UPDATE 2-Libya concerns eclipse solid OMV results

Wed May 9, 2012 7:45am EDT

Related Topics

* Libyan output back to 85-90 pct of pre-war levels

* Cites production and security issues in Libya

* Underlying EBIT rises 9 pct, beats estimates (Recasts with quotes from conference call, share price)

By Michael Shields

VIENNA, May 9 (Reuters) - Austrian energy group OMV warned on Wednesday it faced production and security issues in Libya that could make it hard to match output levels from before the uprising that toppled Muammar Gaddafi.

Concerns about the north African country overshadowed news that OMV's first-quarter profit easily beat expectations.

"We do have issues with damage in the field that we are having to deal with. Local production is, if you will, in manual instead of automated mode," exploration and production head Jaap Huijskes said of Libya in a conference call with analysts.

"Security continues to be a concern. Clearly the political situation is not as clear as we would like. Elections are coming up, and we will have to see how the political and security situation develops from that," he added.

Libya accounted for a tenth of OMV's output before the rebellion, and production reached 85 to 90 percent of that level by the end of April, OMV said. But the company added that it expected the figure to fluctuate and that closing the gap to pre-crisis levels posed a challenge.

Huijskes stuck to OMV's goal to boost its overall output to 350,000 barrels of oil equivalent per day (boed) by 2016 but said this assumed output resumed in Yemen, which is disrupted by political strife, and that Libyan operations went more or less smoothly.

A damaged government pipeline has halted exports from Yemen, which in 2010 provided 6,600 boed for OMV.

Huijskes said OMV could resume output from Yemen within days should the government be able to repair the line. OMV was also exploring alternative export routes.

The market took the uncertainty badly, sending OMV shares down 3.8 percent to 24.30 euros by 1104 GMT.

OMV shares had been trading at around 5.8 times 12-month forward earnings, according to Thomson Reuters StarMine, which weights analysts' estimates by previous accuracy.

That already put it at a discount to peers such as Repsol , Eni and Total at 6.4 to 7 times.

EARNINGS BEAT

OMV's clean CCS earnings before interest and tax, which exclude one-offs and unrealised gains from valuing inventories, rose 9 percent to 800 million euros ($1.04 billion) versus the average estimate of 755 million in a Reuters poll.

That beat even the highest estimate in the poll.

Chief Executive Gerhard Roiss said stronger oil prices and the very cold central European winter supported results in the first quarter, while he expected refining and marketing margins to remain under pressure this year.

Output from Libya helped OMV boost production to 299,000 boed in the first quarter from 289,000 in the previous quarter, OMV said last month.

Average production in Libya was around 25,000 barrels per day (bpd) in the quarter. This was partly offset by reduced production in Romania and lower volumes in New Zealand.

OMV has a long-term stake in Libya with 12 exploration and production licences and petroleum contracts running up to 2032.

The first quarter also saw the first successful Black Sea well, which OMV said in February could be its biggest gas find ever. ($1 = 0.7695 euros) (Editing by Mark Potter and Jane Baird)

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