OMV 4Q 2010 Trading Statement

However, upstream sales volumes were lower than previously due to less previous production in Yemen, Libya and Tunisia. The Brent/Urals differential is expected to be higher in 4Q 10 due to the negative effect of hedging. This should be good news for the Romanian refinery, which is specialized on the processing of Urals-type crude. OMV had entered into crude oil hedges for 2010 in 2Q 09 for a volume of 63,000 bbl/d, securing a price floor of USD 54/bbl via the sale of a price cap of USD 75/bbl.. In 4Q 10, these hedging instruments burdened the result with EUR -45 mn.

The refining margin also improved in line with the industry (supported by higher naphtha and middle distillates spreads), and even a bit better than expected. A better-than-expected demand environment lead to a positive surprise in the output. However, OMV's 4Q 10 refining results will be impacted by one-offs such as impairments and provisions. Higher overall costs at the end of the year will more than offset the effect of higher margins. Marketing was also hurt by lower margins and retail sales volumes.

Gas sales profited from the higher wholesale volumes at marketing subsidiary EconGas and better fertilizer demand in Romania. Low temperatures also helped. As in 3Q 10, margins were supported by renegotiated supply agreements and benefited from quantities extracted from storage. A decrease in provisions for outstanding recievables at Petrom supported the result. Additional transporting volumes were sold due to the start-up of a new pipeline.

The Group has entered into oil price swaps in Januara 2011, locking in a Brent price of approx. USD 97/bbl for a production volume of 50,000 bbl/d and into EUR-USD average rate forwards (at USD 1.37) covering those volumes until the end of 2011. To support this year's investment program at Petrom 25,000 bbl/d of this hedged volume relate to Petrom's production, while the FX hedge is fully attributable to OMV excluding Petrom.

OMV's operational performance procides a positive picture. However, higher costs in upstream, one-offs in refining and the outstanding capital increase prompt us to prefer a cautious view on OMV. We therefore intend to confirm our 'hold' recommendation for the time being. OMV will report 4Q 10 results on February 23.