BERLIN (Reuters) – Austrian oil and gas group OMV on Thursday said its third-quarter operating profit fell by two thirds as weak oil prices hit its exploration and production business, but a strong performance from its refineries meant it beat expectations.
Fuel demand has shrunk as people cancel leisure trips as the COVID-19 pandemic triggers a second round of strict lockdowns.
OMV’s revision of its assumed Brent crude price as the benchmark futures contract struggles to break above $40 a barrel led to write-offs of 594 million euros ($702 million) that hit overall profits.
Net profit dropped to 80 million euros from 457 million a year ago.
But OMV’s clean current cost of supplies (CCS) earnings before interest and tax (EBIT), which excludes special items and inventory gains or losses, was 317 million euros, beating an average analyst forecast of 245 million.
The upstream unit, which explores and produces the crude, reported a higher than expected quarterly loss of 24 million euros, with oil prices in the quarter around 30% lower than last year.
The refining unit’s operating profit fell 28% to 335 million euros, but a 90% utilisation rate of its refineries helped beat expectations.
That is better than peers.
Royal Dutch Shell, which also reported on Thursday, said the pandemic’s impact on demand had continued into the fourth quarter and refining was expected to run at 69% to 77% of capacity.
OMV said commercial sales from its refining unit had fallen mainly because of low demand for jet fuel. Retail sales only decreased slightly and better margins more than offset the lower volumes.
Reflecting the pandemic impact, the group cut its 2020 refining margin forecast to around $2.5 from $3 per barrel.
It lifted its full-year production target to 450,000-470,000 barrels of oil equivalent per day (boepd) from its April forecast of 440,000 boepd as production at Libya’s Sharara oilfield is back onstream.
($1 = 0.8461 euros)
Reporting by Kirsti Knolle; Editing by Michelle Adair and Barbara Lewis