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Welcome to the OMV Results January to June and Q2 2026 Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded.

At this time, I would like to refer you to the disclaimer, which includes our position on forward-looking statements. These forward-looking statements are based on beliefs, estimates and assumptions currently held by and information currently available to OMV. By their nature, forward-looking statements are subject to risks and uncertainties that will or may occur in the future and are outside the control of OMV. Therefore, recipients are cautioned not to place undue reliance on these forward-looking statements.

OMV disclaims any obligation and does not intend to update these forward-looking statements to reflect actual results, revised assumptions and expectations and future developments and events. This presentation does not contain any recommendation or invitation to buy or sell securities in OMV.

I would now like to hand the conference over to Mr. Florian Greger, Senior Vice President, Investor Relations and Sustainability. Please go ahead, Mr. Greger.

Thank you. Good morning, ladies and gentlemen. Welcome to OMV's earnings call for the second quarter 2026. With me on the call are OMV's CEO, Alfred Stern; and our CFO, Reinhard Florey. Alfred and Reinhard will walk you through the highlights of the quarter and will discuss OMV's financial performance. Following the presentations, the 2 gentlemen are available to answer your questions.

And with that, I'll hand it over to Alfred.

Thank you, Florian. Ladies and gentlemen, good morning, and thank you for joining us today. I'm pleased to welcome you to OMV's Second Quarter 2026 Results Conference Call. The second quarter was characterized by continued geopolitical uncertainty and heightened volatility in global energy markets, which led to substantially higher prices and margins across all our businesses. While the ongoing conflict in the Middle East affected our upstream operations and refining assets in the region, our diversified portfolio and strong performance in other areas allowed us to deliver an overall very good result despite these regional challenges.

Our clean CCS operating result rose sharply to EUR 1.7 billion and cash flow from operating activities grew significantly to EUR 1.3 billion. When looking at the market situation, the conflict in the Middle East continued to impact global oil and LNG trade flows through the Strait of Hormuz. While these developments resulted in periods of significant volatility, market conditions gradually stabilized toward the end of the quarter as prospects for easing tensions improved.

Against this backdrop, the average Brent oil price increased to $104 per barrel compared to $68 per barrel in the second quarter of last year. Our average realized crude oil price rose to $98 per barrel from $66 per barrel in the period -- in the prior year period.

Concerns regarding LNG availability continued to support European gas prices through most of the quarter. The average THE gas price increased to EUR 46 per megawatt hour compared to EUR 36 per megawatt hour in the prior year quarter, while our realized gas price increased to EUR 38 per megawatt hour from EUR 29 per megawatt hour.

Market conditions also improved substantially in our downstream businesses. European refining indicator margins more than doubled to $20.3 per barrel compared to $8.1 per barrel in the second quarter of 2025. This was driven by tighter supply availability and drawing inventories following restrictions on shipping through the Strait of Hormuz as well as damages in the Russian energy infrastructure impacting Russian refined product exports.

In Chemicals, European ethylene indicator margins grew by almost 40% to EUR 813 per ton, while propylene indicator margins increased by more than 50% to EUR 704 per ton.

With that, let me now turn to the financial highlights of the quarter. Supported by a much stronger market environment and reliable operations across Energy, Fuels and Chemicals, OMV delivered a substantially better performance compared to the prior year period. This quarter also marked the first reporting period of the new global polyolefins leader, Borouge International, which we co-own with ADNOC's international investment arm, XRG, each party holding 50% and consolidated at-equity. The contribution from Borouge International to OMV's result was very meaningful as it was able to capture the favorable market conditions across the key regions.

In Energy, hydrocarbon production came in lower than the prior year quarter, mostly because the Middle East conflict impacted output. In Fuels, the utilization rate of the refineries improved by 7 percentage points and sales volumes were almost at the strong prior year level. In Chemicals, the steam cracker utilization rate rose by 11 percentage points year-on-year, reflecting significantly higher utilization at Burghausen and underlining our ability to capitalize on the improved olefin margin environment.

Our clean CCS operating result increased sharply by 65% to EUR 1.7 billion. This is especially noteworthy because in chemicals, a large part of the result stemmed from the at-equity consolidated Borouge International and is, therefore, already an after-tax figure. Consequently, OMV's net income surged to around EUR 930 million, an increase of more than EUR 500 million year-on-year. The clean tax rate decreased from 45% to 34% because of a different earnings mix, a higher share from fuels, which is typically lower taxed and substantially -- and the substantial at-equity result from Borouge International. Because of this, clean CCS earnings per share went up sharply to EUR 2.90 compared to EUR 1.20 last year.

Cash flow from operating activities rose by around EUR 250 million to EUR 1.3 billion, reflecting both the stronger earnings and a net working capital inflow of around EUR 150 million. The clean operating result of energy rose strongly year-on-year by 50% to EUR 885 million, driven by an improved E&P result, higher hydrocarbon prices led to positive market effects of more than EUR 400 million. Reduced sales volumes mainly due to the conflict in the Middle East were somewhat offsetting.

The realized crude oil price increased by 48% to an average of $98 per barrel, while Brent increased by 53% to $104 per barrel. Different pricing mechanisms, which in some countries have a delay of 2 months, explain the slight difference. OMV's average realized natural gas price improved by 30% to EUR 38 per megawatt hour. The stronger increase compared to the European benchmark price THE, which grew by 26% was mainly due to portfolio composition.

Hydrocarbon production remained broadly resilient at 291,000 barrels of oil equivalent per day, declining by only 4% despite temporary lower production driven by the Middle East conflict. Strong operational performance in Libya, where production increased by 10,000 to 45,000 barrels of oil equivalent per day, supported by new wells helped to offset natural decline in countries such as Norway and New Zealand.

Absolute production costs decreased because of various cost reduction measures. However, unit production costs rose slightly to $11.2 per barrel. This increase resulted mainly from lower production volumes and unfavorable exchange rate effects.

Sales volumes declined more than production by 34,000 to 242,000 barrels of oil equivalent per day as we had no liftings in the Middle East because of the conflict. Partly compensating were higher sales in Libya and Norway due to increased production and the lifting schedule. The Gas Marketing and Power result improved by EUR 11 million to EUR 6 million, driven by a higher contribution from Gas West, which was mainly attributable to the release of a transport provision related to booked pipeline capacities. Gas East came in broadly in line with the prior year quarter. The power business was impacted by the planned yearly maintenance turnaround of the Brazi power plant, which usually takes place in the second quarter.

I'm now pleased to give you an update on the significant progress of the Neptun Deep project, one of the most important energy developments in Romania and the Black Sea region. With the installation of the Neptun Alpha offshore production platform in the Black Sea, OMV Petrom has now reached another important milestone. The platform located in waters approximately 120 meters deep is weighing more than 16,500 tons and standing over 225 meters high, which makes it one of the most impressive offshore structures in the region.

Neptun Alpha will serve as the operational core of the field, processing natural gas offshore before transferring it to the onshore network. It has been designed as a fully automated facility capable of remote operation, reflecting the latest advances in offshore technology. The installation was successfully completed using the Saipem 7000, the world's third-largest semisubmersible crane vessel. In parallel, the installation of the offshore main gas pipeline, which will connect the field's production facilities to the onshore transport infrastructure has been completed. Furthermore, strong progress in the drilling activities has been made with 6 of the 10 planned development wells already completed.

The next phase of the project is now well underway as progress is being made toward completion of the remaining production wells and the installation and integration of the subsea infrastructure at the Domino and Pelican South fields. In parallel, preparations are progressing well to connect all offshore facilities to the transport pipeline system. This will be followed by a comprehensive testing and commissioning program to ensure safe and reliable operations.

The progress achieved to date is a testament to OMV Petrom's commitment to delivering this strategic project safely, efficiently and on schedule. The Neptun Deep project remains on schedule for first gas production in 2027, thanks to the dedication of everyone involved. Once operational, it will play a vital role in strengthening Romania's energy security, supporting regional supply resilience and reducing Europe's dependence on imported natural gas.

The clean CCS operating result of fuels rose sharply to EUR 446 million, mainly due to substantially stronger refining indicator margins. In addition, the refining business benefited from a more favorable production mix and higher utilization. The trading business also delivered a strong performance, taking advantage of the high market volatility during the quarter. Partially offsetting were the impacts of elevated crude differentials and temporary regulatory measures, especially in Romania and Austria.

The European refining indicator margin increased by more than $12 per barrel to $20 (sic) [ $20.3 ] per barrel, with refining utilization reaching 90% compared to 83% in the prior year quarter, which was affected by planned shutdowns at Burghausen and Petrobrazi, we were well positioned to capture these favorable market conditions.

The contribution from the marketing business declined as the retail performance was affected by lower fuel unit margins caused by price regulations in several countries. This was partly offset by a stronger nonfuel business contribution and sales to EV customers, which tripled compared to the same period last year. The commercial business result remained at a similar level to the prior year quarter. The result of ADNOC Refining and ADNOC Global Trading came in slightly negative due to supply chain disruptions as a result of the conflict in the Middle East.

The clean operating result of Chemicals more than doubled to EUR 429 million, driven by substantial increases in olefin and polyolefin prices. Borouge International in its first quarter of existence delivered a strong performance and represented the lion's share of the Chemical result. This is quite remarkable as we only show OMV's share of clean net income, thus an after-tax number as the new company is consolidated at-equity.

The result of OMV-based chemicals also increased strongly, mainly because of substantially higher olefin indicator margins, which resulted in a positive market effect of EUR 100 million. Elevated price levels led to higher absolute discounts, which partially offset the overall increase.

The utilization rate of the OMV steam crackers improved by 11 percentage points following substantially better utilization at Burghausen. Utilization in the prior year quarter was impacted by the shutdown of the crude distillation unit at the Burghausen refinery as well as turnarounds at customers. At EUR 349 million, the contribution from Borouge International was strong. OMV's attributable sales volumes from Borouge International, which corresponds to 50% of the new company, totaled 1.17 million tons.

As this was the first full quarter of operations of Borouge International, I would like to provide you with some further details. Formed by OMV and XRG at the end of March 2026, through the combination of Borealis and Borouge and the acquisition of NOVA Chemicals, this new global leader in polyolefins has got off to an extremely strong start. Borouge International delivered strong results within the first 3 months of acting as one group.

Adjusted EBITDA reached $1.8 billion in the second quarter of 2026, thus more than double the pro forma adjusted EBITDA generated in the first quarter of this year. At 33%, the EBITDA margin in the second quarter was very strong. The new company has proven the benefit of its diversified global footprint and premium product portfolio in this extremely challenging market environment. While the conflict in the Middle East severely constrained global polyolefin availability and drove prices up by more than 50% in North America and Europe and over 30% in Asia, it also highlighted the flexibility and resilience of the Borouge International global asset base.

Borouge International's assets in North America and Europe continue to operate at high utilization rates with unrestricted access to feedstock and logistics services. In the Middle East, production volumes as reported by Borouge PLC were impacted by asset damage resulting from the incident on the 5th of April, reducing utilization in the second quarter to 60%. Borouge PLC acted swiftly to complete the necessary repairs and restore full asset availability by the end of June.

With asset availability now fully restored, Borouge PLC is well positioned to return to high utilization rates, subject to logistics and feedstock availability. Despite the operational challenges in the Middle East, Borouge International has also made significant progress in integrating its business under a new governance and management structure.

A series of value creation initiatives was launched with a focus on maximizing cost advantages and leveraging the group's differentiated high-performance product portfolio. These actions lay the foundation for the estimated EBITDA synergies of over $500 million with approximately 75% to be realized within the first 3 years.

Thank you very much for your attention. I will now hand over to Reinhard.

Thank you very much. As Alfred explained, Borouge International delivered strong financial results. As part of our ongoing efforts to enhance transparency and facilitate a deeper understanding of our financial performance also with regards to Borouge International, I would like to provide an illustrative reconciliation bridge from EBITDA to net income. We currently anticipate an indicative depreciation of around $2 billion per year, reflecting the size and capital intensity of the Borouge International asset base. The indicative combined corporate tax rate of the new company is expected to be between 25% and 30% per year.

As previously emphasized by Alfred, Borouge International achieved a strong performance in the second quarter, recording adjusted EBITDA of $1.8 billion. Adjusted EBITDA is stated before nonrecurring expenses, which amounted to around $150 million as a onetime effect in the second quarter of 2026. When reconciling to adjusted net income, approximately $500 million reflect depreciation, while the remainder of the difference is being nearly equally split between interest and tax expenses.

To bridge the adjusted net income of around $900 million to the contribution to OMV's clean operating result in Chemicals, we must first deduct the 10% minority share of Borouge PLC, then consider OMV's 50% stake in Borouge International account for the FX impact from dollar to euro conversion and include PPA adjustments. We trust that this information provides greater transparency on how Borouge International translates into OMV's share of results.

With that, let us move back to OMV and from earnings to cash flow. Our cash flow continues to reflect the strong operational performance and cash generation of the OMV businesses. Our second quarter operating cash flow before net working capital effects rose substantially by 39% to almost EUR 1.2 billion, mainly due to higher commodity prices and stronger refining margins. This was achieved despite the missing cash flow contribution from the Borealis Group following the deconsolidation as a result of the closing of the Borouge International transaction in March 2026 as well as lower dividends received in the second quarter of 2026.

The prior year quarter still included around EUR 200 million dividend payments from Borouge Plc, which is now part of Borouge International. Net working capital effects in the quarter were positive and amounted to around EUR 150 million. As a result, cash flow from operating activities came in at around EUR 1.3 billion, an increase of roughly 20% compared with the same quarter in 2025.

As part of investing cash flow, we recorded a cash outflow of around EUR 750 million in the second quarter. The prior year quarter was slightly positive as it included around EUR 450 million from the divestment of our 5% stake in Ghasha Concession in the UAE and around EUR 650 million from a loan repayment from Baystar in the U.S.

Organic free cash flow before dividends increased to more than EUR 600 million from EUR 160 million in the prior year quarter. As usual, the second quarter reflects the payment of our annual dividends, along with the dividends to minority shareholders in OMV Petrom, resulting in negative free cash flow for the quarter.

Looking at the half year picture, cash flow from operating activities before net working capital effects rose by 27% to EUR 2.8 billion. This increase was mainly due to a higher reported result in the Fuels segment, supported by strong refining margins. The missing Borealis Group cash flow contribution and lower dividends received from equity accounted investments were partly offsetting.

In the first half of 2026, we recorded a build of net working capital of almost EUR 700 million because of higher inventory levels in Fuels and the higher price environment. In the respective prior year period, we recorded a net working capital release of around EUR 250 million, mainly due to a decrease in inventories in the gas business.

Organic cash flow from investing activities in the first half of the year was around EUR 1.6 billion related to ordinary ongoing business investments and major growth projects such as the Neptun Deep mega project in the Black Sea, the SAF/HVO plant in Romania and green hydrogen in Austria.

Inorganic cash flow from investing activities in the first half of the year contained outflows of around EUR 2 billion in relation to the formation of Borouge International stemming mostly from a capital injection from OMV in Borouge International and cash disposed due to the loss of control of the Borealis Group. Organic free cash flow before dividends in the first half of 2026 came in at around EUR 500 million.

As you can see, our balance sheet remains strong. In the first quarter, we reflected the deconsolidation of Borealis, the related changes in equity and net debt and the EUR 1.5 billion capital injection into Borouge International. In June, we shared the success of our business by distributing a total EUR 1.7 billion, comprising annual dividends from 2 OMV shareholders as well as dividends to minority holders in OMV Petrom, thereby continuing our track record of attractive shareholder returns.

Even after this sizable distribution, our leverage ratio increased to 19% only, remaining comfortably below our mid- and long-term threshold of 30%. This underlines our disciplined approach to maintaining a robust capital structure while delivering attractive returns. At the end of June, OMV had a cash position of EUR 3 billion and EUR 3.1 billion in undrawn committed credit facilities.

Let me now conclude with an updated outlook for this year. Geopolitical developments in the Middle East remained dynamic throughout the second quarter. While we saw alternative phases of diplomatic engagement and heightened regional tensions, recent escalations again caused increased volatility in global energy markets. We continue to monitor the situation, but how this conflict will develop and its implication on global markets remain highly uncertain.

We continue to forecast an average dated Brent price between $85 and $95 per barrel for 2026, reflecting the ongoing high volatility and limited visibility. The average THE gas price is now estimated to be around EUR 50 per megawatt hour, mirroring the current fragile state of the gas market. Consequently, we expect our average realized gas price to be around EUR 40 per megawatt hour.

In Energy, we continue to expect average oil and gas production for 2026 to be between 280,000 and 290,000 barrels of oil equivalent per day. While we saw strong production in the first half of this year, the timing and extent of the lifting of restrictions on shipping through the Strait of Hormuz continues to be a decisive factor.

In Fuel, we revised our refining indicator margin, which is now projected to be average $20 per barrel for 2026, reflecting an extraordinary situation in global refining markets. Refining balances have substantially tightened with around 10% of global capacity currently offline. We forecast utilization rate of our European refineries to be above 90% with no major maintenance turnaround scheduled in the second half of the year, which will allow us to strongly benefit from the current market environment.

Total fuel sales volumes are expected to be higher than last year, while retail and commercial margins are projected to be below the levels seen in 2025. In Chemicals, the combination of the exceptionally strong second quarter and the continued high price environment moving into the second half of 2026 lead to a substantial improved view on olefin margins for 2026. We now expect the ethylene indicator margin to be above EUR 600 per ton and the propylene indicator margins above EUR 500 per ton.

The utilization rate of the OMV olefin crackers is now predicted to be between 85% and 90% in 2026, following a weaker-than-anticipated second quarter. In the second half of 2026, we expect a significantly improved and stronger cracker utilization compared to the first half year. The clean tax rate for the full year is currently expected to be in the low 40s.

Before we go to your questions, I would like to take a moment on behalf of the Executive Board and the OMV team. Alfred, this is your last quarterly results call as CEO of OMV. And I would like to thank you for your leadership, your clear strategic direction and your strong commitment to OMV's transformation. Over the past years, you have guided OMV through a period of major change and important strategic decisions.

You have helped position the company for the future with a stronger portfolio, a clear transformation agenda and a continued focus on value creation for our shareholders. It has been a pleasure to work with you, and I'm sure many on this call will join me in thanking you for the open and constructive dialogue you have had with the capital markets.

With that, Alfred, I would like to hand over to you for a few final words.

Thank you, Reinhard. That is very nice of you, and thank you for your kind words, much appreciated. And also thank you to everyone on the call. I have to say I've very much appreciated the discussions with analysts and investors over the past years in our quarterly calls, in meetings and during roadshows. Your questions were always detailed, sometimes challenging and very valuable. Personally, I have to say I tremendously enjoyed all the calls, all the discussions because each time I learned a lot through your questions and challenges.

It has been a privilege to represent OMV during such an important phase of its development, and I'm proud of what the team here at OMV has achieved and confident about the company's future. OMV has strong foundations, a clear strategy and many opportunities ahead. And of course, I wish Emma Delaney, Reinhard, the Executive Board and the entire OMV team every success for the next chapter.

And I would like to thank all of you for your continued interest in OMV and for the professional exchange over the last years. I want to wish everybody the best, but we still get to the questions, and we do that by me handing over to Florian.

Thank you, both. Let's now come to your questions. [Operator Instructions] The first question today comes from Alejandro Vigil, Santander.

Wishing Alfred all the best in the new challenges and best of luck to Emma in her new role in the company. My first question is about the dividend from BGI. When are you expecting to collect this dividend? And if considering the market performance, the company results are probably above expectations. Is there any option of BGI to pay dividends in line with the initial idea of $1 billion per year?

And the second question is about the net debt and your expectations for the end of the year. I saw that you issue a hybrid bond in the second quarter, also the working capital. If you can elaborate a bit on the second half of the year to bridge the net debt for the end of the year.

Yes. Thank you, Alejandro, for your questions. Let me start with your questions on dividend. First of all, regarding the delivery of the dividend that was announced, we are actually expecting that this dividend will come in, in the third quarter. And then also for the first time, contribute with a very strong cash flow from Borouge International in our accounts.

Regarding the second part of that question, whether we see any kind of upside to that, I think it's a little bit too early to comment on that because you're right, second quarter was a very strong quarter. We still have lots of uncertainties around there. We have lots of net working capital challenges still with high prices, high inventories. And we have been also exposed to some additional CapEx. It's too early to comment on that. And therefore, I leave that for a later consideration. But at the moment, we are looking forward for still a very strong dividend contribution for Q3.

Your second question on the net debt level. First of all, let me comment on the hybrid bond. The hybrid bond that was successfully placed in Q2 with EUR 750 million is actually a replacement for a hybrid bond that we pay back and that we have announced so to do in the third quarter. So we are not actually increasing the outstanding financing in that respect.

So therefore, if I look at the current expenses that we had, very strong negative impact on cash flow from the EUR 1.5 billion equalization payment for Borouge International in the first quarter and EUR 1.7 billion of dividends for OMV and minorities of Petrom in the second quarter. All that will not happen in Q3 and Q4. So therefore, I would expect some positive development in that respect, and that will also influence our net debt going forward.

Just to clarify a follow-on on the question on the hybrids. So the total hybrids you're expecting to end the year, it's the current level you have in the first half. You're not going to have maturity...

The level is about EUR 2 billion in total. And now we have a little bit of an elevated situation in Q2. That will correct in Q3, and we'll end the year with that exposure of around EUR 2 billion.

EUR 2 billion. Okay. Understood.

Impressive Chairman. Alejandro, thanks for your question. We now move to Ram Kamath, Barclays.

Alfred, I want to congratulate you on your tenure at OMV and wish you all the very best for the next chapter. A couple of questions from me. Firstly, could you provide some color on Chemicals price momentum into second half, particularly given recent pullback in monomer prices. I see that you have guided -- I mean, the indicator margin suggests EUR 150 per ton on an average. But if we imply based -- after considering the first half prices, 2Q has been significantly higher, right? So is it suggesting that second half would be lower than the annual guide that you have? And given the higher prices of these olefins, would you see reflection of that in higher feedstock cost on polyolefin production in the second half?

And just on the refining thing as a second question, I know, I mean, refining margin has been robust so far this year. Do you see any downside risk to this refining outlook? And just on a -- to get a sense -- sorry, I think I lost.

We can still hear you.

Okay. Could you provide some color on basically the relative contribution from refining and the marketing just for the modeling purpose and possibly the impact of regulatory measures introduced in Romania and Austria in the second quarter?

Okay. Well, first of all, thank you very much for your kind words. Much appreciated. And let me try and answer your 2 questions. First on the Chemicals margins, olefins margins and color on that for the second year -- for the second half of the year. What we have actually seen here in July is that, yes, compared to the second quarter, the prices or the margins have come down a little bit, but we are still on a very strong level, well above the guidance that we have provided. So ethylene margins are above the 600, propylene margins are above the 500 that we are guiding for the full year.

Quite honestly, I think it will depend a little bit how we see things evolving as Reinhard explained a lot of volatility in the situation and how to supply the markets. We expect that we can run our assets in the second half of the year full and that we can benefit of a market environment and use this global position in Borouge International, but also the European position of our OMV-based chemical crackers.

On the refining margins, to be honest, Ram, I will be very careful. In the last couple of years, this was the one indicator where we were the most of all the time. It is a very special environment. And I would say some major contributing factors, of course, the Middle East crisis, not just with the Strait of Hormuz, but now also with the activities, blockage of the Houthis in the Red Sea is creating supply chain disruptions.

But on top of that, a lot of the Russian infrastructure is damaged also showing limited availability and with this supply chain streams changing. I think -- and at the same time, what we see is, as you could see in our retail area, a good demand and also on the commercial business-to-business side, only more or less flat with a very slight reduction versus last year.

So we see good demand. And on the other side, globally, major supply chain disruptions with significant capacity not accessible. This is why we take the refining indicator margin for the full year average up to $20 per barrel. And we believe as we have no turnarounds and everything, we will, of course, maximize our production from our assets.

In the -- maybe the one thing that I should mention, what we can see, of course, also globally is inventory levels reducing and partly compensating now for lack of supply. This will -- the longer this takes, the more difficult this will, of course, become. Regulatory measures are hard to predict because the fuel prices now across many countries in Europe, in particular, again, significantly elevated. And here, this is providing for some inflationary push. And one should expect that there could be some further regulatory measures.

In Romania, they have announced something that they haven't published yet. So we are not completely clear, but I think it's similar to what we had in the second quarter. And also the -- in Austria here, they are extending the measures, however, without any margin restriction. So basically, we see that this should provide -- continue to provide a good environment to operate in.

Thank you, Ram, for your questions. We now move to Eva Xenios from BNP Paribas.

So just 2 from me, please. The first is on windfall taxes. So given that Portugal has just approved a windfall tax on oil firms, should we expect Austria to do the same?

And secondly, on NOVA Chemicals, could you update us on the AST2 growth project and the efficiency program, given that these are both -- I think you've said supposed to be key drivers for Borouge International's EBITDA growth this year?

Yes, Eva, thank you. I'll take your first question on windfall taxes. It is true that there are considerations in some countries around reintroduction of windfall taxes. We have not seen that this is a really widespread attempt. We are seeing that some of the regulatory topics regarding fuel margins have been considered. We have seen part of that in Austria. But as Alfred mentioned, not as a direct impact to reduce margins.

However, we are expecting that in Romania, maybe in other Central and Eastern European countries, we see similar measures. But this is not directly a windfall tax in that sense, what we have experienced in the past. And therefore, I would be -- I would say, positive towards a continued positive environment for our business without major restrictions through windfall tax impact.

Okay. And I will try on the NOVA Chemicals AST2. Maybe let me just position it this way. As you point out, AST2 is one of the growth projects that we have there in this environment now with limited supplies globally. This is one of the areas where Borouge International can benefit us. To my understanding, they are on track with the project. However, for the detailed things, I will refer to Borouge International. But all I know is they are on track with the project.

Thank you, Eva. Now we'll come to Josh Stone from UBS.

Best of luck, Alfred. Congratulations for managing OMV through a number of landmark moments for the company. So it was much appreciated. A couple of questions. One on refining, I just wanted to follow up in terms of your confidence and ability to capture these very strong margins. So what are you seeing today? And just to confirm, there aren't any hedges or anything like that, that could disturb things on the refining side?

And then related to that, there have been a number of reports in recent weeks around very low water levels on certain choke points on the Rhine and also the Danube. So I'm just curious how is that impacting your business? And are you already starting to see some premiums to refining or even on chemicals as a result of these very low water levels? I'm curious on that.

Yes, Josh, maybe first, let me thank you for your kind words. Thank you very much. Then I start with the refining margins a bit and maybe Reinhard wants to add something on hedging or other things. Indeed, as you said, if you look at the July margins, right, we are well above the $20 per barrel that we are now giving as an outlook for the full year. I think all that is a mix effect of all these supply chain issues.

All the -- I mentioned some of them before, you added some others on logistics, transportation, low water levels are an issue and they are driving the possibility to transport the things on top of low water levels. There's also some rail issues in Germany. So all this is limiting the supply chains. And I think this is what is causing the fuel prices and in particular, the middle distillate prices to be where they are.

And as I said, I think we are well -- that we have predicted for the full year. Maybe one other comment on the kerosene because we -- I think we are in a special situation here with OMV. As you know, we have both pipeline into Schwechat Airport here in Vienna and to the Munich Airport in Germany. Also close to the airport in Bucharest. And we manage, in particular, here in Austria and in Germany to supply fully the kerosene demand and ensure that we can supply that and also use the demand price environment that we see.

And maybe, Josh, on the topic of hedges, we are not expecting any major negative or other effects from hedging going forward. Remember that the negative hedging impact that we showed in Q2 was actually triggered by a cargo from our oil trading that was designed to come from Middle East. And suddenly, this cargo couldn't leave the port. And therefore, we had one leg open and prices were rising, and therefore, we encountered a loss. That is currently not the case. We do not have any cargoes that we have inside the Strait of Hormuz. We don't have any open hedges on that. So therefore, I'm not expecting any of the negative effects to continue.

Thank you for the questions. And we now move to Gui Levy from Morgan Stanley.

Alfred, also echoing my colleagues here, I wanted to wish you all the best on your next steps. Perhaps the first question to you, I would like to ask you what you think are going to be the biggest challenges to the next CEO? What the next CEO is going to face over the coming years? Any particular issue that you would like to have addressed if you had stayed in the company for longer as CEO?

And then second one, going to the working capital topic. Could you help me quantify how much of the working capital build in the first half has been driven by price versus volumes? And how should I think about that reversing over the coming quarters?

Yes, Gui, thank you very much. Let me -- thank you very much for your kind words. And then let me address your first question. For the net working capital, I will ask Reinhard to help here. The biggest challenge is, right? I think what we have started off here at OMV, we wanted to develop the company to become an integrated energy, fuels and chemicals company. And because we believe in that integrated business model, it has served us well. And over the quarters that I was here, I could see that we were able to deliver very good cash flows through this model, which allowed us to pay attractive dividends and at the same time, make investments into the progress of the company.

We have made some major steps in that direction. Borouge International, of course, is a big one. And it's great that the second quarter was an extremely good start for Borouge International in a special environment, right? And also, we reported on Neptun Deep. And as we reported earlier, Neptun Deep, when it goes on stream, it will deliver about EUR 500 million additional operating result. And in that, it's a key project to keep moving forward.

So Reinhard reported on our leverage ratio of 19%, which makes a very solid balance sheet that allows to continue to invest into the growth and into the transformation of the company. And I think those -- around those things, we will see most of the challenges and not to neglect, in my opinion, the high volatility that we see all around us. This requires agility. We have put a lot of work into OMV to be able to respond to this, but this will continue to be a challenge, just the speed and volatility of changes that we see is incredible.

And last but not least, I want to mention our efficiency program where we said at a minimum, we want to deliver EUR 500 million additional cash flow by 2027. As you know, we have strengthened that program with a fixed cost program that should also deliver EUR 400 million lower fixed costs by 2027. We are well on the way. We have projectized all this and continuing to deliver on this will be key to make OMV a stronger and better company.

Yes. And let me, Gui, look a little bit at the working capital developments and expectations. Maybe just to recap the numbers. In quarter 1, we had a buildup of net working capital quite massively in the magnitude of EUR 848 million. In the second quarter, we had a still relatively small release of EUR 158 million. Now mainly that, of course, is driven by a significantly higher pricing environment that we see. But we also see some impacts from that situation, as Alfred has described it on the gas storage side.

So therefore, my expectation is that actually we would see with our guidance that we have given on pricing levels that probably not all of the net result of around EUR 700 million working capital buildup can be released until end of this year. It depends very much on how quarter 4 ultimately will turn out, and that is too early to anticipate. But my hypothesis at the moment from our liquidity point of view is we will see some of that working capital flowing back with some positive cash flows, but I do not foresee the entirety of the currently positive balance or buildup balance to normalize until the end of the year.

Thank you. And we now move to Sasi Chilukuru from Jefferies.

I wish you all the very best for the future, Alfred. I had 2 questions. The first one was related to Borouge International and more so with the current balance sheet strength of BGI. I just wanted to understand your latest views here. You've previously highlighted the requirement to maintain BGI's investment-grade rating. Now both S&P and Fitch have issued strong investment-grade ratings and 2Q has been a strong quarter as well. Do you think OMV as a 50% shareholder would be required to do anything more here to support the investment-grade rating for BGI?

The second question was related to the dividend policy. If the dividends from BGI were not changed for this year, the temporary reduction stays in place. I was just wondering if you could tweak your dividend policy for 2026, going above 30% operating cash flow, excluding BGI dividends to compensate for this temporary downward adjustment in BGI dividends and also reflect the elevated macro environment?

Yes. Thank you, Sasi. Let me take these questions one by one. First of all, as you mentioned, Borouge International has come out of this transaction with a strong balance sheet. And this is reflected by very strong investment-grade credit ratings that they have received. And we are seeing that in spite of, of course, burdens from the Middle East crisis on the Borouge side, we are seeing very strong performances on NOVA and Borealis parts, now giving an overall clear upside in the situation of Borouge International.

Of course, in net working capital, we also see significant impacts. But this is, for me, still a little bit like a savings account, which will come back at some stage when we will see a normalization of the situation. But this group has now demonstrated huge resilience and the benefits of this really worldwide footprint that they have in the markets. So therefore, I'm not expecting that OMV will be required to do more if you point to any kind of capital injections or something like that.

I trust that this development will lead to what was the original plan that there will be a listing of Borouge International. There will be a capital increase coming with that, even further strengthen the balance sheet, but I also believe that this year is a positive year also regarding the cash generation and the profitability of this company.

Then your second question was on OMV and the general dividend turnout. Now I think we have demonstrated in 2026 for the last year that we are willing to position the dividend payments clearly in the upper range of our 20% to 30% range of our operating cash flow. And while I do not think that changing our dividend policy to something to above this 30% makes sense, our effort is to increase the operating cash flow, which is the basis of the dividend payments. And if we are successful in that, there will be a more than adequate reward to the shareholders from our view.

Thanks. As we have quite a few people in the queue still and we have a hard stop today, I would ask you if possible to limit your questions to only one. And now Oleg Galbur ODDO BHF would be the next.

Hello, can you hear me?

Yes, we can.

And before that, Mr. Stern, I wish you all the best in your future endeavors. So choosing between 2 questions. Let me ask a question about the fuel segment, yes. So you highlighted strong indicator refining margins at around $20 per barrel in Q2, but also referred to elevated crude differentials as a headwind. So could you help us understand how the discount of the crude slate processed by OMV evolved relatively to Brent during the quarter? And also, how should we think about the gap between the indicator margin and the effective margin captured by the refining in Q2 versus previous quarters?

Oleg, happy to give it a try with all the uncertainties ahead that we have. First of all, you're right that in the beginning of all these difficult situations around the fuel markets, not only from the Middle East, but also from the situation with destroyed assets and destroyed refineries in the Ukraine and Russia region. The general margins went up significantly. However, the Middle East situation has led to temporary crude differential increases because it was unclear to what degree other countries in the region with comparable qualities can make up for the volumes that did not come through the Strait of Hormuz.

At the moment, what we are seeing is that these crude differentials have come down. And we are not seeing such a burden there. So I would assume that also the gap between indicator margin and realized margin normalizes again, and this is the situation as we see Q3 going forward. However, you can see that there are surprises or negative surprises not to be excluded. And therefore, it is hard to give a firm prediction on that.

Thanks, Oleg. We now come to Henry Tarr from Berenberg.

I'll restrict myself to a quick one. Just on Neptun Deep, I guess, we're half the way through 2026 now. In terms of timing, I know you probably don't want to limit yourself to a specific quarter or a month, but should we be thinking that Neptun Deep contributes meaningfully in 2027? Or from a modeling perspective, should we think about it sort of really ramping up in '28?

Yes. Thank you, Henry, for the question. So as I described, right, we are making good progress. We are on plan. We're meeting major milestones, the Neptun Alpha, the subsea pipeline, the 6 wells out of 10. So we keep moving ahead according to plan. What we did say is 2027, we will start up. Please do give us a little bit more time when we firm down the start-up date completely. We do not want to overpromise on this despite the fact that we are making good progress.

Thank you, Henry. And next is Matt Lofting from JPMorgan.

I just wanted to follow up on the comments you made earlier on your chemicals outlook for the rest of the year. I think you mentioned earlier that July margins perhaps a bit lower than the second quarter, but above the baseline implied by your updated full year guidance. Clearly, conditions are quite uncertain. But is your base case that margins are likely to further ease from July levels? Or do you see your guidance as deliberately cautious? Just trying to understand sort of where you see the risk reward around that gap, at least as it stands today.

Yes. Thank you, Matt. I would concur with you, difficult to make exact predictions in our super volatile world that we live in at the moment. But what we do see is we did see demand. We are expecting that we can run our crackers on a high utilization for the rest of the year. And we still see a lot of the supply chain issues persist. So July started significantly above the guidance for the full year. Maybe we see a little bit normalization, and I think we should anticipate a little bit of bumpiness as we see supply and demand balancing out. But at this moment, I would still see that third quarter started still on a good and strong note.

Thank you, Matt. And we now come to Adnan Dhanani from RBC.

Just wanted to ask around your UAE assets. For Borouge chemicals volumes, are you able to provide any color on the current status of exports? Obviously, you noted that production has been fully restored. I just want to know how much of that is being exported now, especially given the renewed tensions in the Strait. I think Borouge also in the release today flagged that while the assets are fully repaired, the production in the second half might be constrained due to the feedstock availability. So I just want to get your thoughts there. And then on the upstream UAE volumes, when can you reasonably expect liftings to resume there?

Yes. Adnan, thanks for the question. As I reported, right, so all the damages are repaired and they have restored the full capacity. The constraint there is coming more from a feedstock availability at the moment so that we are looking at about 60% of utilization for the logistics and evacuation of the material, alternative routes were established. They are higher in cost. However, that kind of level of evacuation can be achieved through those alternative routes. And that would be kind of the expectation where we are now at the moment.

Yes. And Adnan, to your second question on upstream. We have not given up the hope for our first liftings in Q3. So of course, at the moment, we are seeing quite difficult situation for any kind of cargoes, but there is also a possibility for us, hopefully, to lift outside the Strait of Hormuz. So whether this will be possible or not, we will be able to then announce. But it is not that we have given up on that perspective also for Q3.

Thanks, Adnan. And next question comes from Chris Kuplent, Bank of America.

Alfred, best of luck for what's ahead of you. And I just wanted to double check more detail around the Borouge disclosure you've made today. I think that's very helpful, short of a prospectus that I'm sure we're looking forward to for next year. But I wonder whether you can shed a little bit more light on what's hidden in your special items and revaluations. I noticed in your disclosure, the EUR 10 billion or so of book value that you've given your stake has remained unchanged from Q1. How are you going to treat the fair value assessment of Borouge Group -- sorry, yes, BGI or BI, whatever we meant to call it now. So I'm not sure, Alfred, that's one for you or for Reinhard.

Thank you, Chris. Thank you for the kind words. And definitely, it's one for Reinhard. I'm sure -- I mean, I can answer it, but I think he would give you a more professional answer here.

Yes. Chris, I'll do my best. So regarding what's in the special items, there is actually 2 elements. One is adjustment of inventory valuations according to what was the difference between Q1 valuation and the Q2 valuation. This is a onetime effect. This will not have any kind of further special character, but this is an effect that has been taken into account here.

And the second is simply transaction restructuring costs out of that situation, also onetime effects that we do not expect to recur. So the adjustments for the future, we are seeing as minor or insignificant. And this is a Q2 onetime effect in the magnitude of closer to EUR 150 million or something like that on an EBITDA basis compared to the EUR 1.8 billion, also a small amount in that respect.

And when it comes to the book values in OMV, there is no need, no intention to take book values down in any way. Of course, we have taken a so-called preliminary PPA for this transaction that will be finalized after or within the 12-month period that we have time for. But we are not seeing that the fair value assumptions currently are under any kind of pressure or discussion. And we have just seen that also in our case, some of the inventory adjustments were running through the P&L without any cash effect, and that is also part of our special effects that we had in the OMV Group. But again, a onetime effect, no effect for the further quarters.

We'll keep waiting for the...

Thanks, Chris, for your question, and thanks, everyone, also for being disciplined and sticking to the one question only at the back end of the Q&A session. So we are now coming to the end of the conference call and would like to thank you for joining us today. Should you have any further questions, please contact the IR team. We are happy to help. Have a happy Friday and goodbye.

Thank you very much. Have a great Friday afternoon.

Thank you. Bye-bye.

Welcome to the OMV Results January to March 2026 Conference Call and Webcast. [Operator Instructions]. Please be advised that today's conference is being recorded. At this time, I would like to refer you to the disclaimer, which includes our position on forward-looking statements. These forward-looking statements are based on beliefs, estimates and assumptions currently held by and information currently available to OMV.

By their nature, forward-looking statements are subject to risks and uncertainties that will or may occur in the future and are outside the control of OMV. Therefore, recipients are cautioned not to place undue reliance on these forward-looking statements. OMV disclaims any obligation and does not intend to update these forward-looking statements to reflect actual results, revised assumptions and expectations and future developments and events. This presentation does not contain any recommendation or invitation to buy or sell securities in OMV.

I'd now like to hand the conference over to Mr. Florian Greger, Senior Vice President, Investor Relations and Sustainability. Please go ahead, Mr. Greger.

Thank you. Good morning, ladies and gentlemen. Welcome to OMV's earnings call for the first quarter 2026. With me on the call are OMV's CEO, Alfred Stern; and our CFO, Reinhard Florey. Alfred and Reinhard will walk you through the highlights of the quarter and will discuss OMV's financial performance. Following their presentations, the 2 gentlemen are available to answer your questions.

And with that, I'll hand it over to Alfred.

Thank you, Florian. Ladies and gentlemen, good morning, and thank you for joining us today. Let me start with the extraordinary and challenging environment being faced by global energy markets. The closure of the Strait of Hormuz at the end of February following the escalation in the Middle East has had far-reaching repercussions not only for oil and LNG flows, but for global energy security as a whole. Our thoughts are with all those affected by the ongoing conflict, and we will continue to prioritize the safety and security of our people and assets in the region.

Despite the current circumstances, we delivered a solid clean CCS operating result of more than EUR 1 billion and cash flow from operations, excluding net working capital of more than EUR 1.6 billion.

Turning to the macro environment. International energy markets in the first quarter were characterized by extremely volatile price developments. Prior to the crisis, around 20% of total oil and gas supply transited the Strait of Hormuz. Following the closure of the Strait, the price of dated Brent experienced a significant upward momentum. The Brent price climbed from less than $70 per barrel in January and February to over $120 per barrel by the end of March, resulting in a quarterly average above $80 per barrel. more than 25% higher than the previous quarter and 7% higher year-on-year.

European natural gas markets have also been severely impacted. The initial reaction to the closure of this trade was even more pronounced in early March. Roughly 20% of LNG supply was stuck in the Persian Gulf and Qatari volumes were offline, causing the average DHE gas price to rise by 32% quarter-on-quarter. Despite this, the DHE gas price for the first quarter averaged EUR 41 per megawatt hour and was 13% below the exceptionally high prior year quarter.

Refining margins were also very volatile. Market shortages caused by the conflict in the Middle East drove prices and margins higher in March. The OMV refining indicator margin averaged $13.9 per barrel and was thus at a similar level to the previous quarter, but substantially above the prior year quarter, driven by tight middle distillate and gasoline supply in the region.

In Chemicals, olefin and polyolefin indicator margins posted varied developments. Olefin margins declined by 17% compared to the prior year quarter as margins in March got squeezed due to the conflict in the Middle East. Naphtha prices rose more strongly over the course of the month than olefin contract prices set at the beginning of March.

Polyolefin margins increased by 28% as polyolefin contract prices could be raised strongly in March, reflecting concerns regarding the security of supply following the breakout of the conflict in the Middle East. Although the extreme market volatility and ongoing conflict in the Middle East presented significant challenges, OMV achieved a solid performance and once again demonstrated resilience, thanks to its integrated business model.

In Energy, hydrocarbon production came in 7% lower than the prior year quarter as the Middle East conflict impacted output. We increased our fuel sales volumes, thereby reinforcing our position as a supplier of choice in the downstream sector. And in Chemicals, total polyolefin sales volumes, which included the joint ventures decreased only slightly year-on-year despite logistical constraints in a challenging environment.

Our Clean CCS operating result came in at more than EUR 1 billion, though this was down 12% year-on-year. The stronger chemicals result could not offset the lower energy contribution, while the fuel segment set a similar level to the prior year quarter. Clean CCS earnings per share amounted to EUR 1. Cash flow from operating activities reached almost EUR 800 million.

The decrease year-on-year and compared to the previous quarter was predominantly attributable to the significant net working capital build of around EUR 850 million. Excluding net working capital effects, the operating cash flow was substantially higher than in both periods, largely driven by a higher pricing environment while also benefiting from timing effects.

Before I discuss OMV's results in more detail, I would like to turn to the Borouge International transaction. which represents one of the most significant strategic steps in OMV's history and the pivotal move in the implementation of our Strategy 2030. On March 31, OMV and XAG, ADNOC's International investment arm announced the successful creation of Borouge International.

The combination of Borealis and Borouge and the subsequent acquisition of Nova Chemicals has resulted in the formation of the fourth largest polyolefin player worldwide, posting substantial scale and reach across the Americas, Europe, the Middle East and Asia. These regions are pivotal in determining future demand growth and long-term industrial relevance. Borouge International will be jointly owned by OMV and AG with each holding a 50% share.

To balance the shareholding, OMV injected EUR 1.5 billion into the new company. Our partnership is founded on clear governance, shared responsibilities and most importantly, a shared ambition to create long-term value and future growth. It is also a reflection of our belief in the value of this platform, which repositions OMV's Chemicals segment to deliver substantial global potential. We recently also announced the executive leadership team, which invites decades of senior leadership experience across the international chemicals, commodities and refining sectors with deep commercial and operational knowledge and a proven track record of strategic execution.

The combined businesses have historically delivered average pro forma EBITDA of approximately $4.5 billion despite recent years being more challenging. We expect EBITDA to increase significantly and reach more than $7 billion through the cycle. This will represent a significant enhancement in terms of earnings quality and cash flow generation, thereby also substantially strengthening OMV's long-term value creation. It will be achieved primarily by growth projects where we see strong progress and near-term execution, but will also be supported by considerable synergies and the expected normalization of the chemicals markets.

The asset usage agreement announced last month further underpins this growth path. It enables Borouge plc to operate and market the substantial Borouge 4 volumes, which will add 1.4 million tons of polyethylene once fully online. Lastly, the new company achieved strong investment-grade credit ratings, demonstrating substantial confidence in the balance sheet and the sustainability of future cash flows. Borouge International is a leader in operational excellence.

The strong results of Borouge International are also the result of the disciplined and consistent approach to managing its assets. Recent years showed that Borouge International is among the best operators in the industry, proven by both asset availability and plant utilization. The company has consistently operated at utilization levels above the industry average, supported by high asset availability and the use of advanced technologies to optimize maintenance costs and production planning.

Over the past 5 years, this focus has yielded significant outcomes. bringing the pro forma average utilization rate close to 90% compared with an industry average of just over 80%. This is supported by a modern, well-maintained asset base underpinned by substantial past investments. This higher utilization rate directly translates into stronger operational leverage, better customer service levels, more resilient cash flows and better financial outcomes through the cycle. But one thing also has to be clear.

Operational excellence does not stop at asset level. It is also founded on an unwavering commitment to health, safety and asset integrity. Product quality and pricing are of paramount importance to the strength of Borouge International. Borouge International's innovative positioning, consistently high quality of its products and substantial share of specialty products in its portfolio are clearly recognized by its customers, which directly impacts commercial outcomes.

Over the past 5 years, pro forma price premiums of almost 20% have been consistently achieved when compared with local market benchmarks. This is a structural advantage and not just a cyclical one. It forms a solid foundation and contributes significantly to the strength and resilience of the company's margins, which has demonstrated stability across various market conditions in previous years. It is crucial that this premium pricing remains consistent throughout the entire cycle.

And Borouge International has consistently demonstrated its ability to maintain premiums even at the bottom of the cycle. This underscores the technological innovation capabilities and the vital function of its products as well as substantial customer trust. This commercial strength is closely linked to the aforementioned operational excellence. Reliable supply, consistent product performance and strong customer relationships all reinforce the ability to price sustainably at the premium.

Let me turn to the historical earnings performance of Borouge International. Margins at Borouge International have been structurally higher than those of competitors, both when markets were strong and when conditions turned out to be more challenging. When comparing the pro forma EBITDA margins with those of specialty chemicals category leaders and global chemical players, the difference becomes clear.

In strong market environments, Borouge Internal margins are ahead of its peer group -- but most importantly, in weaker market conditions, EBITDA margins remain high and close to 20%, well above the broader industry level. For 2025, the margin level of Borouge International remained twice as high as above the industry average across global chemical players.

Specialty Chemicals leaders were in the same ballpark despite their materially different business models. Between 2021 and 2025, Borouge International proved to be the most profitable player through the cycle. And even at the bottom of the cycle, the margin profile were comparable with the very best in the specialty chemicals industry. This performance reflects everything we have already mentioned, operational discipline and advantaged feedstock, premium product positioning based on proprietary technologies and scale. It is the core reason why this platform delivers sustainable value no matter the market environment.

Let me now turn to OMV's performance in the first quarter of 2026. The clean operating result of the Energy segment declined year-on-year by 21% to EUR 723 million. The main driver of this was a lower result in Exploration and Production, which primarily reflected negative market effects and reduced sales volumes. In addition, the prior year quarter was supported by a positive onetime effect of EUR 48 million as a result of an arbitration award.

The realized crude oil price remained virtually unchanged year-on-year, averaging $72 per barrel, while Brent increased by 7% to $81 per barrel. This was largely attributable to different pricing mechanisms that in some countries have a delay of 2 months. OMV's average realized natural gas price fell by 19% to EUR 31 per megawatt hour. The stronger decline than the European benchmark, the TAG, which decreased by 13% was mainly due to the composition of the portfolio.

Hydrocarbon production declined by 7% to 288,000 barrels of oil equivalent per day. This was predominantly due to the temporary shut-ins caused by the conflict in the Middle East and natural decline in New Zealand and Romania. Production in Libya was slightly higher, which partially offset the declines elsewhere. Absolute production costs decreased as a result of various cost reduction measures. However, unit production costs rose to $11.6 per barrel. This increase resulted mainly from unfavorable exchange rate effects and lower production volumes.

Sales volumes decreased by 31,000 to 252,000 barrels of oil equivalent per day to a large extent due to lower production caused by the conflict in the Middle East and the lifting schedule in other countries. The gas marketing and power result decreased by EUR 30 million to EUR 72 million. The main driver of this was the missing positive effect of the arbitration award received in the first quarter of 2025. Gas West was further impacted by a lower storage result following decreased summer winter spreads.

The contribution of Gas East rose strongly, supported by the power market deregulation in Romania effective from July 2025. The clean CCS operating result of the fuels segment remained largely constant at EUR 113 million. Substantially stronger refining indicator margins were offset by several factors. Amongst them were operational one-off hedging losses amounting to around EUR 100 million related to equity production due to global disruptions in crude flows.

Lower utilization and a lower contribution from the marketing business were also offsetting. The European refining indicator margin more than doubled to $13.9 per barrel in the quarter. However, planned shutdowns, particularly in March, limited the ability to capitalize on the high March margins. Because of these maintenance activities, the refinery utilization rate declined from 92% in the prior year quarter to 87%. The marketing business contribution declined substantially as retail performance was impacted by lower fuel unit margins due to higher oil product quotations triggered by the conflict in the Middle East. Increased fuel sales volumes could only partly offset this.

The commercial business result also decreased because of lower margins, though higher sales volumes and a slightly improved contribution from the aviation business mitigated this to a certain extent. The contribution from ADNOC Refining and ADNOC Global Trading improved to EUR 7 million, mainly attributable to a better trading result. However, this was partly offset by impact resulting from the conflict in the Middle East.

The clean operating result of the Chemicals segment rose sharply to EUR 245 million, driven by improved polyolefin margins and the stop of Borealis depreciation. In our European business, we recorded unfavorable market effects totaling EUR 20 million, reflecting lower olefin indicator margins partly compensated for by higher polyolefin margins. Inventory effects were positive. The utilization rate of our European crackers was stable at 91%.

Nevertheless, the result of OMV-based chemicals decreased due to weaker olefin margins and lower butadiene results. The contribution from Borealis, excluding joint ventures rose to EUR 223 million to a large extent driven by the stop of depreciation. In addition, the results of Borealis-based chemicals and polyolefins increased. Borealis-based chemicals benefited from higher light feedstock advantage and positive inventory effects. The contribution of polyolefins grew because of better margins and increased sales volumes driven by improved specialty sales volumes in the energy and mobility sector.

Earnings from our joint ventures decreased by EUR 10 million, mainly due to a lower contribution from Borouge. Borouge performance was impacted by low pricing in January and February as well as logistics disruptions and cost increases in March caused by the conflict in the Middle East.

Thank you for your attention up to here, and I would like to now hand over to Reinhard.

Thanks, Alfred. Good morning, and welcome also from my side. Let's turn to some more financial details of OMV's first quarter. Starting with cash flows. Our first quarter operating cash flow, excluding net working capital effects, was very strong at EUR 1.6 billion, considerably higher than the previous quarter and the prior year quarter.

The main drivers were substantially stronger refining margins and improved Gas and Power Eastern Europe contribution as well as higher prices in fuels, which are not visible in the clean CCS to the CCS adjustment. Cash flow further benefited from realized gas derivatives. It is important to note that the higher prices also affected net working capital with the opposite effect.

Higher prices, together with increased inventory levels led to substantial net working capital build of approximately EUR 850 million. As a result, cash flow from operating activities for the quarter was around EUR 800 million. Organic cash flow from investing activities in the first 3 months of the year was around EUR 900 million related to ordinary ongoing business investments and major growth projects such as Neptun Deep, the PDH plant in Belgium, the SAF/HVO plant in Romania and green hydrogen in Austria. As a result, the organic free cash flow before dividends for the first quarter of 2026 came in at minus EUR 125 million.

Our balance sheet remains very strong. The impact of the Borouge International transaction on our leverage ratio was fairly limited. It rose from 14% to 17% at the end of the first quarter. This was mainly attributable to the impact of the Borealis deconsolidation on our equity and net debt as well as the capital injection of EUR 1.5 billion into Borouge International to equalize OMV's and [ ExerG ] shareholdings.

I think it is worth highlighting that even after this game-changing transaction, our leverage ratio remains well below the mid- and long-term threshold of 30%. This reflects our commitment to maintaining a robust capital structure and healthy balance sheet. At the end of March, OMV had a cash position of EUR 3.5 billion and EUR 3.1 billion in addition in undrawn committed credit facilities. Given the significance of Borouge International transaction, I'd like to briefly explain the impact on reported numbers.

Clean CCS net income amounted to EUR 495 million in the first quarter of 2026, only slightly lower compared with the EUR 561 million a year before. The deconsolidation of Borealis led to a gain in the amount of EUR 886 million, which reflects the difference between the fair value and the book value of Borealis at the time of deconsolidation. This gain is recognized in net income and reported as a special item. As a result, it is not included in the Clean CCS net income or the Clean CCS result.

Thus, reported net income rose to more than EUR 1.6 billion in the first quarter of 2026, largely impacted by the gain from the consolidation. In the prior year quarter, reported net income was EUR 288 million.

Let me now briefly walk you through the general financial implication of the Borouge International transaction going forward. In the first quarter, most financial metrics have been reported under the previous group structure, in line with the previous quarters. This applies to the clean operating results, net income and operating cash flow. At the same time, the balance sheet already captures the technical effect of closing.

This includes the EUR 1.5 billion capital injection into Borouge International and the deconsolidation of Borealis cash balances. From the second quarter 2026 onwards, Borealis will be fully deconsolidated and the new company, Borouge International will be accounted for as equity. This means in operating results and net income, we will report or least share of Borouge International's net income. In operating cash flow, we will reflect dividends received from Borouge International.

And on the balance sheet, Borouge International will be shown as an equity accounted investment as it is already shown at the end of the first quarter of 2026. This structure results in cleaner financials, stronger cash generation visibility through dividends and a more resilient earnings profile going forward. In addition, in the appendix, we provided high-level pro forma figures for the years 2024 and 2025, which show OMV excluding Borealis and Borouge that should help you with modeling.

Let me end with the outlook for this year. Recent escalations in the Middle East, including military activities and restrictions on shipping for Strait of Hormuz have significantly increased volatility in global energy markets. While we are constantly monitoring the latest developments, it remains difficult to predict the environment as the trajectory of the regional conflict is highly uncertain.

In light of these events, we currently forecast an average dated Brent price for 2026 of between $85 and $95 per barrel. The average DHG gas price is estimated to be around EUR 45 per megawatt hour, while the OMV average realized gas price is expected to be in the region of EUR 35 to EUR 40 per megawatt hour. In energy, we expect average oil and gas production for 2026 of between 280,000 and 290,000 barrels of oil equivalent per day, reflecting the current situation in the Middle East and subject to the timing and extent of the lifting of restrictions on the shipping to Strait of Hormuz. Unit production cost is now expected to be around $11 per barrel.

In fuel, the refining indicator margin is projected to be between $10 and $15 per barrel, a range that reflects current market disruptions and uncertainties. These disruptions are also leading to a significant widening of crude oil differentials to dated Brent, which are not reflected in the OMV refining indicator margin or in the full year sensitivities and thus could have a material adverse impact on the fuels business.

We anticipate the utilization rate of our European refineries to be above 90% with no major maintenance turnarounds planned at our refineries in the remainder of the year. Total fuel sales volumes are expected to be higher than last year, while retail and commercial margins are projected to be below the levels seen in 2025. Moreover, several European countries have implemented or are considering implementing initiatives to limit or reduce margins in the fuel business as a means of mitigating the surge in fuel prices.

In Chemicals, we expect the ethylene indicator margin to be above EUR 550 per tonne and the propylene indicator margin to be above EUR 420 per tonne. This increase reflects the current market situation in Europe with inherent supply disruptions and increases in restocking activities. The utilization rate of the olefin cracker is expected to be around 90% in 2026. There are no major turnarounds planned for the rest of the year. The clean tax rate for the full year is currently expected to be at the same level as in the first quarter of 2026, so slightly below 50%.

Thank you for your attention. Alfred and I will now be happy to take your questions.

[Operator Instructions]. We start the Q&A session with Gui Levy from Morgan Stanley.

If we could start talking a little bit about refining, perhaps if you could tell us about the refining margins that you're seeing at the moment? And also looking at the remainder of the year, the company highlighted risks to the fuel segment on the back of the volatility of crude differentials. I wondered what can you do in adjuvant to hedge or protect yourself against those type of risks?

And then secondly, on refining, thinking about storage, could you perhaps say a few words about current storage levels, your ability to procure crude over the coming months? If you could just remind us how much of your crude supplies come from spot transactions vis-a-vis long-term agreements that you might have, that would be great.

Okay. Thank you, for your question. Let me start a little bit with the refining margins. And as you could see, right, the refining indicator margins, in particular, in Europe, we saw after the closure of the straight per that they went up dramatically, I would say. And then after that some normalization happened, but continuing at a high level. We have seen April now to start at about $16 per barrel.

I think there's a couple of different things, I think, that probably play into this basket of crudes and crude pricing, of course, is quite a volatile thing. At OMV, we had very limited exposure -- physical exposure to crudes coming out of the Strait of Hormuz.

Our crude baskets were more focused on other crudes with a significant amount actually from Kazakhstan and then other crudes. So we -- our expectation, we have now for the rest of the year given a pretty broad range of $10 to $15 per barrel because we see really a significant volatility on the way forward around kind of an average assumption in that range. maybe to the storage of the crudes -- the storage of crude for the production to the refineries is actually rather limited, right, to a few weeks of storage as you -- so then if you look at our refineries, we are actually here in the Austrian refinery connected through a pipeline to the Adriatic Sea, also the refinery in Germany is connected to that pipeline here in Austria.

We also have some equity production, which makes about 10% of the feed. And then in Romania in the refinery, we are about integrated with 70-plus percent into equity production from the oil production in Romania with the oil there.

I don't know on hedging, if Reinhard has anything to add.

Yes, very briefly. Of course, in the downstream area, we do apply some hedging in order to mitigate risks. Of course, we also need to keep some flexibility in order to take also advantages. And then we also suffered from hedge in March, a loss of around EUR 100 million, and that was simply due to the situation that oil that was going to be lifted and transported to the Strait of Hormuz was physically not available while the hedge was on there. And therefore, one leg of the hedge disappeared, which had to be covered in the situation of rising oil prices. However, that's not uncommon situation. On the other hand, some of the hedges also protected us from further damage.

We now move on to Michele Della Vigna, Goldman Sachs.

Congratulations on the very good results given the unstable situation. There were 2 areas I wanted to concentrate on. First of all, on Borouge, I was wondering, is there a simple way to think about how the new ownership and reported structure would affect net income, let's say, how much higher or lower that would be if the new reporting structure had already been in place in Q1 for OMV?

And then secondly, I wanted to ask about jet fuel availability. This is certainly a concern going into the summer. Austria actually seems to be better prepared for it than some of the other European countries. But what is your view on the visibility, especially as we go into the late summer on the availability of jet fuel and the potential for dealing with relatively low amount of inventory days?

Yes. Thank you, Michele, for your excellent and your good question. I will start with the excellent one because I can answer it, and then I will ask Reinhard for help on the good question about the net income reflection. Jet fuel, it is indeed like this, Michele, that in Austria, we -- so maybe let me start different. We can say at the moment, we can supply all our contract customers with jet fuel, also including the required mandate of 2% renewable fuel addition, SAF addition. And that covers big airports, of course, in Munich, in Austria and then in Bucharest and a couple of smaller airports across that thing.

So our contract customers, we are covered. And because we are able to actually produce the most part of that by ourselves. In general, we do, of course, see in particular in Europe, but also globally that there is a shortage of jet fuel. There was significant amount of jet coming out of the straight going to Asia, but also Europe heavily depends on imports of jet fuel. So from an OV perspective, we can supply and provide security of supply to all our contract customers. And we, of course, try then to also maximize our business around those airports that I just mentioned before. And now for the good question.

Yes, Michele, it's not so difficult. So far, what we have shown in a net profit is a fully consolidated net profit of Borealis that also included the net profit of 36% of Borouge. Now in the net profit attributable to stockholders, we, of course, only showed the 75% of Borealis. So 75% of that full consolidation because 25% were minorities of ADNOC.

Now the situation with Borouge International changes that we consolidate at equity, which is 50% of the net profit of Borouge International. And that consists of 50% of Borealis, so a little bit less of Borealis, 50% of Borouge that is more than we had and 50% of Nova, that's completely new. And that plays a role because what we currently see in the current environment, Nova has a positive business environment at the moment. So we can also expect that there is a good contribution of Nova now for the rest of the year.

And the next question will come from Josh Stone, UBS.

Two questions. One on chemical margin outlook. Curious what you're seeing in the U.S. market in particular, given your now ownership of Nova. And also, is this a part of base start to make some money. So curious what you're thinking there.

And then secondly, on UAE, your net production capacity is around 50,000 barrels a day in the upstream and something like that. If you are asked to, do you think you can actually produce more from these fields? And obviously, I'm asking given the headline recently about the UAE leaving OPEC.

Yes. Thank you, Josh, for your questions and all the best for getting better there soon. I try to answer the questions. hopefully, I understood everything correctly. So the margin -- the chemical margins in the U.S., as Reinhard just explained, right, with Nova being in there with 50%, but then there's also Baystar that was previously part in the Borealis results. These entities benefit, let's say, of the current crisis of the Middle East.

What we have seen because of the closure of the Strait, right, it's not just oil and gas and oil products. It is also a significant amount of chemical products that came through there, in particular, also polyolefin products, but it's also been a significant amount of naphtha, so chemical feedstock that has come out and mainly went to Asia for the production there. So there's shortage on this. And in our view, the markets of Borouge International products have switched from being somewhat long to being short now.

And with this, we have seen significant price increases across the globe actually and so also in the U.S. the prices for the products have gone up. And with the margins have also expanded for those products. And in the U.S., in particular, what I think is maybe slightly different there is that, of course, U.S. gas on Henry Hub that is also a reference for ethane pricing, then that has not moved as much as gas prices in other regions.

So there will be some benefit of this move will benefit from this with better margins, but also the Bar joint venture will be able to benefit from these better margins. And also there is, of course, the opportunity or the potential opportunity that the global shortfall in can be supplied from some of this production. The second -- I hope that answers your question.

The second question that you had on the production in the UAE, I would confirm that last year, the average production there was about 50,000 barrels per day. We -- of course, in March, as we reported here, this -- this was affected by the supply chain issues with lower production coming out of the asset there. And at the moment, this is back online into production. How this will continue exactly, I think, is a bit volatile depending on the situation in the Middle East. Hence, also our guidance for the full year of the total production between 280 and 290.

We now come to Ram Kamath from Barclays.

My question is largely on the chemicals. As polyolefin prices have recovered strongly at the end of the first quarter and feedstock tied to polyolefin rates have also rising in a market where supply drives pricing and volumes are softer, how should we assess the effect on the margins? And the second one, possibly on Borouge 4 ramp-up, whether the current situation in the Middle East has impacted the ramp-up phase?

And if you can comment also on the feedstock pricing mechanism, particularly for Borouge 4, as I understand, it would be a new price mechanism that possibly the company will be entered into with the suppliers. So if you can comment on that.

Thank you for your question, Ram. Maybe I just start with the polyolefin price environment or maybe let me expand this a little bit because it's an integrated supply chain. So there's olefin and polyolefin prices. And what we have seen in March is that naphtha prices went up quite significantly. Feedstock prices went up significantly, while at the same time, olefin prices were then to a large degree, locked in from price discussions at the beginning of the month. Now this has changed significantly in April because olefin prices have red strongly in April, they have gone up by like EUR 400 to EUR 500 per ton and that is leading to a significant price expansion.

The polyolefin prices, they reacted a little bit faster already in March and the margins expanded there. But again, in beginning of April, so let me say, in March, also the contract prices have gone up, which helped that situation to expand the margins. In April, we have now seen additional price increases also in polyolefins with further expansion of the margins -- so it's -- at the moment, we have seen still continuing good demand, and it's more a question now of supply capability to make sure to be able to supply that demand.

We have -- with Borouge International, they are actually in a very strong position with this with the assets distributed quite well globally and with more than 70% of their production in advantaged feedstock position. I also presented. So this is the situation now. We will see how this is on the way forward.

I do want to highlight again, I don't want to go into all the same again. But as you could see the EBITDA margins, the margin capability of Borouge International is really exceptional. We are with Borouge International is significantly ahead of the competitors in their own field, but they are more playing from a margin level in specialty chemical kind of margin environment. So that we anticipate to continue reason the combination of good technology platform that gives innovative products that can get price premiums plus the good feed Borouge ramp-up, I can explain that throughout the year. So there's multiple production assets that are there.

And the plan has been and continues to be that throughout the year, we are bringing online the different assets to then have all of the assets online before the end of the year. As it is with all these huge -- there can always be some delays. But currently, our plan stays the same. And I can also report that the first asset in XLPE line has already been brought online for this.

On the feedstock, I want to emphasize again that about 70% of the feedstock in Borouge International is based on advantaged feedstock that will continue to be in this way with with some modification on the Borouge assets on the way forward where there will be some adjustments, but this will be compensated with additional capacities that are coming on stream with Borouge on the way forward.

We now move to Sasi Chilukuru from Jefferies.

I've got 2 left. The first was coming back to your refining margin indicator guidance. You've raised it to $10 to $15 per barrel, but have highlighted the widening of the crude oil differentials to have a material adverse impact. I was just wondering if you could quantify the level of these adverse impacts you have seen in April so far or currently.

The second one was regarding the dividends from your JVs. Are you expecting any dividends from ADNOC Refining and Trading this year and from Borouge International. I was just wondering if there was any risk to that updated dividend payments and also the timing for these payments to [indiscernible].

Thanks. I can start with the question on the dividend. In terms of the dividends from JVs, of course, we are expecting also a dividend from ADNOC Refining and specifically also ADNOC Global Trading. This is 2 entities where we have participation in. And while we are seeing that ADNOC Refining, of course, also bears some of the burden of the conflict, we are seeing for the rest of the year rather a stabilizing development in that. Whereas ADNOC Global Trading is doing a great job and is earning very good money, and we're expecting also dividends from that side.

On the Borge International dividends, we have announced that the anticipated dividends were in that way that we are taking only 50% of the anticipated minimum dividend in 2026. Why is that? Because the uncertainty around the situation in Middle East provided some safety measures of safeguarding the balance sheet, making sure that also this excellent rating that we have in the group stays in that way. However, we are not expecting that there are any further modifications to that. So we are expecting, of course, the other 50%, and we are expecting that for the second half of the year.

And let me take the -- your question on the refining indicator margins were as we -- as I described, right, we saw in the first quarter, let's say, January, February quite different than March, we saw significant increase in refining indicator margins, but important, and I think that's your question then to realize this is a very crude measure, right, a very rough measure of taking the fuel prices. It's a little bit more complicated in reality how we see this and the market distortions are also quite significant on the way forward.

For the second quarter, we expect some, let's say, adverse effects one from increased crude differentials that will depend on how the geopolitical issues and risks continue. We do definitely see tighter supply conditions, which we, of course, are continuously optimizing to make sure that we get ourselves in the best possible position.

In addition, we do see local supply dynamics working out and increasingly also in Europe, in particular, regulatory interventions and price caps that are affecting then also the results. And for this reason, we have also left the gap of the 10% to 15% to reflect this. And we will, of course, be managing to optimize our results in that volatile environment.

And the next question will come from Matt Lofting, JPMorgan.

Appreciate the update. Two things, if I could. First, I mean, you highlighted through the update that the strength of the balance sheet, which is quite right. And I guess lots of volatility, but the outlook for cash flows is better net-net than was expected at the beginning of the year. So going back to the update that was provided sort of last month on BGI and sort of the revisions to the next steps.

I just wanted to understand the thinking in terms of the feed-through on the lower BGI dividend payment to OMV and that impacting, I think, the dividend that you expect to pay to your shareholders by EUR 0.6 to EUR 0.7 per share for FY and why that perhaps couldn't be protected more strongly through the higher cash flows on the rest of the business and whether there is still scope to revise that view and take a more positive sort of stance on that?

And then second, I think there were some reports earlier this month on Austria being one of the countries that was pushing the EU to look at revised EU windfall tax measures on the energy sector in the context of sort of the price shock. Could you just share your understanding of the sort of the current status and situation there?

Yes. Thanks, Matt. Maybe let me take the first question regarding the outlook on dividends. The question that you raised was whether our improved outlook on cash flows would somehow put the EUR 0.6 to EUR 0.60 to EUR 0.70 lower dividends into question. And I would say "why not, " but it's too early to say. This is something where we believe that with the higher dividends that we could pay from operating cash flows. If the operating cash flows move up, then there is a part of the compensation of that EUR 0.60 to EUR 0.70 that we will miss from Borouge International.

So I wouldn't be too pessimistic to say the view of the first quarter or from the beginning of the first quarter on overall OMV dividends could not improve over the time. But nevertheless, there will be a little bit shift if we are lucky from dividends coming from the PGI, which will be EUR 0.60 to EUR 0.70 lower. to dividends coming from our operating cash flow where we dividend out 20% to 30%. And that could be a part mitigation compared to the view from the beginning of the year. But of course, the structure, as we have described it, stays exactly the same.

And let me try on the windfall tax. Maybe I stick with the facts a little bit here. Indeed, Austria was one of the signatories of a letter that was sent to Brussels up until this point that our information is that not more than that has actually happened than a letter being sent -- and hopefully, also in Europe, we will continue to pursue free market economy kind of principles with the possibility to manage this difficult supply and demand situation that we have around this. So at this point, I have no additional information about this...

We now move to Oleg Galbur from ODDO BHF.

I have one question, which includes -- which has 2 parts. So investors are keen to understand the overall impact of the Middle East crisis on OMV, and I hope you can help us provide them with a bit more detail. So firstly, could you please update us on the current status of the oil production in the UA and capacity utilization at Borouge, specifically to what extent is the closure of the Strait of Hormuz affecting OMV's ability to produce and more importantly, to sell crude oil and petrochemicals products producing the UIA?

And secondly, while you mentioned that Nova Chemicals is benefiting and is expected to positively contribute to these results, I hope you can tell us how are Borealis results being affected by the current market environment, which is characterized by significantly higher feedstock costs, particularly for Borealis.

Okay. Oleg, thank you for your question. And let me maybe pick up here and try and go through your questions. As you say, we also participate in assets in the Middle East and we are joint venture owner in the oil production there together with ADNOC. The production there was reduced in March, but it is now back in production and also then supplying the local demand there.

And we expect that this will also be optimized in the month before. On Borouge, I can tell you that in the first quarter, we had an asset -- Borouge had an asset utilization of 90%, close to 100% continues to also be able -- so they had preexisting contingency plan on exporting products in case of the waterways not being available and they activated this mechanism. And with this in March, they were able to export more than 90% of the production in March through the alternative logistics channels. And or more than 60%, I think I misspoke, more than 60% through those alternative logistics channels.

The additional production volumes, they put in storage for shipment in the second quarter of this year. And of course, they will continue to maximize their production levels as well. So there's alternative evacuation routes in order to keep up and storage capability to keep up the high production levels.

On Nova Chemicals and Borealis, maybe let me focus a little bit on the European market here because also that has quite -- has developed accordingly. There was very significant price corrections in the European market. We actually see that monomers, ethylene, propylene are quite short and that there is significant demand. We have seen modest price increase in ethylene and propylene in March, but then a significant step-up of EUR 400 to EUR 500 per tonne in April now.

I've also reported that our utilization of our crackers was about 91% the Borealis and OM crackers together, which is about more than 10% higher than the European average utilization rate. That's because all the crackers are either integrated into the refineries or they have a light feedstock advantage on the Borealis side. So that's for the olefins. But then also on the polyolefins, we have seen that the contract prices have gone up. We have actually seen some closing of the gap between spot and contract prices, which is always an indicator of tight markets.

And now in April, again, the prices have gone up around EUR 1,000 per ton for both polyethylene and polypropylene in the prices. So that is significant increases in the prices reflecting the market tightness. And we have also seen the demand levels to be good so that Borealis and Borouge International is able to take advantage of the better market environment.

Next is Adnan Dhanani from RBC.

Two for me, please. Just the first one on the European gas market. Can we just get your latest views? Obviously, we're now facing the second crisis in the LNG market in 4 years. And presumably, there's going to be more focus on domestic energy security in Europe. As a major producer of gas in Europe, how do you see that opportunity set for you in the coming years? And then related to that, any update on your search on Neptune Deep look like? And then just a question for Reinhard, maybe just on the results this morning, significant timing effects in your cash flow that benefited and drove quite a material beat versus market expectations. Just wondering what the moving parts are there? And do you expect those some effects to revert going forward?

Thank you, Adnan. I will start with the gas, and then I will ask for help from Reinhard on the timing effect on the cash flows. The gas market, indeed, it's also quite volatile kind of market environment. We are now giving an outlook of an increased average price for TAG for the German market benchmark of about EUR 45 per megawatt hour in the first quarter was around EUR 41, EUR 42 per megawatt hour that was -- that consisted of lower January and February and then significantly increased March versus the bump that we got in March. It has come down a little bit again to EUR 45, EUR 46 in the beginning of April. But then yesterday's announcement, again added increased the price again. So a very volatile situation.

As you know, the Qatar LNG represented a significant amount of LNG coming to the global markets. Most of the shipments did go to Asia. But as it is a global market, we have seen an increase in the prices. We have seen that after '24, '26, sorry, '24, '25 was slightly higher than '24 in the average annual price for the DG, but now it's gone up again back to more like the '23 type of levels. European storages are on the low side, and we do see some intermittent windows where we can lock in some summer winter spread and increase the storage.

So we have seen a little bit over the last week increases of the storage, but it's still on the low side, and we see the forward curves, they are more on the flat side to making that refilling of the storage is more complicated. And risk towards the winter that we will potentially enter with lower storage levels and the demand in the coming winter goes up, prices will strengthen in the market.

From Oorvels, [indiscernible] because Austria has in total about 1 year of demand storage capacity. And with the storage requirement is a bit lower at 35% and we are already above that storage requirement. So from that perspective on the way forward, we will commercially optimize what we are doing [indiscernible],se, here on the project, we continue to be on plan on executing on the project.

As we have reported previously, the first 4 wells on the more shallow they have been drilled and we have now started the drilling on the further 6 wells on the deeper end of things and advancing with the platform and the things are on plan so that we are still looking at the original time plan 2027 start-up. I do think that is the right moment to come because we see of import requirements into Europe opening up year-over-year on the way forward. So that will come into a good time to improve security of supply and the market that will be priced mainly from LNG import differentials.

Yes. And Adnan, regarding timing effects in cash flow, let me start with saying OMV has once again shown that we have a very strong and resilient cash flows. We have come up with EUR 1.6 billion, a little bit above EUR 1.6 billion of operating cash flow excluding net working capital and almost EUR 800 million of operating cash flow, including the net working capital effects.

Now the timing effects, you can more or less differentiate 3 different factors. One, of course, is the net working capital. This net working capital is an effect that came with a sudden increase of the prices where we both had on the inventories, but also in the netting of the payables and receivables, a significant negative impact, so a buildup of net working capital that negatively influenced the cash flow in first quarter. However, that's a little bit of a savings account.

And according to the development of the prices, this will come back. if prices normalize again. So therefore, I see that as a positive timing effect. On the other hand, there's a little bit of an opposite effect in the CCS in the valuation effects regarding our inventories. There, we have seen a gain from the CCS in the result that, of course, then also is visible in the cash flow. And if we see then prices going down again, this time difference effect also will go away. We are talking here about EUR 250 million positive from the first quarter.

And the third element actually is gas derivatives. This is really a timing effect where we have seen a positive effect, so something between EUR 100 million and EUR 150 million in the first quarter. And this, over time, when these derivatives then can be resolved, will have the adverse effect coming a little bit over the 3 quarters distributed. So yes, it will come back, but it will have a smaller impact on this. But in total, again, the basis cash flows have been resilient and strong. And I think this is what we will also keep for the rest of the year.

And now we come to Sadnan Ali from HSBC.

The first one, I just wanted to ask, I see for the first time, it looks like your country-level production split that you've grouped together the UAE and the Kurdistan region of Iraq. I just wanted to get a sense of your decision behind making that.

And secondly, just overall, it's been 2 months since the conflict started. Just kind of your thoughts on what you think you've managed well and what you think you could have done better?

Sadnan, maybe let me start with the first question of why we group together Middle East simply because this is a region that breathes and lives with geopolitical situations in that region. So if we would do that asset by asset, it would still have the same kind of volatility. So therefore, we have grouped that together. We are talking here about our assets participations in Kurdistan region of Iraq, KRI on the one hand side and our participations in the SAP and in the Umlulu fields in Abu Dhabi that together had a volume of around 60,000 barrels altogether. And you have seen in the past, it's 50,000 from UAE, it's 10,000 from KRI.

And we still see that putting that from a region together makes more sense to look at the volatilities that we have -- just to give you an example, temporarily, we have been impacted in both of these regions from the Gulf War. And as soon as these things is improving and being resolved, both will come back to full volumes. The real difference is KRI is gas and the Emirates volumes are oil. Otherwise, for the impact that we will show with that, they are very easily connected.

Yes. Sadnan, let me maybe try and follow up on what we think we have done well and what we could have done better. Maybe we -- so I think it was really timely to close on the Borouge International transaction. And as we try to describe, this is transformative for OMV. It will be very important on the way forward. It is a very strong company that we put forward. If we could have done that even earlier, that would have been good, but I think it's a fantastic step on the way forward. that will be important for our integrated business model in the future to come.

I also -- we have not talked about this specifically, but I do want to remind you we have our cash flow efficiency program that we are executing on. And part of that is also our cost reduction program. This is good online, and we continue to move forward because we believe this is still efficiency product is a key driver that we need to do on the way forward even if prices have gone up and higher today on what we could have done better.

I would say that hedge that Reinhard described before where we one leg was missing in the end. If we have had somehow the information that the Strait would close, I would have loved to forgo that piece quite honestly. But this is part of our normal business. And as Reinhard said, it's not unusual and was also compensated on some positive effects on the other side. And the last, but this is only half series, quite honestly.

If you remember a few years ago, we -- Borealis divested their fertilizer business and I still think that was a very important strategic move at the time and will continue to be so because it was mainly a European focused, it was only a European-focused production for ammonia or nitrogen-based fertilizer. But at this moment, of course, fertilizer globally is quite short and the prices are high, that would be something that at this moment could be quite fun.

We now are at the end of our conference call and would like to thank you for joining us. If you have any further questions, please contact the Investor Relations team. We will be happy to help. Goodbye, and have a nice day.

Thank you very much, and have a great day.

Thank you. Bye-bye.

That concludes today's teleconference call. A replay of the call will be available for 1 week. The replay link is printed on the invitation or alternatively, please contact OMV's Investor Relations department directly to obtain the replay link.

Welcome to the OMV Results January to December Q3 2025 Conference Call and webcast. [Operator Instructions] Please be advised today's conference is being recorded. At this time, I would like to refer you to the disclaimer, which includes our position on forward-looking statements. These forward-looking statements are based on beliefs, estimates and assumptions currently held by and information currently available to OMV.

By their nature, forward-looking statements are subject to risks and uncertainties that will or may occur in the future and are outside the control of OMV. Therefore, recipients are cautioned not to place undue reliance on these forward-looking statements. OMV disclaims any obligation and does not intend to update these forward-looking statements to reflect actual results, revised assumptions and expectations and future developments and events. This presentation does not contain any recommendation or invitation to buy or sell securities in OMV.

I would now like to hand the conference over to Mr. Florian Greger, Senior Vice President, Investor Relations and Sustainability. Please go ahead, Mr. Greger.

Thank you, and good morning, ladies and gentlemen. Welcome to OMV's earnings call for the fourth quarter 2025. With me on the call are OMV CEO, Alfred Stern; and our CFO, Reinhard Florey. Alfred and Reinhard will walk you through the highlights of the quarter and discuss OMV's financial performance. Following their presentations, the 2 gentlemen will be available to take your questions.

And with that, I'll hand it over to Alfred.

Thank you, Florian. Ladies and gentlemen, good morning, and thank you for joining us. Before I discuss the details of our fourth quarter performance, I would like to briefly reflect on the operational and strategic highlights of last year.

Despite the challenging economic and geopolitical backdrop, we achieved a strong performance across our 3 business segments. In Energy, we were able to almost reach the prior year oil and gas production level if we exclude the divestment of the Malaysian business. We slightly increased our Fuel sales volumes reinforcing our position as a supplier of choice in the downstream sector. And in Chemicals, total polyolefin sales volumes, which include the joint ventures, rose by 3% year-on-year, underscoring our product strength in a challenging market environment.

Our Clean CCS operating result reached a strong EUR 4.6 billion; however, decreased by 10% compared to the prior year quarter. Importantly, despite the difficult backdrop, our cash flow from operations, the basis for shareholder distributions amounted to EUR 5.2 billion and thus was just 4% lower than the year before. This resilience demonstrates again the strength of our integrated business model, delivering robust cash flows in a volatile market environment.

A particular achievement worth noting is that by the end of 2025, we have already surpassed 70% of our efficiency program 2027 target demonstrating our steadfast commitment to operational excellence and supporting our strong cash flow generation. We have maintained a disciplined approach to investments.

Our balance sheet remains very strong, reflected in a very healthy leverage ratio of only 14%. This strong financial position provides us with the necessary flexibility to navigate market uncertainties, while continuing to invest in future growth opportunities and OMV's transformation.

Ladies and gentlemen, as promised, our shareholders will directly benefit from our success. For the financial year 2025, we will propose to the Annual General Meeting a regular dividend of EUR 3.15 per share and again, an attractive additional dividend of EUR 1.25. In total, this will amount to a cash dividend of EUR 4.40 per share, resulting in a dividend yield of 9.3% based on the closing price of last year. This payout will represent 28% of our cash flow from operating activities. Despite the weaker economic environment, OMV will once again offer attractive shareholder distributions.

Let me briefly highlight our strategic progress in 2025. In the Energy segment, the flagship gas project of OMV Petrom, Neptun Deep remains firmly on track and within budget for a targeted start-up in 2027. This marks a major milestone in our ongoing commitment to diversifying and securing gas supply. We strongly believe in the Black Sea's potential for the region and have reinforced our position through further exploration in Bulgaria, partnering with NewMed Energy and the Bulgarian state. Exploration drilling in Han Asparuh began in December 2025 with the Noble Globetrotter 1 vessel contracted to drill 2 exploration wells.

Having 2 rigs simultaneously in operation, 1 offshore Bulgaria and another offshore Romania, represents a significant achievement of OMV Petrom. We have successfully diversified our cost portfolio, ensuring continuous and uninterrupted supply to all our customers since more than 1 year. As a result, we are no longer dependent on any single supplier and now have the strongest gas portfolio in OMV's history.

In Renewables, OMV Petrom achieved notable progress by expanding its renewable power capacity, advancing towards a leadership in Southeastern Europe. We have advanced geothermal energy projects. We completed drilling and the successful production test in Vienna and are on track to commission our first geothermal plant by 2028.

In October last year, we have made an oil discovery in Libya in the Sirte Basin with estimated recoverable volumes between 15 million and 42 million boe. What makes this especially promising is the location, just 7 kilometers from existing infrastructure.

Turning to Fuels. Our coprocessing plant is operational and producing renewable diesel. In April last year, we started up our 10-megawatt electrolyzer plant in Schwechat, the biggest of its kind in Austria. Construction of the SAF/HVO plant at Petrobras is progressing as scheduled with start-up targeted for 2028.

We are also investing in around 200-megawatt electrolyzer capacity in Austria and Romania. These green hydrogen projects are fully integrated with our refineries and primarily designed to supply our own facilities captive demand.

In Retail, we have nearly doubled our EV charging network in 2025 and rebranded our retail stations, underscoring our commitment to sustainable mobility and enhanced customer service.

In Chemicals, the game-changing agreement with ADNOC to form Borouge Group International establishes a global polyolefin powerhouse and more resilient chemicals growth platform. We successfully commissioned our ReOil chemical recycling plant and continue to advance key growth projects such as Kallo and Borouge 4. Kallo is expected to start up in the second half of this year, while Borouge 4 production is expected to ramp up through 2026, as units are commissioned and brought online. First unit of Borouge 4 should come online till this quarter.

Aligned with our Strategy 2030, we remain focused on an agile transformation, responding to evolving customer needs all while maintaining strong cash flow discipline and carefully managed investments to ensure attractive returns for our shareholders.

Let me update you on the status of Borouge Group International. We made very good progress regarding the closing of the transaction and expect this, as previously communicated, in the first quarter of this year. We are pleased to report that we have already secured all necessary foreign direct investment approvals as well as almost all the other required regulatory clearances. In addition, in preparation for the acquisition of Nova Chemicals, we have successfully completed our financing process. We have secured $15.4 billion ensuring that sufficient liquidity is in place to support the transaction. At this stage, the primary remaining tasks are to obtain the outstanding clearances. Discussions regarding the recruitment of BGI Executive Board and Executive Leadership team positions are nearly complete. Announcements regarding these appointments, along with nominations for the Supervisory Board will be made in due course.

Finally, the active collaboration between ADNOC, OMV, Borouge, Borealis and Nova Chemicals has resulted in detailed plans for day 1 and beyond. And we have established a robust framework from the very outset of the integration to realize the synergies of more than $500 million.

Overall, these developments clearly demonstrate strong momentum, and we remain confident in the successful closing and integration of Borouge Group International.

Let me now move on to the details of our fourth quarter performance. Our Clean CCS operating result reached around EUR 1.15 million, representing a decrease of EUR 222 million or 16% compared to the same quarter of 2024. Excluding the positive net effect of EUR 210 million arbitration award received in the fourth quarter of 2024, our Clean CCS operating result would have been broadly in line with the prior year quarter despite lower oil and gas prices.

The quarter was marked by significant geopolitical volatility. Brent crude prices declined, driven by weak short-term demand outlook and increased OPEC+ output. The introduction of new U.S. sanctions against major Russian oil exporters were somewhat supportive. European gas prices also fell despite the onset of the winter season as demand was easily met thanks to ample LNG supply. Refining margins increased further, supported by product tightness resulting from the announced sanctions on Russian refiners and unplanned outages at other refineries.

In the Chemicals market, we observed some improvement of the olefin indicator margins. However, overall demand remains subdued with many customers focused on reducing their inventories before the end of the year. The Clean CCS tax rate saw a significant decline from 50% to 36%. This was mainly due to a reduced share in the overall group of certain companies in the Energy segment located in high-tax countries as well as stronger contribution from equity-accounted investments.

As a result, Clean CCS earnings per share remained nearly stable at EUR 1.7 per share. At EUR 1.7 billion of cash flow from operating activities was truly exceptional this quarter, jumping by over 60% year-on-year. This very strong operating cash flow clearly demonstrates our continued ability to generate strong liquidity even in the face of a challenging market environment.

The clean operating result in the Energy segment dropped markedly to EUR 586 million. Around 40% of the decrease is explained by one-time effects. The Malaysia divestment and the net arbitration award of EUR 210 million received in the prior year quarter. The remainder approximately EUR 390 million was largely attributable to decreased oil and gas prices as well as lower sales volumes. The realized oil price fell by 13% to $62 per barrel, mirroring the movement in Brent prices.

Our realized gas price decreased by 14%, averaging EUR 26 per megawatt hour, thus less than European gas hub prices, which declined by 28%. This was mainly due to changes in portfolio composition following the divestment of SapuraOMV. Additionally, negative currency developments impacted our results by about EUR 80 million compared to the prior year quarter.

Production volumes decreased by 11% to 300,000 boe per day. The main reason was the sale of the Malaysian assets, which had contributed 24,000 barrels of oil equivalent per day in the fourth quarter of 2024. Excluding the effect from the divestment, E&P production declined by about 4% due to production declines in Norway, Romania and New Zealand, reflecting their fields natural decline, partly offset by slightly higher output in the UAE.

Unit production costs rose slightly to above $10 per barrel. This increase resulted mainly from lower production volumes and unfavorable exchange rate movements. Cost reductions -- cost reduction measures taken had a mitigating effect. Sales volumes decreased by 65,000 boe per day, thus stronger than production. In addition to the missing volumes from SapuraOMV, the sales in Norway and Libya were lower due to the lifting schedule.

The result of gas marketing and power declined to EUR 116 million, primarily due to the missing positive impact from the arbitration award received in the fourth quarter of 2024. Aside from the arbitration award, Gas West decreased mainly due to lower release of transport provision. The contribution of Gas East rose strongly, driven by excellent results across both the gas and power business lines, supported by higher gas sales volumes and increased production of the Brazi power plant in the context of power market deregulation.

The Clean CCS operating result of the Fuel's segment more than tripled to EUR 346 million, primarily driven by substantially stronger refining indicator margins, a significantly higher contribution from ADNOC refining and global trading and improved results of the marketing business. This strong performance was partially offset by, amongst others, negative production effects related to repairs at the Burghausen refinery.

The European refining indicator margin rose sharply to $14 per barrel, while the refining utilization rate remained high at 89%. The marketing business delivered a higher contribution compared to the prior year quarter with retail performance benefiting from slightly improved fuel margins due to a more favorable quotation development for oil products, higher nonfuel business profitability and slightly higher sales volumes following the acquisition of retail stations in Slovakia.

The performance of the commercial business came in slightly better as well, supported by higher contributions from the aviation business and increased sales volumes. The contribution of ADNOC Refining and Global Trading increased significantly to EUR 51 million, mainly due to a better market environment.

The Clean operating result of the Chemicals segment rose sharply to EUR 236 million, driven to a large extent by the stop of Borealis depreciation. In our European business, we recorded favorable market effects totaling EUR 58 million, reflecting higher olefin indicator margins. Inventory effects were slightly lower.

The utilization rate of our European crackers stood at 72%, which is significantly below the level of the prior year quarter. This was mainly because of weaker demand and inventory optimization measures at year-end. Nevertheless, the result of OMV-based chemicals improved due to stronger olefin margins.

The contribution from Borealis, excluding joint ventures, increased to EUR 89 million, mostly driven by the stop of depreciation. However, the results of both base chemicals and polyolefins declined. The base chemicals result was affected by lower utilization rate as well as decreased feedstock advantage and phenol margins. Improved olefin indicator margins in Europe and lower fixed costs provided some support.

For polyolefins, the contribution decreased primarily due to softer indicator margins and greater market discounts. This was partially counterbalanced by reduced fixed costs. Polyolefin sales volumes for Borealis, excluding joint ventures, grew by 4%, largely attributable to higher sales in the infrastructure and consumer product sectors.

Contributions from our joint ventures rose by EUR 41 million, mainly reflecting the deconsolidation of Baystar. The contribution from Borouge remained broadly stable versus the fourth quarter of 2024, as a less favorable market environment in Asia was compensated for by substantially higher sales volumes.

Thank you for your attention, and I will now hand over to Reinhard.

Thank you, Alfred, and good morning from my side as well.

At the beginning of 2024, we launched a comprehensive efficiency program aimed at generating at least EUR 0.5 billion of additional sustainable annual operating cash flow by the end of 2027. This initiative helps to mitigate inflationary cost increases we have experienced over the past years as well as effects from lower commodity prices.

In October, we had announced that even considering the BGI transaction and resulting deconsolidation of Borealis, we expect to achieve the originally targeted at least EUR 500 million, from the efficiency program, as we introduced a new cost savings program of EUR 400 million by end of 2027, further derisking the program's implementation. This program is well on track.

By the end of 2025, we successfully delivered more than EUR 350 million of additional cash flow compared to 2023, which represents around 70% of our 2027 target. We achieved this through technical improvements in oil production, optimization of gas flows, reduction of E&P cost base as well as various margin improvement measures and refining optimization related to utilities, crude supply and energy efficiency.

Overall, more than EUR 100 million are attributable to operational cost reduction measures. This builds upon our continued drive for operational excellence, following initiatives from prior years with the impact clearly visible on our cash flow from operating activities.

Turning to cash flows. Our fourth quarter operating cash flow, excluding net working capital effects, was EUR 821 million. This figure was impacted by a significant net cash outflow related to CO2 emission certificates of around EUR 330 million, which is always booked for the year-end in the fourth quarter.

In the fourth quarter of 2024, the net cash related to CO2 emission certificates was around EUR 270 million, largely offset by the one-off net gas arbitration award of more than EUR 200 million. The year-on-year decline also reflects a lower contribution from energy, partially compensated by lower tax payments and a higher contribution from fuels.

Net working capital cash inflows were very strong. At EUR 860 million, it more than reversed the minus EUR 400 million recorded in the third quarter of 2025. This was largely driven by substantial inventory reduction in the fourth quarter 2025, whereas in the prior year quarter, we recorded a negative effect of around EUR 140 million.

As a result, the cash flow from operating activities amounted to around EUR 1.7 billion in the fourth quarter of 2025, an increase of more than 60% compared with the previous year's quarter.

Let us now look at the full year's picture. At EUR 5.2 billion, cash flow from operating activities was once again very strong, only 4% below the high 2024 level. After payment of dividends of EUR 2.3 billion, our free cash flow stood at positive EUR 180 million, supported by inorganic cash inflows coming from the Ghasha divestment and Bayport loan repayment.

Our balance sheet remains very strong with a leverage ratio of only 14% at the end of 2025, despite ongoing macro challenges. Our financial strength is also reflected in our investment-grade credit ratings, A- from Fitch and A3 from Moody's, both with stable outlook. This strong rating underscores our healthy capital structure and prudent financial management.

Following the closing of the BGI transaction, we anticipate our leverage ratio to increase mainly as a result of the deconsolidation of Borealis equity and net debt from our balance sheet as well as the agreed equity injection of up to EUR 1.6 billion into BGI to equalize OMV's and ADNOC's shareholdings. I think it's worth highlighting that even after this game-changing transaction, we anticipate our leverage ratio to be in the low 20s by year-end, well below the mid- and long-term threshold of 30%.

This reflects our commitment to maintaining a robust capital structure and healthy balance sheet. Such a strong financial position provides us with the ability to do both, continue with attractive shareholder distributions and moving forward based on our headroom with our strategic growth initiatives.

We once again deliver on our promise and offer our shareholders attractive distributions. We will propose to the Annual General Meeting an increased regular dividend of EUR 3.15 per share plus an additional dividend of EUR 1.25 per share. Thus, we will distribute total dividends of EUR 4.40 per share, which is an attractive yield of 9.3% based on the closing price year-end 2025. With the total payout of 28% of our operating cash flow, we once again went to the upper part of the guided corridor of 20% to 30% of operating cash flow.

Since 2015, we have delivered every single year on our progressive dividend policy, which aims to increase the dividend every year or at least maintain it at the respective prior year level. Over that period, we have more than tripled our regular dividend from EUR 1 per share to now EUR 3.15 in [ 2022 ] to further enhance our shareholder distributions. We had introduced an additional variable dividend, which we now also paid for the fourth consecutive year. OMV remains committed to pay attractive dividends to its shareholders.

As announced on our Capital Markets update in October last year, we are introducing a new dividend policy effective as of this financial year that builds upon our previous approach and incorporates the clear benefits arising from the BGI transaction for our shareholders.

Under the new policy, OMV will distribute 50% of the BGI dividend attributable to OMV in addition to distributing 20% to 30% of cash flow from operating activities from our consolidated businesses. Our dividend will continue to consist of 2 components: a progressive regular dividend, which we strive to increase each year or at least maintain at the previous year's level; and an additional variable dividend, which will be paid if our leverage ratio remains below the 30% threshold.

This approach aligns with our commitment to deliver attractive and growing shareholder returns supported by strengthened cash flows and a solid capital structure. Based on the estimated closing in the first quarter of this year, we expect Borouge Group International to pay at least the floor dividend for the full year 2026, which means net to OMV at least USD 1 billion. The dividend will be paid in 2 tranches.

Now let me move to the outlook, beginning with capital spending. For the year 2026, we expect organic CapEx to be around EUR 3.2 billion, substantially lower than the past few years reflecting the deconsolidation of the Borealis business and our ongoing capital discipline. The major growth projects in 2026 are the Neptun Deep project, which is scheduled to start up next year, the South HVO plant in Romania and the green hydrogen plant in Austria and Romania.

In the following years to 2030, the average organic CapEx will be below the guided level of EUR 2.8 billion per annum outlined at our Capital Market updates. About 60% of our organic CapEx in 2026 will be allocated to energy with the majority of the remaining spend going to fuels. Following the BGI transaction and the deconsolidation of the Borealis business, organic investments explicitly shown in our financial statements in Chemicals will be relatively small, reflecting only our fully consolidated Chemicals business, specifically the refinery integrated crackers in Austria and Germany and the new plastic waste sorting plant in Germany. The latter is expected to start up this year.

Around 70% of our organic CapEx in 2026 is dedicated to growth, positioning OMV for the future. In addition to Neptun Deep, major organic growth project initiatives include developments in Norway, Austria, the UAE and renewable power initiatives in Romania. In the Fuels segment, we are advancing key projects like the SAF/HVO plant as well as the 2 hydrogen plants in Romania and Austria.

Around 30% of the investments planned for 2026 are allocated to sustainable projects in line with our average guidance for 2030. Please note that our guidance for organic CapEx of EUR 3.2 billion in 2026 excludes any expenditures related to Borealis.

Let me conclude now with our outlook for key market assumptions and operations for 2026. We forecast an average Brent price of around $65 per barrel. The average TAG gas price is estimated to be above EUR 30 per megawatt hour, while the OMV average realized gas price is expected to be below EUR 30 per megawatt hour.

In Energy, we expect average oil and gas production of slightly below 300,000 boe per day, reflecting natural decline and assuming no interruption in Libya. The unit production cost is expected to stay below $11 per barrel, supported by various plant cost initiatives. Exploration and appraisal expenditure for the group is expected to be below EUR 200 million, in line with previous year's spending.

In Fuels, the refining indicator margin is projected to be around $8 per barrel. We anticipate the utilization rate of our European refineries to be above 90%. No major maintenance is planned throughout the year at our refineries, supporting high operational availability.

Total fuel sales volumes are expected to be higher than last year. Retail margins are projected to be slightly below the levels seen in 2025, while commercial margins are also anticipated to decline. In Chemicals, we do not anticipate a significant market recovery in the first half of 2026. Following the closing of the BGI transaction, Borealis will become part of the new company in which OMV and ADNOC will hold equal shares.

BGI will be reported at equity within our financial statements. Hence, we will no longer report separate KPIs for the polyolefin business, these will henceforth be published by BGI. However, we will continue to provide an outlook for European olefin indicator margins, which will impact our fully consolidated Chemicals business. We expect market indicator margins to be slightly below the levels of the previous year with realized margins continuing to be affected by prevailing market discounts.

The utilization rate of our 2 crackers is expected to rise to approximately 90% in 2026. There are no major turnarounds planned for the year. The clean tax rate for the full year is expected to be around 45%.

Thank you for your attention. Alfred and I will now be happy to take your questions.

Thank you, Alfred and Reinhard. Let's now come to your questions. [Operator Instructions] We begin the Q&A session with Josh Stone from UBS.

Yes. Two questions. Firstly, on CapEx. It looks like there was a slight overspend in '25 as compared to your initial guidance. So anything you want to flag on what might have been driving that? And then also for 2026, at least the spending outlook a bit higher than what I had in or certainly higher than the long-term guide. So any comments around what the key building blocks within that? And any potential risks that you can see in this year's budget?

And then second one, I wanted to focus on your Chemicals result, particularly on the olefins side, which everyone has been extremely bearish on European chemicals and you've got sort of almost doubling of your monomers profit this quarter. What would you say is driving that better results? And any one-offs? And then if we're thinking about next year, given this is the business that will stay on your balance sheet, what should we be thinking?

Okay. Maybe let me start a little bit with chemicals and olefins part and then Reinhard will add and explain the CapEx.

On the Chemicals side, I would really say, as you could see, right, 2024 our Chemical sales went up some 10%, last year was plus 3%. And this is really because of the position that we have in the Borealis crackers with mainly Nordic crackers having light feedstock advantage. They are on the -- they are very cost competitive and thus able to run at high rates.

While the OMV crackers in Germany and in Austria are fully integrated into our refineries, and we can use that integration advantage to also optimize our margins. So while we see, as you can see on our outlook for 2026 more or less flat kind of margin expectation for ethylene and propylene. We do believe that we are in a strong position also as a local and integrated supplier here.

Yes, Josh. Regarding your CapEx observation, you're, of course, right. I would rather like to explain. We had guided for EUR 3.6 billion, we came out with EUR 3.7 billion. In fact, we only had an overrun of EUR 90 million, which is around 2%. And this happened very much in the downstream part with the new activities, specifically around our big projects with electrolyzers and the HVO plants where we already started with some spending on long lead items.

So this is more or less distributed among a variety of projects. There is not a significant big overspend in one project. In 2026, it is very clear that we start with a higher CapEx compared to the average of the years until 2030 because we still have the Neptun project in full, the HVO/SAF plant in full and also the main part of the spending on the electrolyzer plant.

So therefore, this average is, of course, a little bit distorted and we are geared towards a little bit higher but significantly lower though compared to 2025. So therefore, regarding risks that you see, we do not see significant risks of overspend because we have contracted out the projects in a very, very high degree. That is also true for Neptun project. And we are going with the speed that we anticipate in spending in order to make sure that 2027 is the year for start-up of Neptun project.

Thanks a lot, Josh, for your questions. We now move to Gui Levy from Morgan Stanley.

I have 2 questions, please. First one, maybe on working capital. The company, of course, enjoyed a very strong release in the fourth quarter. And you know it's still early in the year, but I was wondering if you could say a few words in terms of how much and how quickly you would expect that working capital release to reverse over the course of this year?

And then secondly, on exploration, if you could share with us if you have any initial results from your exploration well in Bulgaria, expectations in terms of drilling completion and also following the recent announcement of the Bulgarian Government joining the block, if you are currently happy with your stake in that asset? Or if we could -- you expect further dilution for OMV Petrom from here?

Let me start with the working capital. We indeed enjoyed a strong cash inflow from working capital optimization in the fourth quarter. However, this does not reflect any, I would say, unnatural levels. This, on the one hand side, reflects very much the business environment in which we operate and we were able to significantly also reduce our inventory levels actually in all 3 segments.

Why am I saying that because also the inventory levels in the Energy business with our gas storage are now at a lower level, maybe compared to earlier years. This is a attribute to the cold winter and also to the very, I would say, small summer-winter spreads that have been available throughout 2025. So we anticipate that also after first quarter, we will come out with even lower level of inventories of storage in there.

How fast will the recovery be? It depends very much on the boundary conditions that we see. If economy picks up strongly in both refining as well as in chemical, of course, also our inventories will go up. This is not what we expect as a situation in the first half of 2026. And we will also then, in Q2 and Q3, see how much of gas storage will be available for decent prices that we can lock in and then put the gas storages again on the level appropriate for surviving the next winter for all our customers.

So this is something that will come across the full year in smaller stages. But as I said, this is not an unusual levels of working capital that we have at this point of time.

Okay, Gui, and regarding the exploration in the Black Sea in Bulgaria. Maybe just to recap here quickly, OMV Petrom is operator with a 45% share, together with Newmet Balkan with 45% share and the Bulgarian Energy Holding with 10% share. And we have contracted the Noble's Globetrotter 1 drillship that will drill 2 offshore exploration wells. The first drill started in December.

And then as it is with all these explorations, right, we need to beat for the results what we get there. Maybe also on the estimated costs for the 2 wells, that's about EUR 170 million for the 2 wells together and the agreements that OMV Petrom made with the partners are such that total cost for OMV Petrom for both wells will be about EUR 30 million. But it's exploration, right, so let's wait and see what we find.

Thank you, Gui, for your questions. And now we come to Henry Tarr, Berenberg.

Two, if I may. The first, just on the Fuels business. We've obviously seen weaker refining margins this year. Where are you averaging sort of Q1 to date? And how do you see the outlook here for the rest of the quarter and then 2026?

You said 2 questions, Henry.

That's the first. I can come back on the second...

Yes, yes. Okay. Then let me try and answer your question. Yes, indeed, the refining indicator margins what we what we found in the fourth quarter last year, we were at about 14%, but with declining kind of thing through the quarter, right? So in December, we saw the margins coming down and then we picked up in January at around 8%.

So more or less, what we see as an expectation for the average for the year. I have to say, right, looking back at the last years refining indicator margins were extremely volatile, very difficult to predict. Supply chains are rearranging themselves, we see outages and so on. So our prediction would be around 8% January also started around that level. And I would see that maybe that's about what's the predictability of the segment, let's say, right?

Okay. That's great. And then the second question is just on BGI and the floor dividend. So I think you've said but I just wanted to double-check that if the merger goes ahead as planned and completes in Q1, you'd expect the floor dividend to be paid in 2026. I guess are there any -- if the merger takes a little bit longer, is there a risk that the dividend gets prorated or anything like that just for this year or is it fixed for '26 at that floor dividend level?

Yes. Thanks, Henry. The floor dividend contractually is fixed to be a full dividend for 2026. That is our expectation, and this is the way how we also calculate. Personally, I do not have any doubts that we will not close in Q1.

Thanks, Henry, for your questions. We now come to Adnan Dhanani from RBC.

Two for me, please. Just 1 follow-up on the BGI dividend. Just in the context of your comments earlier saying that the 2026 dividend would be at least at the floor level. I think at the CMD, you mentioned that the dividend would likely be the floor for 2 to 3 years. So is there a change in the thinking there that it could be at least floor level this year could be higher? Or is that still the thinking that it's going to be 2 to 3 years of just being at the floor level?

And then the second question, just on your upstream production guidance. Obviously, with the 2030 target that was upgraded, just wanted to get your view on the current M&A landscape and just how you're seeing the market right now for barrels?

Yes. Adnan, maybe on the first questions. You know me, I never lose my optimism. But realistically speaking, I expect that there will be the floor dividend, which already is a very attractive thing for the current situation of the market. But theoretically, if the market picks up and the whole economy fires up, then I'm confident that also the dividend policy will kick in and could have an upside. But realistically speaking, I calculate with the floor dividend level and enjoy around USD 1 billion coming to OMV.

Okay. And let me try on the upstream, Adnan. So just as a reminder, right, we said from 2025 level, we have natural decline and then we have organic projects. One is a very big Neptun project, which contributes directly the 50% share in OMV Petrom 70,000 barrels to our production target and then there's other organic projects that we have across our portfolio that contribute in the 70,000.

And that means we have about another 70,000 more or less that we need to close inorganically and we said our strategy will be that we want to strengthen the portfolio in and around Europe that we have to make sure we can move this forward. We are actively trying to fill a pipeline to do that. But at this point, nothing has progressed enough that I could give you specifics on any kind of deal.

Thank you, Adnan, for your questions. Before we come to the next, we have one more in the queue. [Operator Instructions] And now let's come to Oleg Galbur from ODDO BHF with the next question.

Congratulations on the robust results. I have 2 questions. The first one is on the Fuel segment and more specifically, the marketing business. In the past, you were disclosing the average EBIT contribution per filling station. And I wonder if you could already give us the number for 2025?

And my second question is on Chemicals. You mentioned earlier the startup expected at or planned PDH Kallo and Borouge 4. So taking into consideration that the recovery of the petrochemicals market is not yet in sight. What level of annual EBITDA would you expect to be delivered by PDH Kallo and Borouge 4 in the current market environment?

And since I'm at the end of the list, maybe I can take advantage and ask a very short third question. On Libya discovery, you mentioned earlier, when do we expect the new discovery to start contributing to production from Libya?

Oleg, thank you for your questions. Let me start with the fuel question on the marketing business. So what we did in the Capital Market update last year, we updated to give, let's say, a deeper look into our Fuels segment, we updated on the EBIT contributions of our retail marketing type of business.

We do not and we have not regularly in the quarterly updated on this number, right? But what I can tell you is that this is something that helped last year and also in the fourth quarter that we were able to continue to not just grow the contribution from the fuel business in retail, but also nonfuel has grown there and making good contributions and we continue to see this as a value growth driver that we can do.

This is our VIVA stores where we sell both [ gastronomy ] and other shop products, but it is also around EV charging, it is also around car washing and so on. So good contributions from this will continue to grow.

Then on your Chemical question. I would maybe go -- want to go back to also what we disclosed in the Capital Market update that hasn't changed. We think Kallo will contribute EBITDA after full ramp-up of about EUR 200 million. And then on Borouge 4, we have said it's about $900 million, yes, that will be at full ramp-up.

However, right, so we the Kallo or PDH more towards the second half of this year. And we see Borouge 4 is a very big complex with 1.5 million tonnes of production. And there is multiple plants involved, and you will see that we need to take those into operation step-by-step in stages.

The first stage -- first plants will come on stream in the first quarter, but then you will see that throughout the rest of the year ramping up. You were -- so and last, your question around the Chemicals segment. I do believe, and you can see in our sales volume growth that we have, both in Europe, but also with Borouge and our joint ventures, you can see that there is underlying demand there. However, the challenge is supply/demand and unbalance. There is too much supply, new capacity that has come on stream. And -- but what we see now is increasingly old, not optimal plants being taken out of operation.

In total, this is more than 20 million tonnes globally now, a big part of this is in Europe, a significant part in South Korea, but it looks like there are some first actions now also in China on rationalization with their evolution program that they have in China.

Thanks, Oleg, for your questions. We now come to Sadnan Ali from HSBC.

Two, please. The first one on -- just want to go back to Neptun Deep. I know you mentioned that the project is on track to deliver a start-up in 2027. I just wanted to check if you can provide any more clarity on when in the year we can expect it to start up? And what are the key milestones we should expect between now and then? And do you see any risks to that time line or any of those elements that would present more of a risk to delay if there's a delay in the project?

And secondly, just wanted to clarify, your comments today said I believe that post BGI closing, you're expecting leverage in the low 20s by year-end. Just want to clarify, if I'm not mistaken, the prior communication was, I think, it was at 22% after the deal closes, so does this now mean potentially that you expect something higher than 22% upon closing immediately and that's to taper off by year-end?

Let me maybe start with the Neptun project and then Reinhard will follow up on your second question. So project progress, right, just as to recall here, Neptun Deep consists of 2 fields. One is the Pelican field and the other one is the Domino field. In the Pelican field, which -- we -- OMV Petrom wanted to drill 4 wells. They have done so in 2025 and now the Transocean Barents rig is moving on to the deepwater wells in Domino field, where it's 6 wells that have to be drilled. Then there's, of course, not just the wells, but there's a lot of other activities that need to happen to bring this into production.

One was the construction of natural gas metering station, which is making good progress, is ongoing and the equipment is arriving there to the site. We have also finished a microtunnel that is basically bringing then the underground pipeline connection to the onshore. We have also made good progress on the shallow water platform that is moving ahead on the construction and then has to be transported into the Black Sea later this year with good progress on umbilicals, field support vessels and so on.

So all this is running. And so far, we are on track according to the plan. We have not finalized completely when in 2027 this startup will happen, but we will be able to do so in the course of the year.

Yes. And Sadnan, thanks for your question on the leverage. I admit that it's courageous to predict leverage on the single-digit percentage. I still stick to what we said that after close, we will be around 22%. And for the rest of the year, so if that happens in Q1, we still have Q2, 3 and 4. We want to reaffirm by that statement that we stay in the low 20s percentage, which should be really an affirmation of our statement of low leverage, including also the transaction of BGI.

Thank you, Sadnan, for your questions. There is a follow-up question from Oleg Galbur.

Yes. Well, it's rather the question that I asked, but was not answered about Libya discovery when do you expect it to turn into production?

Oleg, sorry, that we overlooked the third question. First of all, Libya has been a successful discovery and the beauty about this discovery is that it's only around 10 kilometers from existing infrastructure. This means that the tie-in of that well should go rather fast, and we're expecting it the latest by next year.

Apologies, Oleg, for not taking the third question, but now we come to Ram Kamath from Barclays.

I have a question on natural gas sales. So can you talk a little bit about what you are seeing in the gas business on demand side particularly? Because I note that the sales in your West business, in particularly, was -- I mean, has come down. I think possibly this year, it's averaging around 40 terawatt hours down from over 50. So how do you see shaping up here, particularly on if you can talk about if it is particularly on the industrial sector demand, which is coming down. And of this volatile time, how do you see this business evolving or the demand evolving?

Yes. Ram, let me try and provide some insights into this. I think if you look further back a little bit, we -- so before the Russian attack on Ukraine. Since then, we have seen significant decline in market demand, both in industrial areas, but also in household and other areas. I think this was driven by very high gas prices and so on.

However, last year, there was, in the markets, some rebound into the gas usage probably also again driven by normalization of the gas prices as we saw that last year. What we have done in OMV, of course, is also that we have also commercially optimized our gas portfolio, diversified it into different sources, and this is probably what you are seeing from our sales figures there.

However, looking out a little bit longer, we do see the demand signals now that Europe will remain a net importing gas region until 2050, at least. And this is also the opportunity that we want to address with our Neptun Deep or some of our other gas production projects.

Thanks, Ram, for your questions. We now come to the end of our conference call and would like to thank you all for joining us today. Should you have any further questions, please contact the Investor Relations team. We will be happy to help you. Thank you again, and goodbye, and have a nice day.

Thank you very much. Have a good day.

Thank you. Bye-bye.

That concludes today's teleconference call. A replay of the call will be available for 1 week. The replay link is printed on the invitation, or alternatively, please contact OMV's Investor Relations Department directly to obtain the replay link.

Welcome to the OMV Results January to September and Q3 2025 Conference Call and Webcast [Operator Instructions] please be advised that today's conference is being recorded. At this time, I would like to refer you to the disclaimer, which includes our position on forward-looking statements.

These forward-looking statements are based on beliefs, estimates and assumptions currently held by and information currently available to OMV. By their nature, forward-looking statements are subject to risks and uncertainties that will or may occur in the future and are outside the control of OMV. Therefore, recipients are cautioned not to replace undue reliance on these forward-looking statements.

OMV disclaims any obligation and does not intend to update these forward-looking statements to reflect actual results, revised assumptions and expectations and future developments and events. This presentation does not contain any recommendation or invitation to buy or sell securities in OMV. I would now like to hand the conference over to Mr. Florian Greger, Senior Vice President, Investor Relations and Sustainability. Please go ahead, Mr. Greger.

Thank you. Good morning, ladies and gentlemen, and welcome to OMV's earnings call for the third quarter 2025. With me on the call are OMV's CEO, Alfred Stern; and our CFO, Reinhard Florey. Alfred will walk you through the highlights of the quarter and discuss OMV's financial performance. After his presentation, both gentlemen are available to answer your questions. And with that, I hand it over to Alfred.

Thank you, Florian. Ladies and gentlemen, good morning, and thank you for joining us. As we held our Capital Markets update at the beginning of the month, where we gave a comprehensive update on our strategy 2030, I will focus today on the third quarter. Let me start with a quick overview of the macro environment. Oil prices in the third quarter were impacted by additional OPEC supply. However, increased crude processing by refineries driven by strong refining margins provided some support. As a result, Brent prices were slightly above the previous quarter, but 14% lower compared to the third quarter of 2024.

European gas prices have traded in a narrow range in recent months with muted Asian demand easing competition for flexible LNG and allowing prices to drift lower. Despite a significant year-on-year decline in inventory levels by the end of the third quarter, European gas hub prices decreased by 5% versus the prior year quarter. The OMV refining indicator margin rose strongly to $11.5 per barrel, thus more than doubled compared to the prior year quarter and was significantly higher than the previous quarter.

This was driven by strong gasoline and diesel crack spreads with unexpectedly high gasoline demand and a shift towards diesel production. Reduced Russian exports and maintenance at the Dangote refinery provided additional support. European middle distillate margins were further boosted by limited imports and tighter access to Russian crude and products. In Chemicals, European demand remained weak due to economic headwinds and increased imports, particularly from China and the U.S. European olefin indicator margins decreased compared to the previous quarter, but remained about 10% higher than the prior year quarter, supported by lower Naphtha prices and industry outages.

Polyolefin indicator margins in Europe showed a mixed picture. Polyethylene margins improved, while polypropylene margins declined versus prior year quarter. Both benefited from lower olefin costs, but polypropylene supply remained abundant due to continued high imports even as domestic producers reduced operating rates.

In this mixed economic backdrop, OMV delivered very solid financial results. Our clean CCS operating result rose to almost EUR 1.3 billion, an increase of about 20% compared with both the prior year quarter and the second quarter of this year, demonstrating the benefits of our strongly integrated portfolio. Main driver was a very strong result of the Fuels segment, which more than doubled compared to the prior year quarter.

Clean CCS earnings per share grew to EUR 1.82, driven by strong refining margins and increased E&P sales volumes. A lower tax rate and the positive onetime effect related to a litigation outcome in Romania provided further support. Cash flow from operating activities reached almost EUR 1.1 billion and thus was on a similar level as the previous quarter. However, it came in below the strong prior year quarter, primarily due to significant negative net working capital effects.

Excluding net working capital effects, the operating cash flow was slightly higher than in the prior year quarter. Our hydrocarbon production was 8% down year-on-year, primarily related to the divestment of our Malaysian asset last year. Fuel sales volumes remained broadly stable. Polyolefin sales volumes, including joint ventures in the third quarter declined by 8% year-on-year, partly attributable to the implementation of a new ERP system at Borealis.

The clean operating result of the Energy segment declined by 11% to EUR 622 million, mainly due to significantly lower oil prices, FX development and the missing contribution from the divestment of SapuraOMV. Increased sales volumes had a somewhat mitigating effect. The realized oil price fell by 15% to $66 per barrel, in line with the Brent price development.

In contrast to the European benchmark prices, our realized gas price increased by 10% to EUR 27 per megawatt hour, primarily due to the changed portfolio composition following the divestment of SapuraOMV. The unfavorable exchange rate development weighed on the results by around EUR 70 million compared with the prior year quarter. Production volumes declined by 8% to 304,000 BOE per day. This was mainly a consequence of the divestment of the Malaysian assets, which had produced 33,000 BOE per day in the third quarter of 2024.

The strong production increase in Libya to almost 40,000 BOE per day more than offset natural decline in New Zealand and Norway. Unit production costs slightly increased to $11 per barrel, predominantly due to the lower production volumes and the foreign exchange rate development, partly mitigated by reduced absolute cost. Sales volumes increased by 6,000 BOE per day due to substantially higher liftings in Libya, complemented by greater sales volumes in Norway and the United Arab Emirates, owing to favorable lifting schedules.

The result of Gas Marketing & Power declined by EUR 25 million, driven by a weaker supply result and a lower sales result in Gas West, only partially offset by an improved LNG contribution. Gas East delivered a better result stemming from the power business supported by power market deregulation in Romania effective from July 2025. The Clean CCS operating result of the Fuels segment more than doubled to EUR 413 million, driven by substantially stronger refining indicator margins, a significantly higher ADNOC refining and trading result and improved utilization rates of our refineries.

The European refining indicator margin rose sharply to $11.5 per barrel. We were able to benefit from the strong market environment through a high refining utilization rate of 91%. The contribution of the marketing business remained strong but was lower compared to the very high prior year quarter. Retail performance declined slightly, mainly due to reduced fuel margins driven by less favorable oil product quotations, partly offset by slightly increased sales volumes following the acquisition of retail stations in Austria and Slovakia.

The result of the commercial business decreased as margins declined driven by slow economic development. The contribution of ADNOC Refining and Global Trading increased significantly to EUR 52 million, mainly due to a better market environment and stronger operational performance. The clean operating result of Chemicals increased significantly to EUR 222 million, driven to a large extent by the stop of Borealis depreciation. In our European business, we recorded positive market effects of EUR 35 million attributable to rising olefin indicator margins, while inventory effects had a negative impact of around EUR 10 million. The utilization rate of our European crackers was 84%, slightly higher than the prior year quarter level.

The result of OMV base chemicals improved, driven by stronger olefin margins and higher steam cracker utilization rates. This was partly offset by weaker benzene margins. The contribution of Borealis, excluding joint ventures, increased by EUR 64 million, supported by the stop of depreciation. However, contributions from both base chemicals and polyolefins declined.

The base chemicals result was affected by a significantly lower light feedstock advantage, a lower phenol margin as well as a slightly decreased utilization rate of the Borealis steam crackers. These effects were partly offset by improved olefin margins in Europe and less negative inventory effect compared to the third quarter of 2024.

Polyolefin sales volumes of Borealis, excluding joint ventures, declined by 8%, largely attributable to the implementation of a new SAP system, which led to presales in the second quarter. Thus, when looking at the 2 quarters combined, polyolefin sales volumes at Borealis rose by 5% compared to the respective prior year period. The realized unit margins of standard products declined primarily due to stronger import pressure.

In contrast, the realized unit margins of specialty products remained strong and stable, underscoring Borealis' strength in the specialty segment. The contribution of the JVs increased to EUR 73 million, even though Borouge delivered a lower result due to softer sales volumes and weak demand in Asia. The increase of the JV result is explained by the reclassification of Baystar, which is no longer consolidated and was negative in the prior year quarter.

Turning to cash flows. Our third quarter operating cash flow, excluding net working capital effects, was very strong at around EUR 1.5 billion, an increase of almost 80% compared to the previous quarter. It was also 7% higher than the prior year quarter. Main drivers were strong refining margins and higher volumes in Libya. A positive onetime effect related to a litigation outcome in Romania was also supportive.

In the third quarter of this year, we recorded a substantial net working capital build of about EUR 400 million, while in the prior year quarter, we had a small positive effect from net working capital. As a result, cash flow from operating activities for the quarter was around EUR 1.1 billion, in line with the previous quarter, but 23% lower than in Q3 2024. Looking at the 9-month picture, cash flow from operating activities came in at EUR 3.5 billion, representing a decrease of 20% compared to the first 9 months of 2024.

Around half of the decrease is explained by a swing in networking capital effects, which were positive last year, but negative this year. Organic cash flow from investing activities in the first 9 months was around EUR 2.8 billion related to ordinary ongoing business investments and major growth projects such as Neptun Deep, the PDH plant in Belgium, the SAF/HVO plant in Romania and the green hydrogen plant in Austria.

Free cash flow before dividends in the 9 months of 2025 was 5% lower than in the same period of last year. Our balance sheet continues to be very strong with a leverage ratio at 16%. In the third quarter, we redeemed EUR 750 million of hybrid notes at its first call date. The fair value of the hybrid bond was reclassified from equity to short-term bonds and consequently repaid, leading to an increase of the leverage ratio. At the end of September, OMV had a cash position of EUR 4.6 billion and EUR 4.2 billion in undrawn committed credit facilities. Let me conclude with an updated outlook for this year.

We maintain our Brent oil price assumption of around $70 per barrel for full year 2025. However, geopolitical environment remains highly volatile. For gas, we now expect the full year average THE price to be slightly below EUR 40 per megawatt hour and the realized gas price is projected to be at the lower end of the EUR 30 to EUR 35 per megawatt hour range.

In the fourth quarter of 2025, we anticipate E&P production to be around 300,000 barrels per day thus expect for the full year 2025 an E&P production of slightly above 300,000 barrels of oil equivalent per day. E&P production costs are anticipated to remain stable at around $11 per barrel. In fuels, the refining indicator margin rose significantly in the third quarter and the start to the fourth quarter has also been very positive with refining margins above $12 per barrel.

As a result, we are upgrading our full year outlook to above $9 per barrel. Our refinery utilization is expected to be at the upper end of the 85% to 90% range. Retail margins have developed positively and are now projected to be slightly above 2025 levels, while we maintain our outlook for lower commercial margins. The European chemicals market continues to face significant pressure from persistent economic challenges and rising import volumes, driving further consolidation and ongoing cracker closures.

Supported by lower naphtha costs, olefin margins in the fourth quarter are estimated to be at a similar level as the average of the first 9 months. However, current high discounts are anticipated to have a somewhat mitigating effect. Polyolefin indicator margins are expected to decline in the fourth quarter due to lower seasonal demand and destocking at year-end.

Consequently, we now assume a lower utilization rate of our European steam crackers of around 85%. Polyolefin sales volumes at Borealis are expected to increase by 200,000 tonnes to around 4.1 million tons in 2025. However, not as strongly as previously anticipated. All other full year assumptions for the group remain unchanged.

We continue to make good progress on the Borouge Group International deal. We remain confident in our expectation to close both transactions related to PGI within the first quarter of next year. Thank you for your attention. Reinhard and I will now be happy to take your questions.

Thank you, Alfred. Let's now come to your questions. [Operator Instructions] we start today's Q&A session with Josh Stone, UBS.

Two, please. One on the very strong result for Fuels this quarter, which pretty much looks like it beat the refining benchmark despite retail and commercial being a bit weaker sequentially. So just expand on what's driving that very strong refining performance. And are you seeing some benefits if you think about specific to I'm thinking about some of the refinery outages we've read about in some of your neighboring countries and wondering if that's been helping some of the performance or is likely to help the performance this coming quarter? And then second, on chemicals.

I don't know if I've observed this correctly, but it seems like your tone has become a bit more cautious on the European market, given the role of imports and noting you're guiding towards lower runs despite being one of the lowest cost producers. So just maybe just talk us through that. And you mentioned these discounts you're seeing on the chemical market. So maybe just expand on how significant those discounts are and your expectation around those?

Yes. Thank you, Josh. Let me start with your question around Fuels. We -- the reception here wasn't very good. So I hope I got your full question. But yes, as you say, we more than doubled our fuels result in the last quarter. That was mainly driven by 2 different things, higher refining indicator margins and secondly, also a good capacity utilization in our refineries. The refining indicator margins drive was, in my view, result of multiple things happening. One is a supply-demand balance kind of thing. We saw strong gasoline demand in the driving season also in Q3. We saw healthy demand on the jet fuel side. And we also did see, let's say, demand-supply imbalance on the diesel side that was driving the diesel margins as well, which we could utilize in our refineries by making sure we are running them to also optimize the refinery margins.

Quarter 4 started very strong. So the first days here in October, we are above the $12 per barrel that I mentioned. And I would anticipate that we continue to see a similar supply-demand kind of picture for the fourth quarter, which is then also why we increased our guidance outlook to over 9%. Let me also just mention here briefly the ADNOC refinery because also there, in the third quarter, we saw an improvement of the margins.

Utilization there remains to be high, but the indicator margins helped to improve that and also the a strong start to the fourth quarter. On the -- your second question on the chemicals sector, indeed, we were very successful in driving the growth in the business in the first half of the year, partly driven by the SAP implementation. But as I said, we are still looking for the full year now at 4.1 million tonnes of sales, which compared to last year would be still about a 5% growth. So I would consider that rather healthy given the market circumstances. However, we are more cautious for the fourth quarter because we anticipate inventory management, cash management in the supply chain also with our customers and that we wanted to reflect in what I said here and in the outlook.

Last but not least, on the discounts, this is a usual thing, the reported contract prices for olefins -- polyolefins usually have discounts associated in the specific sales contracts and with customers. And in particular, in situations where the markets are longer, these discounts or spot prices then can -- the discounts can widen a bit. I anticipate that this will be the case due to the given situation in Q4.

Thank you, Josh, for your questions. We now come to Alejandro Vigil from Santander.

Two questions, please. The first one is about Libya. We have seen this volume increase year-on-year and quarter-on-quarter. If you can give us some color about the prospects for this country in your production profile? And the second question is about the Borouge-Borealis combination. You mentioned that everything is on track. If you can elaborate a bit about how you see all the regulatory -- potential regulatory issues and the fundamentals of the deal today.

Okay. Let me maybe start with Libya. On the Libyan production, or maybe three things. First, we had a higher lifting from Libya that was partly a result that was pulled in from the second quarter, but also we can -- it's difficult to time exactly quarter-by-quarter the lifting. So that was one effect. The second effect was the higher production, which is actually driven by a very good operational performance in Libya and activity there that we have in Nafoora to actually increase the production.

The second effect compared to last year there is also that last year, Q3, we still had reduced production from the unrest in Libya. On your Borouge Group international question, I want to report to you that we are actually making quite some good progress with regulatory approvals. We have received several of those -- of the required approvals.

And at the moment, we are anticipating that we should be able to close that transaction by the first quarter of this year. So far, we have not encountered any kind of delays or issues in any of the approvals. But of course, in the end, right, we need all of the approvals in order to have that. But we expect that Q1, we should be ready to close the transaction.

[Operator Instructions] Now the next questions come from Gui Levy, Morgan Stanley.

Two questions from me, please. First one, you commented on refining margins so far this quarter. I was wondering if you can say a few words about early next year, how quickly do you expect margins to convert to the $6 to $7 per barrel level that you used in your plan? And then second one, in terms of upstream M&A, can you share any thoughts regarding the appetite from sellers at this point? And how quickly could you see -- could we see the company active on that front? It's part of your 2030 targets, but any update as to how quickly that might be addressed would be great.

Yes. Thank you very much. On the refining indicator margins, at this moment, we have increased the outlook for this year to above $9 per barrel. The -- due to the -- as I said, right, we expect now in the fourth quarter, currently, we are even above $12 in the refining indicator margins just from experience this would look like a very high indicator margin and some normalization will happen on the way forward.

At the same time, we have seen over the last years, in particular, since the Russian attack in Ukraine, we have seen a very volatile environment in the refining indicator margins, and we have also seen some supply-demand balances. So this will not go away immediately in my view. However, we would anticipate that for next year, it will normalize more and not stay at the Q4 level.

On upstream M&A, what we said, key is that we want -- we are targeting now by 2030 about 400,000 barrel equivalent per day, and that would require some M&A because our organic activities and the projects that we have, they would result in some 320,000 to 330-ish BOE per day. So the first focus needs to be on successfully implementing and executing Neptun Deep and the other organic growth projects that we have.

There, I can report that we are on track, in particular, also Neptun Deep for the 2027 start-up. On the inorganic activities, we are filling a pipeline of different ideas and thoughts, but our focus will be not on the volume per se, but on making an accretive deal here. And with this we will -- the timing will be depending on when we can make such a deal. At this point, we are not far enough in any of the opportunities that I could report anything specific.

Next is Mark Wilson, Jefferies.

Okay I appreciate that. You've answered my questions on refining, I think. So could I ask -- could you just give us an update on the exploration that you're drilling, I believe, in the Black Sea in the Neptun area. Just remind us where that is and when that gets started, please?

Yes. Thank you, Mark. So the project that we keep citing Neptun Deep, there, of course, we are in the full execution of the project. We are on track with our plan production for 2027. I think you are referring to the Black Sea exploration project that we have started talking about, and that was in Bulgarian waters where we have also started looking in this neighboring Black Sea geology for an exploration drill and that we will start still this year with the first exploration well. And what we have also done a few months ago, we brought NewMed into this project for this exploration activity.

And if you could just remind us of what the target is, if that's going to happen this year or at least start this year, please?

So the exploration drilling will start this year, but we will have to continue exploration activities also in 2026, starting, however, this year.

Thanks, Mark. We now come to Ram Kamath, Barclays.

I have a couple. First of all, on the refining side, this time, ADNOC Refining made a sizable contribution after possibly 4 to 5 quarters of weak set of numbers earlier. So could you perhaps clarify what has changed, how it could be able to capture margin in 3Q, while performance was substantially weak in 2Q, while the benchmark refining was still healthy.

And on the chemical side, it looks like the contribution from Borealis, excluding joint venture increased by EUR 64 million, as you alluded in the remarks earlier, supported by stock of depreciation. Not adjusting for this depreciation, it looks like the unit performance was weaker than last year at the same margin level. Possibly, could you throw some light what is happening in the sector? And is it right assessment to say that the chemical margin is still facing challenges here?

Ram, let me start with refining and then about the chemical market and then maybe Reinhard can also comment some on the specific results here. In refining, what has really changed is, first, in the OMV refineries, we were able to run a high utilization rate. Secondly, the market environment has changed in terms of refining indicator margins. And I think it's really the new sanctions that have come about and then some operational issues in the industry, I would say that are driving some of the supply squeezes.

Dangote refinery is just one, but of course, also new kind of limitations on Russian crudes and things like this are driving refining indicator margins up. And that has been the case in all the refineries where we have participation, so not just in Europe, but also the ADNOC refinery. On the chemical question that you had, I would confirm your view of a more sideways move in the market side in Europe with the chemical margins still under pressure with high imports and lower economic activity in Borealis.

And specifically, we see a difference between the productivity commoditized segment and the specialty segments. While we have seen some margin reductions in the commoditized areas and the specialty margins, we have actually seen continued demand combined with good margin stability and price stability. And maybe for the specific Borealis result, Reinhard wants to add something.

Yes, Ram, your question was a little bit about how this compares also to last year, given that margins were not significantly different. So first of all, of course, if you deduct the depreciation effect, which makes Borealis' result actually look quite good this year, you have a situation that you are in comparison lower. And the reason mainly is that the market conditions are lower. So even if margins being at around the same level, the pressure on discounts is higher in this year.

And Borealis has been quite successful to defend the market shares and to make sure that sales volumes are up -- but of course, that does not mean that they were able to hold exactly the same net margin to the company in this difficult environment. So we are expecting still that there will be some recovery next year in the customer industries. But at the moment, this is a challenging market. And therefore, we are quite happy that Borealis with its ability, as Alfred mentioned, to also concentrate on specialty grades has still a good chance to provide profitability at the end.

We have a follow-up question from Alejandro Vigil from Santander.

It's about the net debt of the company expectations for the end of the year. I know working capital is very volatile, but if you can give us some indication about that. And also about the cash payment you're expecting to equalize your position in BGI, this cash payment, we should expect this to happen in the first quarter next year, right?

Yes, Alejandro, absolutely right to start with your last comment, the cash payment in the magnitude of up to EUR 1.6 billion will happen only with closing of the transaction. We are expecting that to happen in the first quarter. And therefore, we're expecting that cash out also only in the first quarter. Regarding the net debt, -- it has been mentioned that the net debt level has increased simply from the payout of our hybrid bond in Q3 that was EUR 750 million.

We also had a slightly negative free cash flow after dividends because there were some payouts from Borealis dividends as well as some hybrid bond dividends that were still there in Q3. So therefore, in total, net debt was increasing by about EUR 1 billion. However, we are seeing that the effect of the net working capital, which was quite negative in Q3 will be somewhat equalized in Q4. We are expecting that quite some of that will also flow back. The reason for the higher net working capital in effect have been on the one hand side, somehow elevated inventory levels, both in the fuels part as well as in the chemicals part due to a good production, but less sales activities at the end of the quarter.

Then we have now more gas in storage, which is quite normal for this period of the year. And that, of course, also keeps some of the capital bound. And the third is a little bit of a special effect, which definitely will come back in Q4 in Borealis. And that's -- around half of that total effect of net working capital. We had lower securitization and factoring opportunities due to the change in our ERP system, the upgrading of the ERP system, not all of those could be yet transferred into the new net working capital programs that we have, and this will happen certainly in Q4.

The next questions come from Adnan Dhanani, RBC.

Two for me, please. Just first on the gas market. Could we just get your views on pricing going into winter and how you see balances evolving, particularly as you mentioned, European storage levels currently are below where they have been at this point in recent years and just how that might impact your gas marketing results? And then second on the BGI deal, could we just get an update on where things stand as it relates to the recruitment effort for BGI's leadership given we're getting close to the targeted 1Q closure?

Okay. Let me start with your question around the gas market. We have actually seen that -- we have actually seen gas prices trending a bit lower over the year. Initially, we were anticipating [ THE ] hub price in Germany of about EUR 40 per megawatt hour. We now think it's going to be slightly below that EUR 40. If you look at the third quarter, we ended -- the average in the third quarter was about EUR 33 and the quarter before was about EUR 36.

So potentially, when the demand picks up in the winter months, that could provide for some upward movement, but let's see how that develops exactly. On the BGI development, selection of the leadership is, of course, one of the key activities that we do for getting ready for the closing of the transaction.

Also, we are proceeding to plan. We have a selection process where we are looking at both the internal candidates from the three different companies, but we also are looking and comparing to potential external candidates. And what we have agreed with ADNOC is that we would make a merit-based selection. So from this pipeline, we will ultimately then select what we think are the best candidates. We are confident that we will be ready by the closing to have those appointments.

We currently have one more in the line. [Operator Instructions] The next question is from Sadnan Ali, HSBC.

Two, please. The first one is just bigger picture on OMV. If we look back to the CMD in 2022, I think that was the first time you made a big push into chemicals and started reordering the segments and putting chemicals first and upstream third.

Now the CMD this year was the first time where energy was brought back to the forefront and now chemicals pushed back. So can you just talk about the thinking here and how you expect the market to think about OMV's identity bigger picture? And secondly, in refining, you touched upon it earlier, but can you just give us a bit more color on to the extent in which you are able to optimize your refineries to take advantage of the yields given the current market environment?

Yes, Sadnan, let me -- thanks for your questions. Let me start with the first one on the big picture. So I think I want to point out that we are pursuing a strategy to have an integrated business of three different segments. We are looking to create a company with integrated energy, fuels and chemicals segment. And we do see chemicals as a growth opportunity for OMV. And indeed, as you said, in 2022, we had chemicals in the focus.

And with this Borouge Group International deal, merging Borealis, Borouge and then adding Nova Chemicals to this, we believe we have made a major step forward in our chemical strategy. Now this Borouge Group International will require significant integration work. We have also said we want to extract synergies of at least EUR 500 million in this combination there, but there's also significant growth opportunities.

So we said from a pro forma average EBITDA delivery of $4.5 billion in the last year. We want to push that to above $7 billion with the growth projects that we have, biggest one is Borouge 4, but also adding the synergies to it. So this will be a major growth step in a world-leading Polyolefins company that has excellent feedstock position with more than 70% in advantaged feedstock has an excellent share of innovative premium materials due to the innovation and technology capability of Borealis. So that's what we want to drive, and that will allow us to pay interesting dividend to OMV with a floor of $1 billion to -- for the OMV share of this, right?

So this is what we will continue to push, and that will be the main growth vehicle at this point and the main focus for the chemical strategy. Then we have also seen that in our view, the demand for gas, in particular, will be stronger than it was anticipated previously. And we see this as an additional growth opportunity. We always had gas as a growth opportunity, but we see even more opportunity in this. Neptun Deep is obviously at the center of this, but we believe more growth can be added to this, and this is why we increased the production target in energy to 400,000 barrels from the 350,000, right?

I think that's how you should look at that. At the same time, we want to maintain our integrated strategy across the three different segments. We believe that gives us financial performance and cash flow delivery capability to pay dividends and make investments, but we also think there is operational integration benefits, in particular, also in this transition phase. So we will continue to invest into the transformation such as sustainable fuels and in Petrom, in particular, also renewable power and in the longer run, geothermal heating and circular economy chemical recycling activities.

I hope that answers your question or gives you a better feeling about this OMV identity, right? From our point of view, we continue in the direction of an integrated sustainable energy fuels and chemical company with our purpose being reinventing everyday essentials. So we will stick to our energy products, mobility products and chemical products. On the refining side, -- of course, what we have also part -- in our strategy is to adjust the, let's say, the input feedstock and the output product on our refineries. One piece is that more of the refinery output will go into the chemical integration. And -- the second piece is that more of the input raw materials will come from the sustainability side. So in the meantime, in the refinery in Schwechat, for example, we have a 160,000 ton coprocessing facility that inputs bio oils rather than crude oil.

We have a 10-megawatt hydrogen facility in operation that provides green hydrogen rather than gray hydrogen. And the piece that we continuously always monitor is also the crude slate that we deploy and the operating conditions to optimize then shifting more to the chemical integration and making sure that we also get our split between the other products, diesel, gasoline, jet in the right way. We were able to get access to more airports and can also increase our jet sales from this. And in addition, as you remember, last year, we made some acquisitions of some fuel stations and also commercial retail networks that have also contributed positively to the sales in our retail network.

Thanks, Sadnan, for your questions. We now come to the end of our conference call. Thanks a lot for joining us today. If you have any follow-up questions, please contact the Investor Relations team. We are happy to help. Thank you again, and have a nice day. Goodbye.

Thank you, and have a great day.

Thank you. Bye-bye.