Austrian oil giant OMV cashes in on sale of Maari site

OMV is eager to shift its strategy to lower-emitting resources. Photo / File

OMV benefited by $57.4 million from its decision to sell out of the Maari oil field late last year.

The US$50 million sale of its 69 per cent stake in the field off the Taranaki coast was agreed in November but isn't expected to be completed until later this year.

But the decision to sell, as part of the group's global strategy to shift away from heavier-emitting resources, saw it write $57.4 million back onto the value of the field.

That saw net profit for OMV New Zealand more than double to $111.2 million in the 2019 calendar year, from $38.1 million in 2018.

Net profit from the Maari operation – treated as a discontinued business in the firm's accounts – jumped to $65.4 million from $7.9 million the year before.

Profit from the continuing business – OMV's stakes in the offshore Pohokura and Maui gas fields and its exploration activities – rose to $45.8 million from $30.3 million in 2018.

Maari lies in about 100 metres of water about 80 kilometres off the Taranaki coast. It was discovered in 1983 but didn't begin production until 2009. It was the first offshore field Vienna-based OMV operated globally and has been New Zealand's biggest liquids producer since 2015. It produced about 2.4 million barrels of oil last year.

Other partners in the venture are ASX-listed Horizon Oil and Cue Energy Resources, a subsidiary of New Zealand Oil & Gas.

OMV agreed to sell out last November when Brent crude was selling for about US$62 a barrel. It was at US$39 on Friday, having fallen below US$10 in April when the abrupt shutdown of the global economy slashed demand and created a global glut of oil and fuel.

New intentions

Singapore-based Jadestone Energy is still going ahead with the purchase but has cut projected capital spending by 80 percent by deferring projects in Australia and Vietnam.

Last month, chief executive Paul Blakeley said the business had US$72 million of cash on its books and had got its cashflow break-even operating cost down to US$20 a barrel.

An OMV spokesperson said a number of regulatory approvals have been sought for the Maari sale, which remains on track.

In its accounts, signed off on May 28, the company noted that it was impossible to estimate the extent and duration of the downturn in global oil and gas markets.

It noted that the carrying value of investments and the recoverability of oil and gas resources, were more affected by mid- to longer-term forecasts of commodity prices, exchange rates and other economic assumptions.

OMV valued its Maari assets at a net $23.9 million at Dec. 31 – after allowing for $181.6 million of liabilities, most of them abandonment provisions.

The firm's total abandonment provisions stood at $1.59 billion.

Gas

OMV bought Shell's interests in the Maui and Pohokura gas fields in 2018 and has since kicked off projects to restore declining production at both fields. It also completed a three-well exploration programme last summer, resulting in a discovery off the Taranaki coast in its Toutouwai permit.

Excluding Maari, OMV's sales revenue more than tripled to $720.9 million last year.

Tax expenses for the year climbed to $29.6 million – most of it attributable to Maari – from $23.4 million the year before.

Wages and salaries cost $24.6 million, from $16.9 million in 2018, and exploration spending totalled $37.4 million from $10.4 million the year before.

OMV noted that it has since written off $51.6 million on its share of the unsuccessful Tawhaki-1 well drilled off the Otago coast earlier this year.

- BusinessDesk