the first quarter. Alina Popa, Chief Financial Officer, will give you more details on our financial performance and the brief outlook. Afterwards, they 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 first quarter of 2026. Please let me first draw your attention to our legal disclaimer, which you can read in detail on slide two. Ladies and gentlemen, before going into the results of the first quarter, please let me share some thoughts on the current geopolitical context. The Middle East war that began at the end of February triggered one of the largest disruptions ever in the global energy markets. Romania is a net importer of crude and fuel products, with roughly 1/3 of diesel and about 80% of feedstock for domestic fuel production being imported. In this context, OMV Petrom remains focused on its core responsibility, ensuring uninterrupted product availability.
Supported by our integrated asset base, we continue to cover 1/3 of the country's fuel and natural gas needs and ensure about 10% of its power generation with the necessary crude and fueled volumes secured for the coming period. Moving now to the key highlights of the first quarter. Our results reflect robust operational performance driven by our integrated business model and resilience amidst a challenging market environment. At RON 1.5 billion, our first quarter Clean CCS Operating Results were 16% higher year-on-year, with improved Gas and Power and R&M results offsetting a lower Exploration and Production result. Our operating cash flow in the first quarter of 2026 remained flat year-on-year at RON 2.7 billion. The Clean CCS Return on Average Capital Employed reached 14.2 percentage points. I will go into details on each business division later on in this presentation.
I would like to highlight a few points. Our gas production in the quarter was 2% higher year-on-year. We had a strong utilization for our refinery, well above the European average, and refined product sales increased by 11% year-on-year. Gas and Power also had a very good quarter in both business lines, with the highest quarterly gas sales volumes since the first quarter of 2020 and the second-highest power production since the start of operations in 2012. During the first quarter, we further focused on delivering on our three strategic pillars. In our strategic pillar, Grow Regional Gas, our Neptun Deep project is progressing as planned. We are continuing the drilling in the Domino field with all six wells having top hole section drilled, cased, and cemented.
The topside and jacket fabrication is well underway, as is the fabrication of equipment construction of the natural gas metering station. The hull of the field support vessel fabrication has been completed on time and has arrived in Norway for fit out. In offshore Bulgaria, we completed the exploration drilling campaign in Han Asparuh block. The two wells did not encounter significant gas volumes. However, the data gathered by these two exploration wells will contribute to advancing the geological understanding of the region. As exploration in the Black Sea is still at the early stage, each well contributes with valuable insights into the basin subsurface characteristics and its future potential.
With our continued interest in the Black Sea, in March, we increased our acreage position with the signing of a farm-in agreement with Shell as operator and TPAO for the exploration of the Han Asparuh block, acquiring a 25% interest. The completion of the transaction is pending customary approval from the Bulgarian government. We continue to make significant progress in our strategic pillar transition to low and zero carbon. We are also advancing with our renewable power projects. As announced last week, we have taken the final investment decision for three wind projects with a total installed capacity of 300 MW. The projects already hold the necessary permits, and production is expected to begin in stages starting in the second half of 2027. We are moving decisively from project phase to execution and production.
We already have 70 MW in operation and over 1.1 GW under development. In March, we also announced the delivery of the first electrolyzer module for the production of green hydrogen at our Petrobrazi refinery. This is an important milestone in the construction of the new SAF/ HVO unit that will enable the production of sustainable fuels. This week, the General Meeting of Shareholders approved the distribution of a dividend of RON 0.0578 per share. The payment will be made starting from the 8th of June. In HSSE, the total recordable injury rate for the rolling period April 2025 to March 2026 was 0.59.
Moreover, we continued our efforts to reduce greenhouse gas intensity with projects in all three business segments. Let us take a look at the evolution of commodity prices in the first quarter of 2026. The impact of the Middle East war on crude oil products and energy flows through the Straits of Hormuz, as well as the attacks on energy infrastructure across the region, have major implications for global energy security and affordability. Crude prices have shown increased volatility at significantly higher levels since this war began. Brent began the year at $60 per bbl and peaked in March at over $125 per bbl, marking one of the steepest quarterly increases on record. For the first quarter, average Brent price stood at $81 per bbl, up 7% year-on-year and 27% quarter-on-quarter.
Some markets for oil products have also been particularly affected, especially those for diesel and jet fuel, the latter reaching record highs. In this complex geopolitical context, OMV Petrom indicator refining margin reached $14.31 per bbl in the first quarter, driven by strong middle distillates crack spreads. In the first two months of the year, the gas price in Europe saw a steep decrease from the high levels recorded last year. The closure of the Hormuz Strait in March led to an increase in CEGH price of 21% year-on-year. In the first quarter of 2026, the CEGH price averaged EUR 42 per MWh, 13% lower year-on-year, but 29% up quarter-on-quarter. Gas prices on the Romanian centralized market followed the same trend and declined year-on-year by 24%.
Day-ahead prices averaged around EUR 39 per MWh, marking a 21% increase quarter-on-quarter. Base load electricity prices in Romania decreased by 2% quarter-on-quarter and by 12% year-on-year to an average of EUR 118 per MWh. The average CO2 price decreased by 6% quarter-on-quarter, reaching EUR 76 per ton. This decrease was due to the conflict in the Middle East, leading to broader economic uncertainty, which is expected to dampen global economic activity and reduce demand. Looking now at the Romanian macroeconomic environment, the latest available data shows that GDP increased year-on-year by 0.9% in the fourth quarter of 2025, and by 0.7% for full 2025. In April, the IMF reduced its projected GDP growth for Romania for 2026 from 1.4% to 0.7%.
For 2027, Romanian GDP is forecast to grow by 2.5%. The consumer price index for the month of March 2026 versus March 2025 was 9.9%, impacted by the removal of the electricity price cap in July 2025 and by increases in the VAT and excise rates in August 2025 and January 2026. Looking at the Romanian energy sector in the first quarter of 2026, based on our internal estimates, the demand for our products was mixed. Demand for retail fuels was slightly lower year-on-year. Commercial demand was down by 4% year-on-year due to a colder winter and the declining industrial road construction and transportation activities under weaker economic development and rising price pressure.
Gas demand increased by around 5% year-on-year, driven by cold weather, increase in the households and small or medium enterprises consumption, coupled with higher gas to power consumption. Power demand was 1% higher in year-on-year, while domestic production increased by 10% year-on-year. Romania was a net importer of power in the first quarter of both 2025 and 2026. The contribution from hydro, gas, and renewables increased year-on-year, while production from nuclear and coal sources decreased. Let me now summarize the key highlights of the Romanian fiscal and regulatory framework. In March, in the context of the Middle East conflict, the Romanian state declared a crisis situation for the oil and fuels market. Consequently, starting April, some interventions from the Romanian government are directly impacting OMV Petrom for an initial period of three months.
The first one refers to limiting the Refining and Marketing margins at 2025 levels for gasoline and diesel. The second one is a solidarity contribution from E&P linked to the average Brent quotations for the respective month. The solidarity contribution rates are applied to R&M sales of own products weighted with the share of the onshore equity crude oil processed in 2025. These interventions will lead to a partial offset of the OMV Petrom Group upside over the targeted period. The government also decided to reduce the excise for standard diesel fuel by approximately 10%, aiming to support the consumption in this difficult period.
In March, the government issued a new emergency ordinance by which the natural gas market for household consumers, as well as for heat generation and cogeneration plants and thermal power plants for household consumption, remains regulated until the end of March 2027. Even if the gas market was not fully liberalized in April 2026, as initially planned, we see steps towards full liberalization as the new ordinance has a more limited scope compared to the previous one. As a consequence, we expect the percentage of our gas sales subject to regulations to decrease from April to December 2026 to around 15% on average from more than 60% for previous quarters. We continue to emphasize that free market principles are essential for fostering investment, and that any market intervention should remain temporary and directly rooted to vulnerable customers.
Let me now move to the performance of our division, starting Exploration and Production. Clean Operating Result in E&P decreased by 20% year-on-year, reaching RON 660 million in the first quarter, driven by lower gas prices, lower oil sales volumes, u nfavorable ForEx effect, and higher exploration expenses. These were partly compensated by higher oil prices, lower E&P taxation, higher gas sales volumes and cost optimization measures. Hydrocarbon production in the first quarter decreased by 3% year-on-year, mainly due to natural decline in main fields, partly offset by the contribution of workovers and new wells. Production cost of barrel of oil equivalent increased year-on-year by 10% to $18.72, reflecting unfavorable foreign exchange and lower volumes available for sale, partly compensated by lower costs, mainly lower personnel expenses, despite high inflationary pressures.
For the full year 2026, we expect the Brent oil price to be between $85 per bbl and $95 per bbl. We expect to produce more than 100,000 BOE/d with no divestment impact considered. We continue our cost management measures aiming for a production cost similar to last year in the context of persisting inflationary pressure on our costs and negative foreign exchange effect. E&P CapEx is estimated to be around RON 5.6 billion. Alina will provide more details on this later. In Refining and Marketing, the Clean CCS Operating Result increased by 28% year-on-year to RON 506 million in the first quarter of 2026, reflecting higher indicator refining margin, strong refining utilization and increased sales volumes. These were partially offset by significantly lower sales channel margins.
Refined product sales were 11% higher year-on-year, with a non-retail volume increase of 21%, mainly due to higher export and commercial sales, while retail sales volumes were 4% higher. For the full year 2026, given the recent developments on the international markets, we now estimate the indicator refining margin to be above $10 per bbl. The captured refining margin is expected to reflect the cap on margins introduced by the government for diesel and gasoline in the second quarter in the context of the Middle East crisis. 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 an improved year-on-year performance due to higher expected equity product available in a year without a planned shutdown. In Gas and Power, we achieved very good performance in both business lines and especially in power, supported by deregulation of the electricity market effective from July last year. The Clean Operating Result was RON 339 million, compared to a negative result of RON -86 million in the same quarter of the previous year. In the gas business, we had outstanding operational performance with strong sales to both wholesales and end users at higher realized margins year-on-year overall, as well as higher Brazi power plant offtake. The power result was built on excellent operational performance and market deregulation starting in July of 2025.
We achieved very good results from higher production, improved margin from volumes bought from third parties and strong contribution from the balancing and ancillary services markets. The Brazi power plant generated 1.6 TWh in the first quarter, second highest level since the start of operations, accounting for 11% of Romania's generation mix. For the full year 2026, we expect demand for gas and power to be stable year-on-year. Our total gas sales volumes are envisaged to decrease mainly on lower supply, mainly from lower third parties. The net electrical output is expected to be higher year-on-year despite a longer planned shutdown. This planned shutdown, together with higher prices on third-party gas in the current global context and the late prolongation of the regulated gas market, are expected to negatively impact the second quarter results.
Please let me now hand over to Alina for more details on the financial results of the first quarter of 2026.
Thank you, Christina, and good afternoon also from my side. I will continue our presentation with slide 11, starting with some highlights on the income statement and also presenting key developments of our cash flow statement. Group Clean CCS Operating Result increased by 16% year-on-year to RON 1.5 billion, with improved results in R&M and Gas and Power. The clean consolidation line was RON -6 million in the first quarter of 2026, mainly reflecting the higher unit margins for crude and fuel products, partly compensated by positive effect from lower natural gas volumes in stock. For the first quarter of 2026, we recorded inventory holding gains of RON 378 million, mainly as a result of the upward price evolution for crude oil.
We recorded net special charges of RON 499 million in the first quarter, mainly related to net temporary losses from derivatives in the Gas and Power segment and Refining and Marketing segment. For comparison, in the first quarter of 2025, we recorded net special charges of RON 15 million. The net financial result was a loss of RON 88 million compared to a gain of RON 30 million in the first quarter of the previous year, mainly due to lower interest income. As a result, in the first quarter of 2026, the net income attributable to stockholders was RON 1 billion.
The 0.5% tax on turnover introduced in 2024 amounted to around RON 58 million for the first quarter of 2026, mostly booked in the Refining and Marketing segment. For the 0.5% tax on constructions, we booked in the first quarter around RON 80 million, mostly in the Exploration and Production division. With regards to our cash flow statement, in the first quarter of 2026, the cash generated from operating activities before net working capital was RON 3.1 billion. For comparison, the amount recorded in the first quarter of the previous year was RON 2.2 billion. Working capital changes led to cash outflows of RON 404 million in the first quarter of 2026 compared to a cash inflow of RON 445 million in the first quarter of 2025.
The cash outflow reflects increases in trade receivables in R&M and Gas and Power segments as well as increase in inventories. The increase in inventories was mainly driven by higher oil and petroleum product stocks, partly offset by seasonally lower volumes in gas in storage. Working capital changes were partly offset by an increase in payables, mostly in Refining and Marketing segment, reflecting higher acquisition of crude oil and petroleum products. Overall, the operating cash flow in the first quarter of 2026 amounted to RON 2.7 billion, similar to the previous year. Our net payments for investing activities amounted to RON 2 billion, mainly reflecting a cash outflow for organic CapEx of RON 1.9 billion, while Q1 2025 figures reflected also investments in short-term securities.
The net cash position, including leases, decreased to RON 5.8 billion at the end of March 2026 versus RON 8.1 billion at the end of March 2025. Our dividends amounting to RON 3.6 billion will be paid starting June 8, 2026. Moving now to slide 12. Total CapEx for the first three months of 2026 at RON 1.6 billion was 14% higher year-on-year. Almost 70% of this amount was spent in Exploration and Production, mainly for Neptun Deep, as well as the drilling of seven new wells and sidetracks and performing more than 110 workover jobs. In Refining and Marketing, investments increased by 24% to RON 354 million, mainly for the SAF/HVO unit.
In Gas and Power, we invested RON 143 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. To conclude our presentation today, let's take a look at our outlook for 2026 on slide 13. We have presented already our expectations for the relevant indicators for 2026. Overall, this year, in the context of higher planned investments, we expect the free cash flow before dividends to be negative. We are closely monitoring events on the global agenda and permanently assess their impact on our business.
For now, the assumptions and targets communicated at the beginning of the year for the period 2027- 2028 still hold. Depending on how the context evolves in the coming months, we will provide an updated guidance as appropriate. We are confident that our strong financial position and integrated business model will help us navigate in this volatile environment. With this, we conclude our presentation. 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. We'll now pause for a moment to assemble the queue.
We will now take our first question from Oleg Galbur from ODDO BHF. Please go ahead.
Good afternoon, thank you for the presentation. I have several questions, I'll ask them one by one. First of all, on the in the E&P segment on the OpEx per BOE costs, which has increased quarter-on-quarter, both in U.S. dollar terms as well as in local currency. Could you please help us understand the drivers behind this increase? When looking at FX and the sales volume of crude oil, those were rather stable or flat quarter-on-quarter. If I remember correctly, in the previous conference call, you indicated, or you hinted at least to lower unit cost to be reached in 2026.
Considering the current market environment, would you expect the OpEx per BOE for the full year to be closer to the 2024 level or rather to the last year's level of almost $18 per BOE? That would be my first question. Moving to the royalty, to the increase of royalty in the upstream segment, I'm referring to royalties on gas production. The impact was not visible in Q1, and as you pointed in your presentation, it will be visible afterwards. I was wondering whether we should expect the booking of the missing higher costs from the first quarter in the second quarter, or this will be rather spread over the next three quarters?
Lastly, on the solidarity contribution in the E&P, could you please help us assess the impact of this contribution? How is it calculated and for how long was it introduced? Thank you.
Hello, Oleg, from my side. I'll take them one by one. To start with the E&P OpEx question. The main impact, if we look quarter-on-quarter, is related to a higher personal cost. This is in the context where we negotiated our CLA, that is applicable for 2026. This is the outcome of the negotiation was in one-off payment that was made in Q1. We'll not have a percentage salary increase, which we'll see equally over the quarters. We had in one-off payment, which is also good in a way that is not affected the future to the same extent, like a percentage increase. That is the main impact that you see if you look on a quarter-on-quarter basis, where indeed we have approximately $ 1 per bbl fuel increase.
Coming to the second part of your question with regards to full year guidance. Indeed, we have, as mentioned in our previous calls, a lot of cost management measures ongoing. What we are seeing is that there is a persisting inflationary pressure, and also we see a lot of negative FX effect. In this context, we have relooked at all our estimation, and we see the guidance for 2026 production cost rather similar to the previous year, 2025. Moving to the next second question about the royalties increase. What we have announced is that in December 2025, we have agreed with Romanian state a set of objectives that were planned to be implemented in Q1 2026.
Part of these objectives are related to prolongation of E&P concession agreements. In this context, talking about the 40% increase of royalties. Implementation was going on in Q1, and a lot of dialogues and progress, however, was not yet finalized. We expect this to be finalized in Q2. Then, it will apply, the increase in royalties will apply prospectively after implementation. There will be legislation changes. Legislation changes are always of prospective application. Hope this covers your second question. Now coming to the third one around the solidarity contribution. If it's okay, I like to give a bit of a full overview of all the interventions that happened at the end of Q1, basically.
In the context of the Middle East crisis, Romanian state declared a crisis situation for oil and fuels market. This crisis situation covers three months, April to June 2026. In this context of crisis situation, they came for this three month with three main interventions. Number one is related to E&P. It is a solidarity contribution, which depends on the average Brent quotations. Now, it's starting from $70 per bbl. It's a solidarity contribution rate, which is progressive. It starts from 1.5% and can go up to 9.9%. Now, as an example, for an oil price between $100 per bbl-$120 per bbl, we will have an impact of EUR 10 million-EUR 15 million per month.
How it is calculated, we take Refining and Marketing sales of own products. Own products of the respective month weighted with a share of domestic crude processed in 2025, which is approximately 60%. Revenues of own product multiply with 60% and multiplied with the rate, which is depending on where the crude price is. This in a price environment of $100 per bbl-$120 per bbl gives you approximately EUR 10 million-EUR 15 million per month. That is the E&P impact. The second intervention from Romanian state is related to Refining and Marketing. Here, Romanian state imposed caps for gasoline and diesel. I mean, capped margins for gasoline and diesel in the sense that we are not allowed to sell with a margin higher than last year margin.
A lot of complexities when it comes to implementation. Yeah. We are still working on trying to find the best way to implement this. As a principle, this is the principle. Gasoline and diesel, all the other products are reflecting the market. Yeah. There is also always a stock effect that you need to consider if you try to estimate. All in all, the net effect of this intervention, basically what they are doing, they are taking a part of the upside coming from these higher prices. Not everything, but a part of it goes to either government or to the consumers when it comes to the margins. The third intervention, just to mention it, is not directly impacting us.
The government reduced excise for standard diesel by approximately 10%, aiming to support consumption. This shows that government also did something on their side, not just asking the oil and gas companies to support everything. All of these are applicable right now for three months. There is always the possibility of prolongation, but for the time being, that's the plan. Sorry for long answer, but I tried to cover all dimensions.
No.
Thank you.
No, no. I like very much long, longer answers. Thank you very much for all this clarification because it's helping us to understand how to at least try to project all these measures. Just one follow-up on the second question. Now that you had more time to think over this royalty impact, but also other measures that have been agreed with the government, would you be able to give us an update on the expected net impact on a yearly basis?
Not yet. As soon as we will finalize everything, all the legislative changes will be clearly published, then we will provide as soon as possible an impact on the intervention. Indeed, it's a royalty increase, but also it's a change in supplementary taxation. We do not have yet all the details finalized. That's why we ask for your patience a bit more.
Understood. Thank you very much.
There is no one else in the queue. Let me remind you that if you want to ask a question, you need to press star one one on your telephone keypad. We'll wait for a minute to see if there is anyone in the queue. Okay, we have two more.
Our next question comes from Irina Răilean from Mosaiq. Please go ahead.
Good afternoon, thank you for taking my questions. My first one is regarding the Refining and Marketing business. How do you see the impact? If we take the margin, the last year's 12 point something margin in the Refining business as a reference for this cap on the margin that the government introduced, is this a relevant figure or not? We saw the average for last year for OMV Petrom, and we saw the average for the Q2 2025. Is this comparable? Q2 is lower than the whole year. If you could guide us a little bit on the how much the impact could be here and how to correctly interpret. This is my first question. The second one is related to the gas market.
If you could tell us how much of the volume in 2026 for the remaining quarters do you plan or are you obliged to sell on the regulated market? That's all from my side. Thank you.
Yes. Okay. On the... I will start with the R&M question. On the impact. Last year, the question was around if to what extent is relevant the last year refining margin. We need to consider that this maximum cap is valid for gasoline and diesel, not for the other products. What at least we have seen in April were quite negative cracks for other products than gasoline and diesel. That's an effect to consider. Let's see how the following quarters will go. There is always also a kind of a stock effect because the regulation starts from accounting logic, not from the CCS logic. There is a bit of temporary stock. You start from stocks plus the margins. There are some complexities around that.
I mean, you can use it as an indication, but then there are other considerations to be looked at when you calculate the full impact. All in all, that's how I said previously. There is a positive impact. However, part of it is taken away from us at company level. Second question around the regulated sales. On the Q1, we talk about sales to households at regulated price. In Q1 2026, 2.9 TWh. Q2 2026, 1.9 TWh. The full year, we talk about 6.6 TWh of volumes to be sold to households and district heating. Thank you.
Okay. Thank you. Maybe just a follow-up regarding the supply on the whole market, how safe and secure you see it right now? Because I think a couple of weeks ago, I saw some headlines in the press that we don't have enough supplies on the market, so on the fuel market. That's why I'm asking how do you see the situation right now?
Thank you, Irina. I will take that one overall. Just a reminder, as we said in general, Romania is importing 80% of the crude needs. Obviously, it's got more than one refinery. We're not the only refinery. We've got two refineries operational. Also, we are importing diesel as well on top of, on top of the crude that we are bringing in overall. With regards to how we see the market, I'll talk just for ourselves about Irina because I can talk to it. I mean, we're able to see access to the crude that we need. We're comfortable that we're able to bring the crude in.
We're comfortable that we are able, obviously, with our own production as well to make sure our refinery is full and therefore to be able to put that into the market overall. What we do see is some, let's say, local filling station supply disruptions. Generally for where you might go dry for a while, just for a limited period of time. It's temporary in nature until we get the stock moved to that. We do see some of that. That's really an effect of the fact that we have an administrative intervention in place and just trying to manage that overall. The other question we do tend to get around is jet, because there's conversations, I think, more at the European level on jets.
For the domestic needs that we see here in Romania, that is generally supplied very well by the two refineries on the jet side. It is a volatile period. I think we need to be careful about forward projection in this. Overall, for how the first two months of this have gone, turbulent, but supply has been secured.
Thank you very much. One more follow-up, if I may on the fuel market. Regarding the exports, you have some restrictions there. I know you have a distribution in Moldova and Bulgaria. How will that affect you? Is that just you should ask for permitting for export, or can it actually impact your sales volumes?
Yeah. Yeah. No, I mean, I think there are some checks, I think on exports. Just to check it that the market does not run out or anything like that. We're also able to provide our other markets with locally provided product as well in that overall. I don't see a disruption there. I think just always to remind ourselves as a market, we are generally long gasoline, short diesel. You could possibly see some exports of gasoline, et cetera, for that.
Thank you very much.
Thank you. Your next question comes from Daniela Mandru from Swiss Capital. Please go ahead.
Hello, everybody. Thank you for the presentation. I have just two questions. One regarding the guidance for the gas price, tags and realized price for 2026 at least. Because I think you don't publish this indicator despite the fact that it is important. The second one regards the Han Asparuh. We know that you have drilled two wells, both empty. Please let us know, upgrade us on the development of Han Asparuh going further. Thank you.
Okay. I'll take the Han Asparuh question and Alina can take the, why don't we disclose gas price question. Overall. Yeah, maybe I'll just start a bit to write down on the sort of big picture. We are actively beginning to do more deep water exploration activity in the western part of the Black Sea. Obviously we have Neptun Deep, that's in development right now. What we had did is we have acreage in Bulgaria, and we have acreage in Romanian deep water as well. You're absolutely right. We drilled two wells in Han Asparuh. Unfortunately, we were not able to find significant gas resources there. We have abandoned, plugged and abandoned both of those wells.
However, we have also at the same time picked up acreage in the block further south of Han Asparuh, the Han Tervel . We're in the process of entering that with 25% equity. Shell is the operator as TPAO is also in the block. That's going through government approval. That will then after that, it will do some seismic activity before you look to see if there is a prospect that you can drill. The main message is we continue to be very interested in the Black Sea. We have also a deep water exploration well due to be drilled in the Neptun Deep block. That will happen at the end of the Neptun Deep project drilling program overall.
Yes, unfortunately, we had these two dry, two dry holes, but still continue to look because we see the overall western part of the Black Sea as geologically prospective. With regards, I think there's been some questions in terms of the financial implications. The two wells cost approximately EUR 170 million. However, that's gross. Our exposure to that was EUR 30 million because we had actually brought in partners. When you bring in a partner, they carry a higher share of the cost as part of the entry into those wells. Of that EUR 30 million, we have written off about half of it. The other half is expected to be in the second quarter.
That's 'cause we were still plugging and abandoning and actually the demobilization of the rig. Some cost went into the second quarter. Hopefully that gives you the macro picture, the big picture, and then also the financial picture as well.
Hello, Dana, from my side.
Thank you.
Thank you for the question. Indeed, we don't say much about the gas price. We have a lot of limitations coming from competition requirements in this respect. What I can say that indeed the local prices trend is expected to follow the region and the large Western trading gas hub. If you are looking at those, you should be in line with what we expect to happen on the Romanian market as well. For Q2, we see the trend going potentially higher depending on the external marketing trends and mainly the Middle East conflict. For the full year remains volatile and yes, we will follow probably in Romania. We expect to follow the trends on the large trading gas hub. Thank you.
When making the budget, what price you assumed?
Unfortunately, I cannot disclose this, due to the confidentiality restrictions that we have in place.
Okay. Thank you.
Let me remind you that if you want to ask a question, you need to press star one one on your telephone keypads. We will wait for a few moments to see if there are further questions.
Your next question comes from the line of Oleg Galbur from ODDO BHF. Please go ahead.
Yes. Thank you for allowing me to ask one additional question. This is about your oil and gas production. Because what we observe is that in the first quarter, the oil production continued to decline. You have named several drivers behind this decline, including some adverse weather conditions. My question is, going forward, would you rather expect the crude oil production to stay somewhere between first quarter and fourth quarter of last year levels? Would you rather say that the levels we see in the first quarter are to be expected going forward due to the ongoing natural decline? Maybe you can say also a few words about the gas production, which was increasing. Should this trend continue or would? Or, we should rather expect it to stay at current levels or at levels seen in the first quarter? Thank you.
Yes. Maybe I'll start with the gas side overall. I mean, I think we're very pleased with the first quarter production in the gas side. We do generally see, Oleg, that when we look at our near field wells that we drill, when we look at some of our exploration, we do tend to see a little bit more success in the gas side than in the oil side. You can start to see that therefore in how the production is trending overall. I think it's fair to say in general, yes, I think oil was a little bit lower than normal because of weather. Otherwise, it's generally going to be the one with a higher decline than the gas is going to be.
This is the trend that we see. Now we continue to look for more and more opportunities. As we said in the strategy at the end of update at the end of last year, we will continue to put more capital into our traditional E&P business because we see that there is opportunity there. They're not the Neptun Deep of the world, but we can tie these new wells in pretty fast and turn them into a revenue line. If we can get more oil, obviously we will as well. Geologically, we tend to see that it is the gas that has a stronger performance in that area.
Understood. Thank you.
Thank you.
Your next question comes from the line of Daniela Mandru from Swiss Capital. Please go ahead.
Hello again. Now regarding this solidarity contribution, you are saying that it will apply by June 26th. What if the oil price will remain high, going high, going forward? It will apply just until June 26th?
Based on the current legislation now, yes. If the Middle East crisis continues, it can be prolonged. If we read the law as it's written right now, this state of crisis for oil and fuel market is declared for three months.
Okay. You are saying that this year you will acquire less third parties gas. By how much less compared to last year? Can you provide an amount or a decline rate?
We cannot provide a third party gas, a number. No, we cannot.
Oh, okay. Thank you.
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 very much.
Thank you.
That concludes today's conference call. Thank you for participating. Ladies and gentlemen, you may now disconnect.