Petrom 2010 budget

(i) oil price will remain volatile between 60-80 USD/bbl, (ii) refining margins will remain weak given the overcapacity in the sector,

(iii) Romanian economy will return to a marginal growth in 2010, (iv) E&P will target cost management and organizational streamlining,

(v) capacity of Petrobrazi refinery will be adjusted to 4.2 mn tons per year, and

(vi) Doljchim will be closed by the end of 2010 and until then run the operations on an 'as needed basis'.

The E&P production was planned at 63.24 mn boe, some 2% below our current estimates. Turnover is seen at RON 14,008 mn (an increase by 9% yoy), some 11% higher than our projection. EBITDA is budgeted at RON 3,283 mn (an increase by 11% yoy), beating our estimates by 38%, while net profit was budgeted at RON 1,709 (an increase by 25% yoy), 63% above our projections.Taking into account that Petrom's 2010 budget is above our estimates, we will review our planning model, but for the moment we maintain our TP and recommendation.