Hello, and welcome to Virtual Investor Conferences. On behalf of OTC Markets, we are very pleased you have joined us for our Oil and Gas Conference. The next presentation of the day is from OMV. Please note, you may submit questions for the presenter at any time. You can also view a company's availability for a one-on-one meeting by clicking Book a Meeting. At this point, I am very pleased to welcome Corina Moza, Investor Relations Manager, and Oliver Rosenthal, Investor Relations Manager of OMV, which trades on the OTCQX Best Market under the symbol OMVJF, and on the OTCQX Best Market, OMVKY, and on the Vienna Stock Exchange under the symbol OMV. Welcome back, Corina and Oliver.
Hi there.
Good morning. Good morning, and thank you, Greg, for the introduction. We are here in Vienna, and together with Oliver, we look forward to sharing OMV's story with you and discussing your questions. For the next 20-25 minutes, we will look at OMV today and where we are heading, how our businesses work together, and also what our latest Q3 results tell us, and we will end with how our major growth projects support our ambitions for 2030 and beyond. Let me start with the basics. What does OMV actually do? We operate across three integrated business segments: energy, fuels, and chemicals. Together, they form a balanced, diversified portfolio that generates strong cash flow through the cycle. In energy, we produce oil and natural gas across three core regions: Northern Europe, Central and Eastern Europe, including the Black Sea, Southern region, including Libya and the United Arab Emirates.
In 2025, we produced 305,000 bbl of oil equivalent per day. That is 58% oil and 42% natural gas. The energy segment also includes the gas marketing and trading business across Europe, including gas storage in Austria and Germany, and the gas-fired power plant in Romania. In addition, we are developing our low-carbon business, including geothermal and renewable power. This segment gives OMV stability, strong cash flow, and long-term growth through natural gas. Moving on to fuels, our second segment, where we operate an integrated refining and marketing business. OMV operates three refineries in Europe, in Schwechat, Burghausen, and Petrobrazi, so in Austria, Germany, and Romania. In addition, OMV holds 15% of ADNOC Refining and ADNOC Global Trading in the UAE OMV's total global processing capacity amounts to around 500,000 bpd .
On the marketing side, we have a strong retail network where we operate 1,700 filling stations across eight countries, and here we are transforming in line with market trends, shifting gradually towards more sustainable fuels, chemical feedstocks, more EV charging networks, and more services around mobility. Now on to chemicals. In OMV base chemicals, OMV directly operates two steam crackers, which are physically integrated into the refineries in Austria and in Germany, allowing for cost-competitive naphtha supply. We also operate ReOil, a chemical recycling plant at the Schwechat refinery, which is based on proprietary ReOil patented technology with strong monetization potential. In addition, and that's also a very exciting part for us, at the end of March of this year, OMV and ADNOC International Investment Arm completed the transactions to create Borouge International, the world's leading pure-play polyolefins company.
This company is equally held and jointly controlled by OMV and ADNOC, and we at equity consolidate the company. Across energy, fuels, and chemicals, OMV operates a highly integrated, diversified, and cash-generative portfolio, with gas and chemicals as primary value drivers. Now I want to show you that this integrated model consistently delivers strong cash flow. Here you can see the cash flow generation mix and also the CapEx mix. On average, over the past five years, we generated EUR 6.2 billion in operating cash flow, with 50% of it coming from energy, 30% chemicals, and 20% fuels. Over the past five years, we generated a return on capital employed of 13% and grew our dividends by 18% per year. This integrated model is not just a concept. It translated into attractive returns and growing distributions.
As we also just published the Q3 results last week, let's have a quick look at some highlights. We maintained reliable operations, executed projects with discipline, and continued to supply our customers with energy despite continued geopolitical uncertainty and heightened volatility in global energy markets, as we all know. Commodity prices increased significantly from Brent price to the European hub gas prices, and they, compared to the prior year period, were much higher, and also refining margins reached exceptional levels. A great operational performance in an exceptional market environment led to the clean CCS Operating Result rising by nearly 70% to more than EUR 2.1 billion compared to the same quarter of last year. Cash flow from operating activities more than doubled to EUR 2.2 billion. It's very healthy, with a leverage ratio of only 17%. That's a decrease compared to Q2, for example, of 2%.
This excellent performance strengthens our ability to deliver attractive returns to shareholders. First, starting with the share price development, which is up more than 50% year to date, if we look at the share prices at the end of October. This strong share price development is complemented by our dividend track record. Over the past decade, our overall dividend increased more than four times, with dividend yields of over 9% in all the recent years. In the past three years, we paid out 28%-29% of our operating cash flow. If we look at the first nine months of 2026, we generated very strong cash flows, and this positions us well to deliver an attractive dividend also for the year 2026.
Just to paint the picture, in the full year 2025, we generated EUR 5.2 billion, and in 2026, from January to September, we already generated EUR 4.3 billion, an increase compared to the same period of last year. We have a clear commitment to shareholder returns, and our integrated model and strong balance sheet gives us the capacity to sustain that. I will also come back later to how Borouge International further strengthens our dividend policy. Now, I would like to talk about our strategic compass. We are transforming OMV in an integrated energy, fuels, and chemicals company with a strong focus on value and net zero targets by 2050 across Scope one, two, and three. We still believe that gas is a key enabler of the energy transition, as it remains essential for energy security, balancing renewables, and also industrial demand. Our strategy focuses on three priorities.
One, we want to grow gas and selectively advance renewables. Second, we want to strengthen the fuels part, especially in sustainable mobility, and we want to accelerate chemicals growth, now significantly enhanced by Borouge International, and we want to drive circular innovation. Underpinning all of these are high cash flow generation, clear investment criteria, and attractive and reliable shareholder returns. The strategy is not about growth at any price, it is about disciplined, value-driven transformation. I would like now to zoom into the segments, starting with energy, and also our ambitions for 2030 for each of our businesses.
If we look at the traditional E&P, we want to execute on an increased pipeline of organic projects in Romania, Austria, Norway, Middle East, and North Africa, while focusing on cost and efficiency, as we want to decrease our production cost to below $9 per barrel, compared to current levels of around $11. Our ambition is to grow our oil and gas production to 400,000 bpd by 2030, from around 305, like I mentioned at the beginning, in 2025, which means that on top of organic projects we have, we may also pursue value-accretive inorganic opportunities that leverage OMV's strengths. In addition, we also have an exploration program with potential to add volumes by 2030, and further growth potential by 2035 and forward. Our focus here is on infrastructure-led exploration, particularly next to existing fields, which allows us to develop potential discoveries costs effectively.
We expect an oil and gas portfolio cash breakeven of less than $30 per barrel by 2030. For the gas marketing and power business, we want to unlock significant value by expanding trading and sales in Europe, with a strong focus on gas. For renewables, we want to enable OMV Petrom to establish leadership in the power sector across Southeast Europe to leverage favorable wind and solar conditions and regulation. Here, we target more than 1.3 GW wind and solar net production capacity by 2030, and more than 2.4 TWh net electrical output per year by 2030. On the geothermal side, we want to adjust the pace of geothermal energy in line with learnings and economics, and plan to have around 1 TWh net production output by 2030. Energy is about profitable growth in gas, with a disciplined cost and returns focus.
Since Neptun Deep is a cornerstone of that energy strategy, I would like to provide some details on the project, as well as an exciting update. Some key facts I'd like to share. Neptun Deep is the largest offshore gas project in the EU. It's operated by OMV Petrom, and OMV Petrom owns 50% of the project, with Romgaz the other 50%. Romania will likely become a net gas exporter once the production starts, and there's infrastructure in place to export to neighboring countries, and further on to other European countries. In terms of economics and impact, which is the most relevant, I would say, for you, the plateau production is around 140,000 bpd for nearly 10 years, which means net to OMV Petrom, this is 70,000 bpd .
Production cost is very low, at around $3 per barrel, and the gross CapEx is around EUR 4 billion. Net to OMV and OMV Petrom, this is EUR 2 billion. Now, onto the exciting update on the project. The first gas is targeted for the first half of next year, and plateau production by end of the third quarter of 2027. The project moved faster than the industry average, with first gas targeted around two years sooner than comparable offshore developments of this scale. The project has been designed for remote operations with a modern offshore concept and the lower emission intensity compared with the industry average. At full plateau production, Neptun Deep is expected to contribute around EUR 500,000,000 per year to our clean operating result. The project has reached almost 90% completion, with the drilling of the remaining two out of 10 wells ongoing.
For us, this is a high-quality, low-cost, low-carbon gas project that supports both our financial and sustainability goals. Now, turning to fuels. Our 2030 ambitions are structured along three themes. On the fuels value chain, we want to transform in line with market demand and shift towards more chemical feedstock. We want to maximize integrated margins for traditional fuels across the entire value chain. On the marketing side, we want to be the first mobility choice for retail customers, and we want to grow the non-fuel business through new partnership concept with convenience retailers like Auchan and BILLA, or via our own brand, VIVA. We also want to ramp up the EV capabilities to 5,000 high-performance charging points by 2030. We currently have 2,100, and we also want to grow the EV charging infrastructure for heavy-duty vehicles.
We expect to generate EUR 600 million by 2030 only from the retail business. This is an increase from an average for the period 2020 to 2024 of EUR 500 million. We also want to grow sales volumes in commercial road transport and to expand our aviation footprint to further capture growing jet demand. On the renewable fuels and feedstock side, we believe the demand for sustainable fuels and chemical feedstocks will increase, and we want to capture growth potential in renewable fuels like SAF and HVO, and chemical feedstock. To this end, we are currently building a 250,000 tons per year capacity SAF/HVO plant and green hydrogen facilities at the Petrobrazi refinery in Romania, where we've seen strong progress already with more than 50% of the CapEx spent. The planned startup of production at the SAF/HVO plant is in 2028.
Overall, we expect a contribution to the clean results in 2030 of around EUR 200 million-EUR 300 million from renewable fuels and chemical feedstock. By 2030, for the fuel segment as a whole, we target more than 50% operating cash flow growth compared to 2024. So fuels is a cash-generating, transforming platform that supports both mobility and chemicals. This brings me to the chemicals segment, where Borouge International plays a central role. Here, our ambitions are grouped into, first, Borouge International. Focus will be on the successful merger and integration and delivery of the organic projects, efficiencies, and synergies. In OMV base chemicals, we want to maximize the utilization of OMV crackers and further optimize end-to-end integration across the value chain.
In renewables and circular economies, we want to leverage technology and innovation for circular solutions, including ReOil that I already mentioned, and grow sustainable chemicals volumes in line with market demand. By 2030, we target for the chemical segment a floor dividend of more than $1 billion from Borouge International to OMV, a utilization of the OMV crackers of more than 90%, and from the base chemicals segment, we expect a contribution of around EUR 200 million to clean operating result. As the chemical strategy has at the center Borouge International and its creation, I think it is worth providing an overview on that as well. Following the closing of the transaction at the end of March 2026, OMV now holds 50% stake in Borouge International, the world's fourth-largest polyolefins company. What sets it apart? First, the global scale.
The company operates in all major growth markets: Americas, Europe, Middle East, and Asia. A highly competitive cost position. More than 70% of the production benefits from cost-advantaged feedstock, mainly low-cost ethane. A strong asset base. A modern, well-maintained asset base enables above-industry average utilization rates. On top of that, we also have a differentiated portfolio with a high share of specialty products. In terms of financials, on top of all of these competitive advantages, we also expect substantial midterm synergies. Borouge International expects to achieve at least $500 million in EBITDA synergies by 2030. Already $200 million annual run rate EBITDA synergies have been secured. This will start contributing to results in the fourth quarter of this year.
On near-term organic growth, Borouge International has several important organic growth projects that are nearing completion, and the best part is that most of the required CapEx already was spent. A good example of this is the Borouge 4 project. Together, these factors underpin Borouge International's high profitability. Here, I want to showcase the competitiveness of the company and give you a short overview of the profitability of Borouge International in the past five years. We saw strong volatility in the markets, but despite that, average margins were above specialty chemicals leaders and global chemical peers, with attractive margins in both up and down cycles. Even in 2025, when the market was depressed, the pro forma margin was nearly double the industry average.
Looking at 2026, across its first two quarters of existence, Q2 and Q3 this year, Borouge International achieved an industry-leading 26% EBITDA margin with an encouraging start to Q4 and a more positive outlook compared to Q3. Let me now come to our capital allocation. Our priorities are clear. We want to have a balanced portfolio framed by strict capital discipline with average organic CapEx for the period 2026 to 2030 of EUR 2.8 billion, with higher CapEx in the first years due to the current growth projects that I mentioned, such as Neptun Deep and the South HBO project. Second, attractive and level shareholder return are very important to us. Third, we plan on doing M&A to accelerate growth and transformation, but this strictly guided by investment criteria. Then fourth, last but not least, we want to deleverage.
We have a mid-to-long-term target leverage below 30% while maintaining an investment-grade credit rating. Now on to our dividend policy, which we updated recently to account for Borouge International. We maintain the principle of a progressive regular dividend plus an additional variable dividend when leverage ratio is below 30%. Starting with the financial year 2026 to be paid in 2027, OMV will distribute 50% of Borouge International dividends attributable to OMV, plus 20%-30% of cash flow from operating activities, excluding those Borouge dividends. Borouge International directly enhances our capacity to pay attractive dividends in a transparent formula-based way. Let me close with our investment case. The four messages on this slide bring together what we've discussed today. An agile transformation, growth across our businesses, increasing free cash flow, and attractive shareholder distribution. First, our transformation remains market-led.
We are basing investments in sustainability businesses in line with demand and regulation, with a clear focus on returns. Second, we have concrete opportunities to grow energy, enhance value in fuels, and build on our world-class chemicals position. You've seen the projects behind that, from Neptun Deep and our broader oil and gas pipeline to sustainable mobility and Borouge International's new capacity and integration synergies. Third, as these projects start contributing and investment spending moderates, we expect a significant increase in free cash flow by 2030.
Fourth, our robust dividend policy provides a clear link between the cash we generate and what we return to shareholders, supported by our integrated business and dividends from Borouge International. That's the investment case that we want to deliver, discipline transformation, profitable growth, translating into stronger cash flow, and attractive shareholder returns. Thank you very much for your attention and your interest in OMV. We are happy to take a few questions now for the time that we have left, and I look forward to continuing the conversation in one-on-one meetings later today.
Thank you, Corina. I will jump into the Q&A. First question is on capital allocation. Given the strong cash flow in Q3, what are the priorities?
Yes. Thank you for the question. It is a very good one. I think that, first of all, we have to still keep in mind that we are in a very volatile environment. Like I said, we generated a much higher operating cash flow in year-to-date 2026 compared to 2025. Our priority will definitely be maintaining the strength of the balance sheet, which can be seen in the leverage ratio of 17%. That is quite low. Of course, we want to share this success with our shareholders, so it should reflect the strength of the cash flow and also the strength of the balance sheet. I would say that this would be the short-term and mid-term priorities that we definitely plan to share this success.
Thank you, Corina. The next question is a bit on our SAF/HVO plant in Petrobrazi in Romania. What are the next milestones, next steps? I can take this one. Here we are on track for production start in 2028. Construction is progressing across key fronts, paving, piping, secondary steel, and equipment installations. All 11 electrolyzer modules have been installed. We expect green hydrogen production here to start end of this year, subject to successful testing and full integration into the refinery. These would be the next steps. Currently tank constructions is advancing, and also external shell erection and firefighting ring installations is in progress. Well on track for 2028 first production. The next question is on basically the low carbon or low carbon fuels, what advantages we have here across our assets. I do not know, Corina, if you could take this one.
I think that on the low carbon side, we have on the energy side, we have the geothermal initiative that I mentioned, and maybe we go back to that slide. Here, like I mentioned, we already paced our transformation, and we basically shifted some of these investments more towards the end of this decade, and we expect profits to come 2030 and thereafter. Other than the geothermal part, we are also looking into CCS in the energy part. On the chemicals business, I mentioned ReOil, and I've also seen some questions on ReOil, and there we are also making progress, but it's also something that we shifted more towards the end of the decade. I'm not sure if you want to add something, Oliver, because we talked about—
No, I think, yeah. I think it's well covered. I mean, we are basically with the plant in Petrobrazi, we are well positioned to, with the first production coming on in 2028, we're well positioned for the step-up in the ReFuelEU regulation, which mandates 6% SAF blending by 2030. This positions us well for that. The next question that I would like to highlight is, what are the next milestones that could make investors look at OMV differently?
Yes. We receive a lot also relative to our share price performance because we had quite a run lately, so people want to know if there's still some upside, what is our growth potential. I think first of all, I would start with what I already mentioned, the projects like Neptun Deep, where we have a clear expectation for result contribution and cash flow contribution, the SAF/HVO plant. On top of these bigger projects, we also have an organic pipeline of E&P production growth and development. Like I said, we are also looking into exploration. In addition to, we have these several layers of value.
We have the existing integrated business, the growth projects that I mentioned, and a next layer of value creation from projects that are, I think, not yet fully reflected in today's earnings for sure, but also not in the expectations from analysts and investors. Beyond this near-term contribution, we have further potential from the areas such as circular economy, and we have a strong pipeline of double-digit return projects. Every project that we have also on the sustainable side has to earn double-digit returns. What's important is that we are not pursuing growth just for the sake of growth. We remain very, very disciplined on capital allocation and returns, and all the projects are subject to clear investment criteria, and that's important because ultimately we want to grow to translate into higher cash generation and shareholder return.
I think that we do have a strong pipeline, and maybe it is worth that we develop on this topic in a one-on-one, because I think that other than the main larger projects, it would be too many details in one minute now. I think that this brings us to the end. Thanks a lot, and looking forward to one-on-one meetings. Have a nice day.
Thank you.