OMV Libya oil output tumbles, shares follow
VIENNA (Reuters) - Austrian oil and gas group OMV (OMVV.VI) said it could be heading for a full production shutdown in Libya as it pulled staff out of the turmoil-hit country and its shares tumbled as much as 8 percent.
The flagship of OMV's growing North Africa business, Libya provided OMV with 33,000 barrels of oil equivalent per day (boe/d) in 2010, around a tenth of the group's total output.
"We are evaluating the situation. We cannot say at the moment how production is developing exactly," Chief Executive Wolfgang Ruttenstorfer told a news conference.
"It is going down sharply. We do not rule out that it could come to a complete stop for a period of time," he said, adding OMV would not be able to make up the shortfall elsewhere.
He said he had no indications to support reports that Libyan strongman Muammar Gaddafi could cut off the flow of oil and gas.
OMV stock was down 5.8 percent at 30.05 euros by 1230 GMT (7:30 a.m. EST), the biggest decliner by far in the European sector index .SXEP which slipped 0.4 percent. The shares hit a 10-week low 29.40 euros earlier in the session.
"We calculate that if this (a complete Libya stop) really happens it would have a negative impact of 1.61 euros per share," one Vienna-based trader said.
OMV's exploration and production chief Jaap Huijskes said it was too early to speculate about the outlook for the company's Libya operations.
"Right now our priority is to get our people out. We are still in the process of getting the very last of our people out," he told journalists.
"Production is looking at significant decreases or a full stop. I think what happens after that remains to be seen."
OMV has major production operations in south-west Libya and a branch office in Tripoli. Witnesses and observers have said eastern regions of Libya appear to be out of Gaddafi's control.
"It is not clear how shipments can take place in this situation, so it is better for security reasons to reduce production," Ruttenstorfer said.
OMV had forecast steady production in 2011 when it released disappointing fourth-quarter results on Wednesday, but later made clear that did not reflect recent events in Libya.
OMV has 12 exploration and production licenses in Libya and in 2008 extended some of its petroleum contracts to 2032.
North Africa is a core growth area for OMV, which this month closed the purchase of Tunisian assets from Pioneer Natural Resources (PXD.N).
OMV, Italy's ENI (ENI.MI) and Spain's Repsol (REP.MC) are the three most exposed energy companies to Libya, Cheuvreux analysts wrote in a note on Tuesday.
Costs linked to OMV's 1 billion euro ($1.37 billion) acquisition of Turkey's Petrol Ofisi last year pushed down the Vienna-based group's fourth-quarter net income and helped boost its debt-to-equity ratio to 46 percent, well above target.
Chief Financial Officer David Davies told the news conference OMV was not ruling out any options for refinancing, including a share issue, in the first half of this year.
Net income after minorities fell to 88 million euros in the quarter ending December, from 103 million a year ago.
"We remain concerned at the structural decline in upstream volumes, pointing to further acquisition risks, and believe that any excitement about its exploration potential is premature," Credit Suisse wrote in a research note.
(Additional reporting by Dominic Lau in London; Editing by David Hulmes)
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