OMV Petrom S.A. (SNP) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the OMV Petrom's earnings call. Today's presentation will last around 30 minutes and will be recorded. By now, you should have received the presentation by email. The slides and the speech are also available online on www.omvpetrom.com in the Investors section. These also include the cautionary statement regarding forward-looking statements. Now let me hand over to Simona Crutu, Manager of the Investor Relations and Stakeholder Engagement Department who will moderate the events.

Good afternoon, ladies and gentlemen. Thank you for joining us. We'll have a presentation followed by a Q&A session. Christina Verchere, Chief Executive Officer, will provide the key highlights about the 2030 strategy execution, the macroeconomic and regulatory environment and the performance of our business segments. Alina Popa, Chief Financial Officer, will give you more details on our financial performance and the brief outlook. Afterwards, all the Executive Board members will be available to answer your questions. [Operator Instructions] I'm now handing over to Christina.

Good afternoon, ladies and gentlemen, and a warm welcome to our conference call that will take you through our performance in the fourth quarter of 2024. Let me first draw your attention to our legal disclaimer, which you can read in detail on Slide 2. Ladies and gentlemen, during our Capital Markets Day held in June 2024, we presented an update on our Strategy 2030, the outcome of which will see OMV Petrom leading the energy transition in Southeast Europe. The strategy presented in December 2021 remains robust with some adjustments made to reflect the significant macro changes we've experienced since then. These include a more rapid build-out in renewables, more ambitious targets and e-mobility, slower pace in biofuels and higher dividend distributions. With regards to our flagship project, Neptun Deep, the progress achieved during 2024 was exceptional, with all major execution contracts awarded and 90% of the execution budget committed. Construction works started for the platform topsides in Indonesia, for the jacket in Italy, the fabrication of the field support vessel hull in Poland, as well as the onshore natural gas metering station in Romania. Furthermore, in November 2024, the Transocean Barents, mobile offshore drilling unit, arrived in Romania. As a result of these significant milestones, we are on track to commence drilling in 2025 and first gas is expected during 2027. In light of this progress, in the fourth quarter, we started gas marketing activities, another important step in the project. In offshore Bulgaria, in the Han Asparuh block, adjacent to the Neptun Deep block, we signed the transfer of a 50% interest in the license to NewMed Energy, while maintaining our role as operator. The closing of this transaction is expected to take place in the first half of 2025, after fulfilment of several commercial conditions and approval by the relevant Bulgarian authorities. We aim to start drilling an exploration well this year. Regarding our strategic pillar Transition to Low and Zero carbon, we made significant progress on many projects and particularly in renewable power. In June, we increased our 2030 target for renewable power to 2.5 gigawatt of solar and wind, including partnerships. We have achieved significant progress in building up a strong portfolio of renewable projects in different phases of implementation, both organic and via acquisition. In 2024, several acquisitions were completed, bringing approximately 1.9 gigawatt of renewable projects into our portfolio. Firstly we completed 3 transactions with Renovatio, of around 950 megawatts of wind and 200 megawatts of solar projects. We also closed the transaction with Jantzen Renewables for the acquisition of 3 photovoltaic projects in Romania, totaling approximately 710 megawatts of photovoltaic capacity, after the ready-to-build stage has been attained. Therefore by the end of 2024, we now have more than 2.4 gigawatts of renewable power projects, including partnerships, secured into our portfolio. This includes our existing partnership with Complexul Energetic Oltenia, with 450 megawatts PV capacity, and our Isalnita project, with approximately 89 megawatts PV capacity, for which we have awarded the EPCC contract and started the construction phase last year. In the area of e-mobility, our electric vehicles charging points network increased from 270 units at the end of 2023 to around 900 at the end of 2024, with a significant boost coming from the acquisition of Renovatio’s network. By 2030, our network of EV charging points is targeted to reach more than 5,000, while for 2025 we plan to reach more than 1,500. Another low carbon activity in our 2030 strategic portfolio is biofuels, which contributes to the decarbonization of the transportation sector. We are investing approximately EUR 750 million at Petrobrazi to become the first major producer of biofuels in South-East Europe by 2030. In June, we took the final investment decision for a new SAF/HVO plant in our Petrobrazi refinery. Around 80% of the feedstock for the first 8 years has already been secured, including through the announced contract with Expur and through the acquisition of a stake in Respira Verde, the largest used cooking oil collection company in Romania. We have also pursued our green hydrogen path in Petrobrazi by taking the final investment decision for 2 electrolysers with a total capacity of 55 megawatts and by leveraging EU non-reimbursable funds available through the National Recovery and Resilience Plan, securing up to EUR 50 million financing from the total investment. This will cover around 70% of the SAF/HVO unit's green hydrogen needs. We are also delivering on our commitment to offer attractive shareholder returns. In addition to our competitive growth in base dividend per share, in June, we provided additional guidance for yearly allocation to dividends aimed to be between 40% and 70% of operating cash flow. In 2024, our strong performance enabled us to pay RON 4.4 billion in dividends to our shareholders. The market also clearly recognized our performance and strategic progress in 2024 by virtue of a 23% increase in our share price over the year, leading to a total shareholder return of 36%. For the year 2024, we propose a base dividend per share of RON 0.0444, up 7.5% year-on-year, at the middle of the 5% to 10% year-on-year increase guidance. Moreover, around mid-year, the executive board will also decide if a special dividend per share is to be proposed. Alina will provide more details. On HSSE, the total recordable injury rate for 2024 was 0.42. Moreover, we continued our efforts to reduce greenhouse gas intensity with projects in all 3 business segments. Based on our preliminary data, GHG intensity decreased in 2024, reaching a level of 12% lower compared to 2019 and reflecting our focus to reduce carbon emissions. On Slide 4, we present the key highlights for the fourth quarter. Operational performance was strong in the fourth quarter. However, the context of weaker commodity prices and margins, and also the regulatory environment, impacted our financial performance, only partially offset by integration benefits. At RON 1 billion, our fourth quarter Clean CCS operating result was 57% lower year-on-year. Our operating cash flow in the fourth quarter of 2024 declined by 76% year-on-year and reached RON 0.5 billion. The Clean CCS return on average capital employed reached 15.4 percentage points. I will go into details on each business division later on in this presentation. However, I would like to point out that our hydrocarbon production in 2024 was above plan, marking the lowest decline in the past 7 years. In addition, the high availability of the Petrobrazi refinery and our rigorous cost discipline contributed also to our results. Now let us take a look at the evolution of commodity prices in the fourth quarter of 2024. Brent price remained under pressure in the fourth quarter of 2024. The major drivers which reduced oil prices earlier in 2024 remained in place, including the broader concerns over softening oil demand and the corresponding need for OPEC+, in December, to hold to its current policy and postpone the gradual return of supply for a third time. Brent averaged $75 per barrel in the fourth quarter, a decrease of 7% quarter-on-quarter and 11% year-on-year. OMV Petrom indicator refining margin reached $7.39 per barrel in the fourth quarter, 32% lower year-on-year, mainly due to lower middle distillate crack spreads. European spot gas prices increased during the quarter, driven by a combination of factors, including uncertainty over Russian pipeline supplies across Ukraine and rapid drawdowns in natural gas inventories. The latter was due to a combination of cold weather and much lower renewable power output. At an average of EUR 44 per megawatt-hour, the CEGH price was up by 10% year-on-year, and up 19% quarter-on-quarter. Gas prices on the Romanian centralized market also increased, with day-ahead prices around EUR 40 per megawatt-hour; 29% higher quarter-on-quarter and 5% higher year-on-year. Baseload electricity prices in Romania increased by 38% year-on-year and 5% quarter-on-quarter to an average of EUR 33 per megawatt-hour. The average CO2 price was 13% down year-on-year to EUR 66 per tonne of CO2, reflecting sluggish industrial demand, and was broadly flat quarter-on-quarter. Looking now at the Romanian macroeconomic environment, the latest available data shows that, in the first 9 months of 2024, GDP slightly increased by 0.9% year-on-year. In November, the European Commission reduced its projected GDP growth for 2024 for Romania from 3.3% to 1.4%. And for 2025, Romanian GDP is now forecasted to grow by 2.5%, reduced from the previous 3.1%. Though the expectations are softening, Romania remains above the EU average estimates of 0.9% in '24 and 1.5% in '25. The consumer price index for the month of December 2024 versus December 2023 was 5.1%, with spikes in January and February 2024, followed by a downward trend until the end of the third quarter and then resuming growth mainly in November and December 2024. Romania's rating was maintained at investment grade by the major rating agencies. Yet, recently 2 agencies revised their outlook from stable to negative. This downgrade was motivated by the high budget deficit, as well as a weaker growth outlook. Looking at the Romanian energy sector in the fourth quarter of 2024, demand, based on our internal estimates, increased for all our products. Demand for retail fuels slightly increased by around 2% year-on-year from the effect of higher disposable income. Commercial demand was down by 5% year-on-year, coming mostly from diesel, while jet and bitumen continued to increase. Gas demand increased by around 8% year-on-year, with higher offtake from end users in the distribution system due to colder weather. Power demand was 4% higher year-on-year, while domestic production significantly decreased by 10% year-on-year, making Romania a net importer of power in the fourth quarter. The contribution of solar sourced power production to overall generation mix increased significantly year-on-year, nuclear was broadly flat, while hydro, wind, coal and gas to power sources decreased year-on-year. Looking at demand for our products in 2024 compared to the pre-COVID times, the picture is mixed. Retail fuels demand, which was affected during the COVID crisis in 2020, is now 17% higher than in 2019, reflecting the higher motorization index in Romania and increased disposable income. The demand for gas and power, on the other hand, reached record lows after the start of the war in Ukraine and in 2024 was still well below the 2019 level, showing that consumers were affected by the high volatility in prices over the period. We expect this trend to reverse by 2030 supported by increasing electrification and mobility, in the case of power, and by demand for new investments in gas to power projects and as a balancing source for renewables in the case of gas. At the end of December 2024, the government issued a new ordinance, including several fiscal measures, aiming to reduce the budget deficit. A 1% tax on the value of assets classified as constructions, that are not subject to building tax was introduced as of January 1, 2025. We expect a Government decision to be published, which should include clarifications regarding the scope and the tax base. The preliminary estimated impact in 2025 on OMV Petrom is mid-double-digit million euro. The 0.5% tax on turnover was introduced in 2024 for 2 years, hence it is applicable also in 2025. We maintain our estimate on the impact from this tax to be below RON 250 million in 2025. The gas and power sector in Romania remains highly regulated, with more than half of OMV Petrom gas and power sales portfolio subject to some form of regulation or taxation. Ordinance 32, in effect since April 2024, continued to negatively impact our results, especially on the power side, mainly due to the non-recoverability of CO2 costs for quantities sold through the centralized power market mechanism applicable until the end of 2024. Currently, the power market has an increased level of taxation, low levels of liquidity and imports are pushed to the upper limit, all challenging the proper functioning of the energy market in Romania. Although the ordinance is due to expire at the end of March 2025, there are currently public discussions regarding the extension of the applicability of the regulated gas and power framework in 2025. We reiterate our belief that free market principles are fundamental for investments and that interventions should be temporary in nature. Let me now move to the performance of our divisions, starting with Exploration and Production. Clean operating result in exploration and production decreased by 41% year-on-year to RON 0.5 billion in the fourth quarter of 2024, driven by the lower oil prices and sales volumes, as well as higher negative impact from gas taxation and depreciation, partly compensated by higher gas prices and lower production costs. Hydrocarbon production in the fourth quarter came in better than planned, decreasing by only 3% year-on-year, on good contribution from workover jobs and new wells, partly compensating natural decline. Moreover, production was flat quarter-on-quarter, with an increase of 3% in gas offset by a similar decrease in oil. Production cost per barrel of oil equivalent improved year-on-year by 5% to $16.93, reflecting lower costs for energy, materials and services and favorable foreign exchange, partly offset by lower volumes available for sale. For the full year 2025, we expect brent oil price to be around $75 per barrel. We expect to produce around 104,000 barrels of oil equivalent per day, considering no divestments. The inflationary pressure on our costs is expected to persist and therefore, we see the production cost at around $16 per barrel of oil equivalent. CapEx in E&P is estimated to be around RON 5.8 billion. Alina will provide more details on this later. In Refining and Marketing, the Clean CCS operating result decreased by 41% year-on-year to RON 0.4 billion in the fourth quarter of 2024, mainly due to lower refining and sales channels' margins. These were partly offset by the excellent refinery utilization rate of 98%. Retail sales increased 2% year-on-year, reflecting higher demand. However, total refined product sales volumes decreased by 5% year-on-year reflecting lower exports. We started 2025 with a refining margin of around $6 per barrel in January and, for the full year 2025, we estimate the indicator refining margin to range between $7 and $8 per barrel, lower compared to the previous year. The refinery utilization rate is estimated to be between 90% and 95% due to a 20-day planned shutdown in the second quarter. We estimate demand for retail fuel products in Romania to be slightly above 2024. For total refined product sales, we see a stable year-on-year performance, with slightly higher retail fuel sales following demand. In Gas and Power, we recorded lower results in both gas and power business lines, leading to a loss of RON 76 million, severely impacted by regulatory changes and market developments. In the gas business, we had good operational performance with higher sales volumes year-on-year. However, a lower contribution was achieved year-on-year, reflecting weaker realized gas sales margins in the context of lower prices for deliveries in the quarter. The power business was significantly affected by the changes in legislation introduced starting April 2024 and by higher gas costs in the quarter. We achieved good results from the balancing and ancillary services markets, as well as from transactions outside Romania, the latter lower year-on-year. The Brazi power plant generated 1.3 terawatt-hour in the fourth quarter, covering 10% of Romania's generation mix. For the full year 2025, our total gas sales volumes are envisaged to decrease, mainly on lower supply, both from equity and third parties. The net electrical output is expected to be stable year-on-year. Please let me hand over now to Alina for more details on the financial results of the fourth quarter of 2024.

Thank you, Christina, and good afternoon also from my side. I will continue our presentation with Slide 12, starting with some highlights on the income statement and also presenting key developments in our cash flow statement. Group Clean CCS operating result decreased 57% year-on-year to RON 1 billion, with lower results in all business segments. The clean consolidation line was RON 90 million in the fourth quarter of 2024, mainly as a result of the gas volumes extracted from storage. For the fourth quarter of 2024, we recorded inventory holding losses of RON 6 million compared with RON 32 million of losses in the fourth quarter of 2023. We also recorded net special charges of RON 631 million, mainly related to impairments in E&P segment and to much lower extent in R&M segment, partially offset by net temporary gains from forward contracts in Gas and Power segment. The impairments booked in E&P were related to some producing oil and gas assets, being driven by the general increase in the operating costs in the context of high inflationary pressures. The special items in R&M were mainly in relation to the impairment of some retail assets. For comparison, in the fourth quarter of 2023, we recorded net special charges of RON 250 million, mainly driven by the temporary net effects from power forward contracts. In the fourth quarter of 2024, the net income attributable to stockholders decreased by 82% year-on-year to RON 263 million. The 0.5% tax on revenue introduced in 2024, amounted to around RON 52 million, mostly booked in the Refining and Marketing segment. With regards to our cash flow statement, in the fourth quarter of 2024, the cash generated from operating activities before net working capital movements was 47% percent lower year-on-year at RON 1.2 billion. Working capital changes led to a cash outflow of RON 734 million in the fourth quarter of 2024 compared to RON 279 million in the fourth quarter of 2023. The higher cash outflows reflect higher receivables due to increased gas sales and also excise paid in advance as well as decrease in trade liabilities. Consequently, the operating cash flow in the fourth quarter of 2024 amounted to RON 0.5 billion compared to RON 2 billion in the previous year. Our net payments for investing activities amounted to RON 2.2 billion, an increase of 91% year-on-year. This mainly reflects a cash outflow for organic CapEx amounting to RON 2.1 billion and a cash outflow for inorganic investments and loans amounting to RON 0.1 billion, while investments in government bonds had a net positive impact of RON 47 million. The net cash position, including leases decreased to RON 8 billion at the end of 2024 versus RON 12.6 billion at the end of 2023. Moving now to slide 13, total CapEx for 2024 was RON 7.2 billion, 52% higher year-on-year and broadly in line with our guidance. 50% of this CapEx was spent on our strategic projects, mainly Neptun Deep and renewables, underpinning our strategy execution and our planned transformation for a lower carbon future. In Exploration and Production, in addition to Neptun Deep project, which Christina covered earlier, we finalized the drilling of 39 new wells and sidetracks and performed more than 500 workover jobs. In Refining and Marketing, around RON 1.6 billion was invested in major refinery projects such as the new aromatic complex, the sulfur acid gas treatment plant and the new SAF/HVO unit. We also allocated investments to our retail operations, including for the acquisition of Renovatio's network of charging points and further expansion of our e-mobility business. In Gas and Power, we invested RON 1 billion, mainly in strategic M&A activity of renewable power, such transactions with Renovatio and with Jantzen Renewables. For the full year 2025, assuming a predictable and competitive regulatory and fiscal environment, we plan an organic CapEx of around RON 8 billion, more than 25% higher year-on-year. We plan increased investments, mainly dedicated to Neptun Deep, as we start drilling in 2025, as well as to low and zero carbon projects, mostly related to SAF/HVO, renewable power and EV charging points. Additionally, potential inorganic CapEx is estimated at up to RON 0.6 billion, mainly in connection to the M&A transactions already closed in 2024. Moving now to slide 14, in June 2024, at our Capital Market Day, we reinforced our intention to increase our base dividend per share by 5% to 10% per annum. And as Christina already mentioned, we provided additional guidance for yearly allocation to dividends, between 40% and 70% of operating cash flow. Based on the 2024 preliminary results, we are now proposing a base dividend per share of RON 0.0444, which represents an increase of 7.5% year-on-year, at the middle of the 5% to 10% range stated in the dividend guidance. The proposed base dividend is subject to the approval of the Supervisory Board and General Meeting of Shareholders, which will take place in April. The proposed base dividend of RON 0.0444 per share represents a payout ratio of 42.8% of Group's 2024 operating cash flow, above our 40% minimum threshold. In addition, we announced this morning that around the middle of 2025, the Executive Board will decide if a special dividend distribution is to be proposed. The potential proposal for distribution of special dividends will be subject to a future Ordinary General Meeting of Shareholders. We have a strong track record of proposing to our shareholders competitive dividend distributions. Our base dividend almost tripled in the last 9 years, while the total dividend yield averaged around 10% per year. To conclude our presentation today, let's take a look at the outlook for 2025, as well as our guidance for 2026-2027, on slide 15. We have presented already our expectations for the relevant indicators for 2025. As a result, this year, in the context of higher planned investments, we expect the free cash flow before dividends to be negative, decreasing further our net cash position as planned. Moving now to the 2026-2027 period, we estimate an average oil price of around $75 per barrel. As we expect production from Neptun Deep to start in 2027, our hydrocarbon production is estimated to be up to 130,000 barrels of oil equivalent per day on average in 2026-2027, before potential divestments. We expect inflationary pressure on our costs to persist and therefore, with support of intensive efficiency programs started, we see the production cost at around $16 per barrel of oil equivalent until Neptun Deep comes on stream. Considering the Neptun Deep volume in 2027, the average production costs for 2026-2027 is expected to decrease to around $13 per barrel of oil equivalent and closer to a $8 per barrel objective, once there is a full year of Neptun production. In Refining and Marketing, we currently estimate an average refining margin of around $8 per barrel in 2026-2027. The refinery utilization rate is estimated to remain above 95% in 2026. In 2027, we plan the next major turnaround resulting in an expected utilization rate of around 85% that year. CapEx is expected to be around RON 8 billion in 2026-2027, on average. As we continue the most intensive investment period in our company's history, we reiterate that investments require a predictable and competitive regulatory and fiscal environment. In 2026-2027, we expect on average a marginally positive free cash flow before dividends, driven by strong operational performance, offset to a large extent by significantly higher investments. With this, we close our presentation and thank you for your attention. We are now available for your questions.

[Operator Instructions] We will now take our first question from Ioana Andrei from Alpha Bank Romania.

I have a couple of questions. First, I would go with the impairment on E&P. Could you please give us more details regarding the impairment done in the last quarter? And what were the main assumptions that trigger it? Second, regarding OpEx per BOE, you mentioned a reduction to [ 13 ] by 2027, what are the drivers here to decline from [ 16 to 13 ], excluding Neptun Deep? Third, regarding the gas and power business, I do understand that what happens after end of March is still uncertain from a regulatory point of view at least, but how do you see things? And what to expect? Do you expect the RON 400 threshold for taxation to be maintained? Please give us some kind of guidance here. And if I may, just a clarification regarding taxation, the 1% tax on revenues is applicable from 2026. Does it have an end period? Or is an ongoing tax? And what about the construction tax? This is just due for a limited time frame? That's all from my side.

Thank you for your questions. Maybe, Alina, maybe you take the impairment, but at the same time, I think there were clarifications and questions on the taxation side as well, and then we come back to you on the OpEx per barrel. Christy and then Franck's ability to assess the regulatory environment in Romania after March. Can you take that?

Ioana, I will start. So with regards to the impairment, end of 2024, we did an impairment test, which is a normal practice in according to IFRS. The outcome was that we had 3 cash generating units, basically operating oil and gas assets in E&P that ended up this impairment. Main reason for this impairment is not linked to any change in price assumptions. It's coming from increasing cost. Despite all our efforts and the efficiency measures that we have taken, we see the increasing cost. Of course, in some assets more in other less, it's always hard to have a linear result overall. From the overall perspective, I think what is important to have in mind, we talk about the impairment of RON 600 million. This represents less than 3% of the net book value of our traditional E&P business and it's related to 3 cash-generating units in oil and gas traditional E&P. With regards to -- you had 2 questions around taxation, and I hope I understood them correctly. So it was a question around 1% turnover tax, which is a tax applicable for companies where -- which profit tax does not reach 1% of the turnover. That tax it's applicable from 2026, and it doesn't have an end period to my knowledge. And with regards to construction tax, there are many questions open as you asked some of them. So we have questions around applicability. We have questions around the taxation base. So there are many things which we need to clarify with authorities. Ministry of Finance indicated that they will start consultation process soon. We will actively participate together with association in this consultation process, and we hope to get more clarity because we indeed have lots of questions around the applicability of such a tax. And of course, in such a process, we will advocate the need of stable and predictable and competitive fiscal regime, especially where we have the highest investment in our history.

Thank you, Ioana, for the question. As you know, we are into a quite extensive program of cost optimization, which we are looking very ambitious to that. So we're looking on changes in the way in which we're operating, but as well, there are measures which are related with the portfolio optimization that will drive basically the costs per barrel in that range.

I will add to Chris's comment that the main driver for seeing this average is Neptun Deep, seeing going to 13 is Neptun Deep that comes in 2027.

So in terms of your question in the regulation for tax, which is to support the energy transition, 2 things. So one, there was a decision from the Constitution Court in November saying that this tax is not in line with the legal system of Romania. So we're now waiting for the notification from the Constitution Court to clarify this. In case we -- the legislation is valid till the end of March, as you mentioned, this year. So we don't expect an extension and potentially even that this -- when the Constitution Court will clarify that we will stop even before. But the end of March is our expectation at the moment.

The next question comes from the line of Tamas Pletser from Erste Group Research.

I'm basically curious about your view how the new regulation would look like? When do you expect this to be in play or to be effective because I think the end of March date is rather unlikely that anything new would come. And how do you see this difference between the current prices for households and the market price? I mean, what kind of an increase would be necessary to -- for the households to reach the same level as the market? And what is the obligation what you have to sell towards this group of clients, I mean, natural gas. Yes.

Okay. So thank you, Tamas, for your question. On the regulation, at the moment, there is a lot of -- because of the election in May, there's a lot of discussion in the political today but there is no instruction to the industry about any prolongation at the moment. So we see the end of the current regulation at the end of March. We are not -- we're not aware of a new scheme for the moment. We expect the Ministry of Energy to come very soon with a new scheme, but we are waiting for that. In terms of the prices for household versus market price, yes, there is a gap. I mean the gap is more important in electricity and in gas. And due to the fact there is a [ cap looking ] -- if you take out the distribution cost, taxes, et cetera, there is quite a big gap between the power market price and the household, especially if you are below 100 kilowatts. But I think what is important for the new regulation is not to look at the volume of the customers, but the income of the customers and to define the scheme, which is linked to renewable customers, which what the Minister of Energy and Minister of Finance have told in the press in the last days. So that's why we are waiting to see what will be the final of the scheme to provide renewable customers. We have also a lot of consumers, a lot of people who have installed using credit from the government. We have different class of customers that had some advantages as well. So let's see what will come from...

[Operator Instructions] Your next question comes from the line of Daniela Mandru from Swiss Capital.

I have several questions related to the taxation, of course. Regarding the asset tax, how do you see this taxation impacting the Neptun Deep project? Do you believe that Neptun Deep project assets will be impacted by this asset tax? And also regarding this asset tax, you -- yes, you offered us a guidance for this year. But going forward, will come in place a lot of renewables. So can you provide us some guidance on the asset tax around 2027 the level of this asset tax? And the other questions are related to your forecast for this year. Regarding the production, you indicated 104,000 barrels per BOE per day for 2025. Can you split or indicate the decrease by oil and gas production to indicate to us the level of decreases for split by the type of hydrocarbon production. And then related to the volumes to be sold at -- gas volumes to be sold at regulated prices. From your last -- I think from your last conference, I have for this quarter, assuming that starting in April, this regulation will be -- will not apply anymore. So regarding volume, I have a figure here of 2.6 terawatts to be sold at regulated prices in the first quarter of this year. So please confirm it 2.6 terawatts. This is all.

Daniela, thank you for your questions. I think the first one is taxation -- asset taxation, construction tax impact on Neptun Deep and an impact on renewable investments and then production question, Christy, will take. Alina, on gas.

Daniela, I will start with the taxation question. With regards to Neptun Deep and offshore assets, we believe this tax does not apply to Neptun Deep and to offshore assets because these are basically protected by the offshore law, which, in our view, is clear in this respect with regards to stability -- fiscal stability that applies to such projects. With regards to our indication and guidance for the impact on us, it's really preliminary draft indication because it all depends very much on the consultation process that will start soon. So there are many questions, many questions, which are around taxation base, which are around applicability, around renewable as well. So it's very hard to -- we provided the guidance, but it's really roughly and indicative. And it's impossible for us at this stage to imagine a future impact as well. In all this process, we will reiterate the importance of the Romania for Romanian state to find the right balance between short-term fiscal needs and the need for investments that Romania has because only investments can bring economic benefits that the country needs. So we hope to -- that we will be hurt and we will -- of course, once the consultation process is finalized and we have a certainty, we will provide more precise information.

Sorry, on the gas volume. Yes, it's -- you're correct. So 2.6 terawatt hour, which is a bit less than last year for the same quarter was 2.9 terawatt hour.

Yes. And with regard to the production forecast, indeed, we're seeing a forecast of 104,000 BOE per day. That's translating to 4.5% decline. I would say that it's a bit more the decline, it's a bit higher on oil than on gas.

Okay. So -- but overall, this -- no, I'm trying to compute by myself an asset tax on the future investments, excluding Neptun Deep. So yes, you mentioned and everybody knows that you will invest RON 8 billion per year over the next 3 years. Out of this, over the period, the investment in Neptun Deep will be up to EUR 2 billion. I would like to know by 2027, what would be the investments in renewables and other projects in refining and margin. Just to have an idea because after that, it's simple to compute the asset tax.

I think what is important to understand, not all investments are subject to this tax, only those which go into this category of construction. And it's not so easy to calculate starting from the investment. My proposal is to wait a few more months, and then we will have a better basis for calculation because now it's pure speculation what goes in, what goes out? Is it book value? Is it what kind of book value. So we will ask all these questions, and we hope we get clarity and then we can have a reliable calculation.

Our next question comes from the line of Jonathan Lamb from Wood & Co.

I was looking at gas storage statistics in Europe, and I noticed that Romania is particularly low compared to many other European countries. Do you see any issue with refilling storage this year?

Jonathan, is that your one question? Or did you have any other?

Yes, just one question. The other question I was going to ask have already been asked.

Okay. All right. Franck, do you want to take that one?

Yes, we are a bit below the average in Europe. It's true in terms of the level of the gas storage at the moment. Now in terms of refilling the storage, I think one of the advantage of Romania compared to other countries is we are producing during the summer more than what we are consuming. And we have an excess of gas. But we will see how far the storage if we go really to close to 0, how much we can reinject. I think historically, we didn't have problems to reinject due to the level of gas production.

I see there are no more questions. I want to thank you again for taking part in our conference call. For further information, please do not hesitate to contact the Investor Relations team. Until our next call, we wish you all the best. Thank you.

Thank you.

Thank you. Bye.

That concludes today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.