OMV AG

David Davies - Deputy Chairman of the Executive Board

Mehdi Ennebati - Societe Generale Nitin Sharma - JPMorgan Joshua Stone - Barclays Thomas Adolff - Credit Suisse Henri Patricot - UBS Hamish Clegg - Bank of America Merrill Lynch Marc Kofler - Jefferies

Thank you and good morning, ladies and gentlemen. Thank you for dialing in to this conference call.

May I start with two announcements, unfortunately Mr. Seele, who was scheduled to introduce this meeting, has had to attend an unexpected and urgent meeting in relation to the development of one of our strategic business projects.

I am sure you will forgive him for having to step out unfortunately. He’s asked obviously to take up his part of the presentation which I of course will do.

And the second thing is equally significant, this is the 57th and final presentation you will hear from me. The next time we do a quarterly presentation, my successor Mr.

Florey will lead the presentation and similarly, Mr. Felix Rüsch who is the coordinator of these meetings for quite some time, this is also his last meeting.

Mrs. Moll who joined us shortly will be the new voice of investor relations in the future.

That said, let me start with the presentation. Clearly as ever in the industry, probably health and safety remains our top priority and our record as you can see from the graph is commendable in terms of improvements that we’ve made but of course, one can never relax and unfortunately although not reflected in this chart, an incident that we had in April will cause a deterioration of this otherwise favorable trend and is further evidence of how one needs to continue to stay very focused on ensuring your operations are safe.

Our strategy in a nutshell on the next slide. Clearly this is not unique to OMV in this current very low commodity price environment, focusing on cash and costs is absolutely critical.

Similarly through the portfolio realignment in our upstream business, achieving a sustainable position in a low price environment is clearly a major point of focus. Our downstream gas given the very challenging environment in the European market and restructuring that business is clearly an area to continue to focus upon, and of course, downstream oil business, which both last year and also into this year has helped compensate for the very low oil and gas price.

It’s something clearly where the strengthening of its competitive position needs continuing focus. We have a leading position here in a very cost competitive market, and of course the announcement recently of the intention to sell our investment in Petrol Ofisi in Turkey is clearly the evidence of how we are focusing and refining the business in downstream oil.

On the next slide, some recent highlights. Recently, Gazprom and OMV signed documents to develop the strategic cooperation.

A further term sheet was signed regarding the non-publicized asset swap which we are proposing. We also signed a further cooperation agreements in terms of oil supply, technology swapping and indeed in terms of a cross cultural support.

In United Arab Emirates, we signed with ADNOC a technical evaluation agreement. Here we have several fields in the North-West Offshore of the country, including Ghashaand Hail areas, and what we've agreed is a four-year work program for seismic drilling and initial engineering studies.

In Iran, recently we signed a memorandum of understanding regarding future projects. And in terms of downstream portfolio optimization, we have a number of projects which have been completed or are strongly underway.

In the Austrian market, we purchased a number of unmanned filling stations during the year which strengthens our market position and secures the supply for our refinery. We also received merger control clearance for the sale of a number of relatively low margin Czech filling stations which of course helps improve the average profitability of the overall estate.

Through the gas sales, we received merger control for the full takeover of EconGas and clearly once that is completed, that will give us the opportunity to continue to integrate and restructure that business more directly. In terms of the disposal we have announced of a 49% stake in the Gas Connect Austria business.

We have received indicative bids and they confirmed as we expected a strong market interest in this asset, so that process will continue in the remainder of the year. We've announced the Petrol Ofisi divestment.

We've appointed investment banks and mandated them to actually assist us with the program, and went out preparing to approach potential buyers, and a number of them having already expressed interest in looking at the asset. The next slide just outlines the asset swap and the status between Gazprom and OMV.

What we've indicated recently is that the asset that we're looking at swapping is a share in an OMV North Sea subsidiary. This is under negotiation for the consideration for the 24.98% stake in Achimov IV and V.

We expect to sign a contract for the asset swap in the second half of this year and to close the transaction during 2017. And you can see on the graphic, although there's no scale against it, particularly attractive, it’s a very long term stabilized production which will occur for many years in this asset and be helpful in achieving a stable reserve replacement rate also for the group.

Let me turn now to the part of the presentation concerning the financials. Slide number 7, the highlights for the first quarter this year.

€333 million last year, down by 50% to €167 million this year. You can see clearly the decline is predominantly in the upstream, €130 million, 30% drop in the average Brent price to $34 per barrel has clearly been the primary driver of this.

Production was actually slightly higher 312,000 barrels a day, up by 3% predominantly due to increased production in Norway, somewhat offset by lower production in Romania and Austria. Higher sales volumes also occurred mainly in Norway.

In the downstream business, the decline of €35 million is essentially due to a weaker gas market environment, particularly compared to the first quarter last year, which was also helped by one or two one-offs which didn't occur this year. We must also report that the refining margins although still attractive have weakened compared to where we were a year ago.

Although this was largely compensated by a stronger petrochemicals business. The gearing ratio at the end of the first quarter improved versus last year to 29%.

And this is clearly a consequence of the hybrid bond of €1.5 billion that we issued in quarter four. And on the next slide, we talk about the economic environment.

The left hand chart is rather self-explanatory. Clearly we've seen successive quarters since Q2 last year of the oil price declining, and an average for the first quarter of this year was, as I said, $34.

What's been a relatively recent currency you see in the middle has been the strong decline recently in the Central European Gas Hub. Natural gas price as an index for the natural gas price across the whole of the European market.

You can see where we are now at about €14 per megawatt hour compared only two quarters ago to something in excess of €20. And this clearly has also been quite detrimental to us, although not as detrimental as for others who are sort of wholly exposed to the European market.

Because of course we have a large number of our gas assets where the price is either regulated or fixed contractually. You can see in fact that our realized gas price with the orange line is back slightly above the Central European Gas Hub price which is the first time that I've certainly been aware -- been around that that actually happened.

On the right hand side, the indicator refining margin, as you can see the very high levels that we experienced for the first three quarters of last year. We already saw a decline in quarter four and that has unfortunately continued.

We are 32% down at $5.10 per barrel compared to the same quarter last year and 14% down compared to quarter four. So that is the environment we’ve had, what kind of results that that produced.

You see on the next slide that our clean CCS net income attributable to stockholders is down by 27% from €237 million to €174 million. On the right hand side, you can see the constituent parts of that, our EBIT at the top.

Clearly this is in clean or CCS was down by 79%. Our clean CCS EBIT was down by 50% from €333 million to €167 million.

Clearly the negative CCS effect given the lower oil price has been eliminated in that number. And our clean CCS net income attributable to stockholders is only down by 27%, so it's got progressively better in this case in particular due to the lower deduction for minorities.

Financial result was also a major swing compared to last year, €41 million contribution, versus minus €23 million last year, and this is in large part due to a much stronger performance from Borealis which posted a contribution of €92 million for the quarter this year versus €50 million last year. One, two other things have mostly contributed to the turnaround but that’s been the biggest part.

Of interest also is what's happening on the tax line. Clearly we are trading at a loss in quarter one in the E&P business.

So we're generating losses in a business where the very high tax rate in the upstream business will give you a high value in terms of the tax relief on those losses, and where we're making profit is in the downstream business, which is markets such as Romania with a 16% tax rate and Austria with a 25% tax rate. So we're making profits in low tax areas and losses in high tax areas and that produces a rather curious [ph] results that our effective tax rate for the quarter was minus 54%, so we actually have a profit as it were from tax of €47 million for the quarter.

Minorities of €41 million compared to €58 million last year; minorities and hybrid capital owners here. Clearly the hybrid capital owners’ stake has increased now that we've doubled in fact the size of the hybrids that we had.

We had 750 million last year and we issued further 1.5 billion this year, so the total hybrid owners share has actually increased as one would expect, but the lower level of profit in Petrom has also had an impact here. So the share of that profit that goes to the minority shareholders also is as a consequence lower.

And let me drive down through the income statement to a position where as I said earlier on, clean CCS net income attributable to stockholders at €174 million is a decline of 27% versus last year. Going to the special items, and particularly the CCS effect.

You can see here CCS losses of €104 million as a consequence of the collapsing oil price in the quarter one was the biggest reconciling item between the clean CCS EBIT and the reported EBIT. In terms of special items, the only thing of matter of what we want to report is a further increase in the provision against our Gate LNG obligation and the associated transportation commitments, which arose for the very simple reason that the change in the interest policy at the European Central Bank led to the long term interest rates declining, and clearly that’s a constituent part of our calculation of the weighted average cost of capital and accounting rules are quite strict, if you actually see a reduction in your weighted average cost of capital, that clearly has an impact on your valuation, and that has required us to book a further net provision on that line.

Now going to cash flow. On the next chart, you can see that our free cash flow after dividends at €145 million is a significant improvement, versus the negative cash flow of €517 million last year.

Why is that? A profit of €136 million is clearly not as high.

Depreciation is rather similar €538 million against €526 million the year before. And this in fact would have been higher of course had we not had the write-offs during last year, which of course lowers the depreciation burden going forward.

And that’s probably had an impact of about €50 million in the first quarter compared to the same quarter last year. Of course, the reason it's slightly higher as a consequence, despite that €50 million benefit is of course that we now have Edvard Grieg fully producing versus quarter one last year, it was not yet on stream.

The other position eliminates those items in profit which are not cash effective. Usually what we have in here is a share of our profit from Borealis, because it doesn't pay a dividend every quarter.

Clearly, we book our share of the profit but it's not cash affected. This quarter in fact it's the opposite, they paid a dividend of €153 million during quarter one, was the contribution of profit was only €92 million, so that actually went the other way as it were in Borealis.

The cash contribution was greater than the profit contribution in quarter one. That clearly would not be the case for the rest of the year.

And what you've actually seen leading to this negative position is really due to devaluation of a number of foreign exchange positions and derivatives which were in the profit. Change in net working capital at minus €73 million compared to minus €274 million last year, so that is clearly an improvement, was not a negative it was a year earlier.

And what you see here, in particular is that the biggest reason for the increase -- and clearly there's always a lot of pluses and minuses in it. But the single biggest effect is the fact that we had a lifting in Norway very close to the end of the quarter, which of course went into receivables at the end of the quarter, rather into cash and that's probably more than half of the €73 million change.

What also is an improvement on last year and clearly has helped to improve the cash flow is a much lower level of investments, cash flow used in investments, €745 million, that’s 20% down on the same position last year. You would see in a moment, however, that the cash invested is not the same as the amount of CapEx that we actually.

capitalized and booked. What you see here is that were a couple of hundred million actually higher than what we booked in quarter one, which is related really to in large part a number of contract renewals in Petrol Ofisi which were completed in quarter four last year and capitalized as a consequence but where payments were only made in the first quarter this year.

That of course means that the cash flow CapEx is higher than the accounting CapEx as it were. That then produces the free cash flow of €145 million which as you can see compares to over €500 million negative a year earlier.

Coming now to CapEx, and as I mentioned that we show on the previous slide, the cash flow CapEx was minus €724 million but here the accounting book CapEx is €467 million, so quite a significant difference, the majority of which as I said is due to contract renewals in Petrol Ofisi right at the end of the year. The €467 million, where we've been spending money, where almost a quarter of it went in field -- workovers, drilling and field redevelopments in Romania, clearly continuing to invest in Norway in Gullfaks and Aasta Hansteen.

Those developments continue to be rolled out. Exploration and appraisal activities were €79 million during the quarter.

And further contract renewals in Petrol Ofisi were €45 million, and that’s clearly in the downstream part. So that's the lion share of where we've been spending our CapEx.

Coming now to the divisions and the profits that we generated. If you look at the upstream clean EBIT, on the left hand side, you see the bridge between the first quarter last year and the first quarter of this year.

On the right on the other hand, you see the reconciliation of -- sorry -- on the left you see the reconciliation between the fourth quarter last year and the first quarter this year. On the right hand side, you see the reconciliation between the first quarter this year and the first quarter of last year.

So looking on the left, clearly the biggest reason for the change in profit was lower realizations, clearly lower oil price, lower natural gas price contribution in total minus €155 million. Volumes were also slightly lower versus Q4 and this first quarter.

Exploration expenses on the other hand were better by €93 million and depreciation was also better of which some €33 million of the €47 million again is due to the write-downs that we took in quarter four last year which of course, you don't depreciate it going forward because you've written the value of the asset down. That brings us then to the minus €97 million that we actually showed in the quarter.

Versus the same period last year when we actually made a small profit of €33 million in the upstream, realization of the impact here was clearly even more dramatic, €184 million. Volumes on the other hand, versus the same quarter last year were actually higher by €10 million in terms of EBIT contribution, the largest part of which is the production in Edvard Grieg, although also Gullfaks production was also slightly higher.

Exploration expense is again more favorable and DD&A, depreciation here actually higher than the same quarter last year. And what you have here is that although you have a €48 million improvement due to the asset write-down you clearly have the depreciation of the Norwegian assets which are now fully producing, that was only partly the case in the reconciliation between Q1 this year and Q4 last year, compared to the same quarter last year.

Q1 on Q1 is where clearly you’ve got a full quarter’s depreciation was last year. You didn't have it basically for the Edvard Grieg asset.

Other items is a variation of things there, foreign exchange, hedging, change in the residual hedging gains from the hedges that we closed last year, produces a €97 million loss in total for this quarter. Key performance indicators in the upstream.

Clearly production overall has improved somewhat 312 against 303, clearly helped here from the contribution of Edvard Grieg which started in November 2015 and for the first quarter this year, it was fully on stream. This unfortunately is somewhat compensated by lower gas volumes from Romania and from Austria which to some degree is due to the level of natural decline, of course which we are experiencing in both markets.

You see on the bottom left, OpEx in US dollars per barrel, clearly continues to decline, which is very encouraging. We are certainly seeing the benefit of lower levels of service activity clearly as we cut back but also external service costs, clearly also cheaper than they were a year ago, and that's all starting to contribute favorably to the overall profit.

If you turn to the next page, the positional costs in Petrom, it’s not dissimilar although we actually saw a slight increase Q1 on Q4, and of course, this is really a reflection as you look at both [ph] what’s been happening with production, which is now 175,000 boe per day compared to 184,000 boe, and clearly the level of natural decline is contributing to this. If you have a lower level of production, clearly you have to run even more quickly to keep your unit costs in line.

And clearly we were quite able to do that in this quarter compared to Q4 but of course we are still substantially lower than where we were a year ago. In Petrom, the clean EBIT was a loss of €16 million which is an improvement on the loss we had last year, which is clearly helpful.

What explains that in particular was the lower exploration expenses and depreciation partly due to the write-offs that we booked last year as regards the depreciation. But the oil price and sales volumes clearly more than compensated that.

Production decreased by 1% in total and the OpEx position, I've only talked about. Turning now to the downstream.

The decline in profit Q1 this year versus Q1 last year was almost essentially in the downstream gas business. The gas business in terms of the lower commodity price is more of a challenge in the upstream.

Clearly what you see here is the margin side of the business and service [ph] to end customers, which clearly also is under considerable pressure in the European market. It should be said, however, that the same quarter last year did include one or two one-offs, for example, payments from Gazprom because they weren't delivering full volumes.

The fact that we had reached a solution in terms of some of our power customers, which produced a one off gain last year. The non-occurrence of that this year was also a big contributor to this relative decline in the.

downstream gas profitability. Downstream oil, as I mentioned already, the indicator refining margin was in fact down, that hit our both refining business somewhat but the petrochemicals business, and improved performance in Petrol Ofisi has helped claw that back so that the downstream oil business is more or less flat on where it was the year earlier.

Some KPIs for the downstream business. Our level of utilization remains quite high at 90% although, West you see it actually declined by, from 94% to 89%, the remaining refining actually increased from 92% to 94%, and part of the reason for the decline in utilization in the first quarter was an unscheduled external power outage in the Schwechat refinery which caused production to stop for quite some time.

And what of course you don't yet see is the planned maintenance shutdown, which just started right at the end of Q1 but of course will have a bigger impact in Q2. The Schwechat refinery of course now is back on stream having completed the planned turnaround.

The natural gas sales volumes, clearly you see the seasonal improvement as you go through from Q3, Q4 and into Q1, but if you look from Q1 ’16 back to Q1 2015, you see that our natural sales gas volumes decreased by 14%. And this is in very large part due to the unusually warm weather that we had during this recent winter.

And of course also in Romania where we are seeing some of the large industrial customers particularly in the fertilizer space not being as active as they had been previously. Then finally, to the last slide, our expectations for the current year.

We’ve not changed our oil price assumption. Clearly we were below $40 in Q1 but thankfully the oil price has improved so much during Q2 and we're currently operating above that average of $40.

I hope that it continues for the balance of the year. Clearly refining margins, we expect as we've said repeatedly to be below the 2015 level, and this is certainly coming about in more recent weeks or so burdened by the fact that the oil price has been relatively strong, so an improved position in the upstream has hit the downstream somewhat.

Retail volumes are being supported by lower product prices. Clearly we're most definitely seeing that.

No question also that the gas markets are going to remain challenging. Our overall production will be around the 300,000 barrel level, we’re clearly higher than that right now.

But we have a number of expected shutdowns in the balance of the year, which we think will bring us in round about the 300,000 level. Capital expenditure, €2.4 billion in total, of which clearly the majority will continue to be spent in upstream.

And our exploration and appraisal expenditure is something of the order of €450 million, so lower as we've said repeatedly than we've done previously as we clearly seek to reduce our level of activity in that area in the current very difficult environment. So that ladies and gentlemen is the presentation.

If you have any question you'd like to ask, then clearly we’re at your disposal. Thank you.

So good morning all. First, just would like to say thank you very much, David, for all of those explanations and the selling of older business.

And I wish you all the best in your retirement. And I will ask two questions, first, regarding your CapEx.

David, you highlighted that accounting CapEx in Q1 were €467 million, cash flow statement -- in the cash flow statement, CapEx were above €700 million. So you explain this, that's fine.

I just wanted to know, if for the rest of the year, the accounting CapEx should be more in line with the CapEx accounted in the cash flow statement. Meaning that we should have on a quarter over quarter a material decrease.

Second question regards with your organic free cash flow. So you had Q1 organic free flow of minus €158 million.

Given that oil price is improving and given that normally your cash flow CapEx should decline, is it fair to consider that we should have a material improvements in your organic free cash flow, maybe not in Q2 because you have some incidents but from Q3? And you highlighted during the strategic meeting in February that particularly [ph] when the oil price would start going up, you will have some working capital release.

So is it still -- do you see still – do you confirm this – what you said during the strategic meeting? And finally, so you said that you are doing maintenance at Edvard Grieg in May.

If I remember well, most of your Romanian oil production goes to your refinery, so what will be the impact on your oil production, or maybe on your Petrom oil sales in Q2, should we expect a material impact there on? Thank you.

Thank you, Mehdi and I think it’s the 57th time that you've actually got in with the first question, so congratulations on that. At the end of the year, our guidance as we've said just a moment ago was €2.4 billion for capital expenditure and by the end of the year, I think the cash and the accounting CapEx, they're not going to be materially apart quite frankly.

And if we hit that number of €2.4 billion, clearly on a cash basis having spent over €700 million in Q1, then you would expect to see the cash side actually yes indeed come down. But given that the accounting side as it were it was only just in the €500 million you may actually see some increases in that.

So that’s what’s going to bring them broadly into line. But cash flow wise, yes, I think that would be a fair point and in fact was the case last year, we had a strong cash flow negative in Q1, over $900 million in CapEx last year, and clearly you saw Q2, Q3, Q4 come down.

The free cash flow of €130 million, I should point out of course is after dividend and of course we don't pay the OMV dividend during Q1, we pay during Q2. So as in every Q2 we clearly will have the cash outflow of the dividend which is going to be something around €330 million, which we're going to have to absorb, so that obviously needs to be baked into your expectations.

But clearly as the oil price improves, we will see some benefit potentially in working capital, because we saw some negatives from that, because we had a number of structured financing programs around our working capital which were based on barrels and clearly if the value of the barrel goes down, then the benefit of that program goes down. Similarly if the value of the barrel goes up, then clearly we'll also be able to take advantage of that as that improves but the real improvement to the cash flow from an improving oil price is clearly hopefully going to come from an improving level of cash contribution from the operations in the upstream.

It may impact negatively on the downstream, as we clearly see during times of rising oil prices, it's more challenging to actually get the prices true into the marketplace, so the downstream tends to suffer. But clearly the upstream will benefit more from that.

Then you're right absolutely, in terms of our production of oil in Romanic, it goes – the vast majority of it goes into our refinery in Petrobras for processing. And of course what we do ahead of a stop is work feverishly on the logistics to make sure that we can continue to produce.

The crude is stored during the stop, but it clearly is not being consumed. What we then start to do is work down the stock of product that we've generated ahead of the stop to make sure that we can keep the market satisfied, and of course once the stop is then over we work very quickly on building off-stock levels back up of product and of course getting the crude level of inventory down in the refinery.

So it should not have an impact on production during the quarter. It never has had so far.

Where it can have an impact of course is the valuation -- the volume and values of inventories move up and down. We clearly have to get clever with the calculation of the inter-divisional profit elimination in Romania which is always something of a challenge.

But given that it should be back on stream in May, by the end of June hopefully we'll reach the most of a stable position in terms of a total working capital. So that shouldn't have a significant impact I would hope.

Good morning, David. Thanks for the presentations.

Two questions from my side. First one on taxes, please.

So you touched on negative tax rate and the driver being the earnings mix. But could you maybe explain the implications of that negative tax rate on operating cash flow if it were to carry on?

The second question is more around the Brent-Urals differential and the outlook statement suggesting that you expect this differential to remain wider compared to some prior years. Correct me if I'm wrong but I think a wider discount is a negative for Petrom upstream earnings but it’s a positive for your downstream oil business.

So could you maybe give us some color on the earnings sensitivity from this wider differential? And finally best wishes to you and Felix for your future endeavors.

Thanks.

Thanks for the latter, Nitin, much appreciate it from both of us. In terms of your questions, the tax benefit that was recorded in Q1 was a non-cash tax benefit.

It was all deferred taxes, which is basically recognizing the losses which were predominantly in the UK and in Norway and expecting the recovery of those losses in tax terms when profits start to rise in the future. And clearly you have to make a conservative cautious assessment of when you expect the businesses return to profit and based on the expectations we do have in the medium term of the oil price rising, as profits then start to be earned in those markets, the losses that you booked prior to that, you can offset against those.

So the tax benefit in terms of cash will only start to show up in the future once the businesses generate profits to absorb these losses. And it would show up in cash to the extent that the tax that you book, you will not be paying in cash because you offset it against the losses that you have made.

So they are non-cash effective tax incomes that we book and they’re purely a function of the deferred tax asset that we've created as a consequence of the losses. The Brent-Urals, you're absolutely correct.

The reference price for the crude transferred from upstream into the refinery in Romania is Brent-Urals – sorry – is Urals and the reason of course we do that is – that is basically the benchmark crude that's processed in Romania and it obviously impacts the downstream prices, and margins as well. So negative yes to the upstream.

Positive to the downstream. But I think it really rather depends on the absolute amount of the thing, if it's a dollar what’s the capacity of the Petrobras refinery?

4.5 million tons – 7 barrels a ton, so if it was a dollar difference, all things being equal you probably have a €30 million – sorry – $30 million difference between upstream profit and downstream profit, all things being equal assuming of course that the downstream margins were able to pass it through.

Hi, good afternoon, David and thanks for the presentation. I’ve got two questions, please.

One on the indicator refining margin, if I look at the breakup through East and West, I know East is quite a large premium to West and has been the best part of year, I suspect part of it relates to the Petrobras upgrade but also the outages you experienced at the West part. But for the rest of this year did you expect – is it something structural there and do you expect that premium between West and East to continue for the rest of this year?

And then secondly, a small one on the corporate charge came in quite lower at around €4 million. Is there anything going on there and how do you expect that to trend?

Thank you.

Hopefully I am back in again, I am sorry, don’t know what happened and I apologize for that, Josh. I don't know whether you heard my answer.

I mentioned that the refining margins in Petrobras clearly do not reflect the fully completed turnaround program. And of course the product yield as a consequence is a premium compared to what it was previously and this is clearly a major driver of the improved refining margin situation.

And also of course, to the question of Nitin, although the spread is quite volatile the crude is going into the Petrobras refinery is being basically priced against euros which should clearly stay, and the discounts of Brent that helps you also.

Hi David, and for early retirement, I guess. Few questions -- before the questions, I always wanted to say I appreciate your transparency and I don't want to be harsh to other CFOs but sometimes I always felt other CFOs have been true promotional and you've been always very very transparent.

So thank you for that. Question maybe looking out, maybe one or two years, when you've completed your disposal of Petrol Ofisi and GASTEC [ph] as well, how should I think about capital allocation given that your balance sheet – excuse me – the oil price will continue to reset given that your balance sheet will look quite healthy then?

And staying on with the question of Petrol Ofisi you said you've hired investment bankers and you're now approaching potential buyers. I wondered whether it's safe to assume that potential buyers have to be Turkish entities, or at least a Turkish entity has to be part of a consortium?

And my final question I guess is on Iran where you signed on MoU and I was a bit surprised because, okay, it’s only an MoU but still we haven't seen the IPC being finalized. And so on what basis was this done?

Thank you, Thomas and thank you also for the kind words you mentioned at the beginning. I mean as I said at the strategy presentation we did earlier in the year in London.

Clearly with the disposal program it's successfully executed and of course also if our expectations come to fruition that the oil price will improve, albeit slowly but improve nevertheless, as you go into next year and the year after. Then the cash flow position and as a consequence the balance sheet will clearly become stronger.

At that point in time of course we will also have -- will be up to our next in executing the investments in Russia and hoping for production to come on stream a year or two thereafter. And that's really going to help start to be able to address what is a challenge for us particularly in this environment whether cutting back on investments, of profitably replacing the reserves that you’re consuming, which as you are well aware more recently in particular has been quite a challenge for us.

Clearly in the long term, I'm not going to be around in any case but the structure of the balance sheet as you rightly say would improve given the disposal program being successfully executed and of course how the new management then chooses to structure that, I'd really rather leave it to them but it's important that we have the opportunity to this program to make sure that the balance sheet strength improves, from a relatively strong position today. In terms of Petrol Ofisi, we have had expressions of interest already from both Turkish entities and non-Turkish entities and it certainly wouldn't be ourselves who would set any criteria in terms of what kind of structure the buying consortium or bank individual needed to have.

Clearly historically and this is also the case for our first investment in Petrol Ofisi itself, it has not been unusual for non-Turkish partners to partner up with Turkish players. But frankly we'll see what the process throws forward.

As I say we have had interest expressed preliminary inquiries of course at this stage from both Turkish entities and non-Turkish entities. And the MoU on Iran, I mean it’s clearly extremely early stages.

There would certainly be a lot of water to flow under the bridge in terms of determining how the profitability can actually work there and inclusion of an agreement which actually gives you some degree of competent certainty that that you can invest there profitably, it’s clearly going to be a prerequisite for any projects that we ultimately get involved in. It’s in a very early stage MoU.

We hope that things will progress to enable us to actually invest. But the precondition is clearly going to be that we can generate profit there.

Thank you. Can I quickly ask another question, very straight forward one -- Nord Stream 2, you seem in the press release very very confident that you can take FID into this year despite the fact the EU parliament having its doubt around this project, and I just wanted to better understand where this confidence is coming from?

Well, I think Rainer clearly would be a better person to speak to on that with his experience with the Nord Stream 1 project, and the fact that the transit countries involved in the Nord Stream 2 are politically very strongly aligned to facilitate this project. Leads to that confidence.

There’s clearly a political process which any project like this would need to go through and that support needs to be shown for the project to happen. But the strong support of the nations that’s actually hosting the pipeline investments, is clearly a starting point.

Hi David, thank you for the presentation. Just couple of quick questions for me.

The first one, just on the clean tax rate, where do you see that moving over the next few quarters, assuming that the oil price remains fairly close to the current level of 40? And then secondly, just want to go back to the question on the corporate charge in the first quarter, which was very low at €4 million, was there anything special going on there?

On the corporate charge, I mentioned a moment ago, I mean if it's going to be about 40 this year instead of 4 in quarter one, it should have been 10 on the 6 million that isn't there is basically stuck in the businesses. And that will be addressed during the course of the year.

So it’s not materially different in absolute quantum, low percentage wise, it does look a bit unusual. Then, what was the other question?

Clean tax rate.

Yes, the clean tax rate, sorry yeah. I mean particularly from such a high negative tax rate in quarter one, albeit the level of profit was quite low.

It's hard to really see how it's going to be significantly positive and actually spent by the time we get to the end of this year even with an improving oil price environment. So I would expect it not to be dramatically as high as it was at quarter one.

Hopefully we've seen quarter two, a high level of profit or indeed a level of profit from the upstream business which should change that picture somewhat as well. But I’d rather suspect it's going to be negative by the end of the year.

But certainly nothing like as high as we currently have. I don't believe, it's very unusual.

It’s very challenging also because of course you have to be cautious in booking deferred tax assets because you have to have a degree of confidence that you can recover them in the foreseeable future. And that of course makes the whole calculation very much a subject to the judgment.

Clearly all the deferred tax assets that we have as a group are not recognized, we have not fully recognized them their assets which are not booked as it were because of course the future environment is so uncertain. But we believe those that we’ve booked particularly in Norway and the UK, will be recoverable as the price of oil improves, of course in the UK, as our production comes back on stream in the medium term as well.

But it makes it very challenging to actually give the sensible guidance on what our tax rate is going to be at the moment, basically making losses in upstream, and profits in downstream complicated, actually quite considerably for our integrated business.

Good morning. A few quick questions from me.

Just first of all, I wondered if you could elaborate on the North Sea swap now, we seem to have sort of moved from potentially gas assets back into upstream assets through the swap. Would you – could you tell us maybe how that could be shaped, so would it be a spin off co?

Secondly within that, would you consider using cash from the Ofisi sale to contribute towards that asset swap to balance it in any sort of way, or will that cash be used to pay down debt? My second question is just on upstream volumes.

You he guided us quite clearly that Romania and Austria would see declines with lower CapEx. On my numbers it looks like year on year minus 5%, and minus 10% respectively.

Can we see this trend continuing for the current CapEx outlook or accelerating or stabilizing? Third question, still in upstream, sorry, this is a big one.

I know it’s your last call, so making the most of you. Exploration, the expenses are quite low levels, in terms of exploration expense this quarter, 30%.

Could you maybe suggest what the sort of risk is within the exploration portfolio? I know it’s much lower than it was previously and what we're looking forward to.

Also, and this is a final one, I promise. Elaborating more on what Thomas was asking about Nord Stream 2, I've been reading that the US as being a part of the project.

I wondered what OMV would save in terms of how much of the political influence do you feel the US has over a project like this? And obviously thanks a million for all yours and Felix's help over the years.

Thanks for that Hamish. Let's see if I can finish this by the end of business today.

In terms of the assets moving from gas in downstream, we never actually said anything about the assets. There has been a lot of speculation and we simply haven't commented upon this.

And what’s moved frankly has really been the speculation rather than anything that we were feeding into. I don't want to go into too much detail in terms of the particular asset, because I think we've been sufficiently circumspect by saying a North Sea subsidiary, not with particular one, so I’d really rather leave it at that but clearly what we're talking about is selling a stake in that subsidiary.

So we would actually find that Gazprom would become a co-owner of the subsidiary. We’re not talking asset being spun out of any of the subsidiaries.

Then clearly the decline in upstream production, particularly in Romania and to a degree in Austria is clearly being impacted negatively by the reduced level of our CapEx but in fairness what we're also doing and having to do of course in a very low oil price environment is really filtered through loss making wells, and if we have wells which at this low price is a cash negative, then clearly you have to be aggressive and cut the production as a consequence. We've said fairly consistently that the natural decline rate could be around about the 5% and that clearly is more or less where we are right now.

And of course there is a risk of course with this low level of CapEx and also the contribution from the low oil price that, that actually comes to fruition in those core markets. Then the exploration risk in the portfolio, I mean clearly there is always a risk until you actually reach a final investment decision given what you've capitalized but given where most of our CapEx has been actually going in exploration over the last couple of years, it’s really been into the Black Sea activity with Exxon.

I think that's relatively low risk of course, clearly we haven't taken any investment decisions there. But we're very encouraged by the results of the drillings that we did, the exploration wells that we’ve drilled.

But the majority of them were discoveries. So that gives us a degree of confidence but of course until you've actually taken a final investment decision there is always a risk that, there's a write off associated with it.

And then I'm not a politician, clearly the US has something it’s going to have, they’re going to get engaged in it. But I can't really quantify what impact that would have.

I think the primary impact is always going to be the host nations of the the pipeline quite frankly.

Hi everyone and thanks for taking my questions. Two remaining, please.

Just coming back to Nord Stream and the transition of the strategy towards Russia, is it right to think of Nord Stream 2 FID and the Achimov asset swap as two mutually exclusive events? Or should we be thinking about them as in some way related?

And then, secondly, just on the downstream. I was hoping you could give us any sort of line of sight on the indicator refining margin into the second quarter, and perhaps if you have any observations around trading opportunities in the second quarter and as we head into the summer, based on the crude and the product side.

That would be especially helpful.

When the first LOI was signed as regards to Nord Stream 2, which I think was in June last year. It was announced simultaneously not only that we would engage in the Nord Stream 2 project, but that we were also signing an agreement with Gazprom to actually swap and acquire a stake in the Achimov field.

There is no physical relationship between the two projects. Clearly gas to be produced in Achimov field and much of that gas will find its way into Europe, potentially through the Nord Stream pipelines.

But there's no – the pipeline has to be built to enable the development of Achimov to take place, but it isn't the case. But clearly our interest in one was also in parallel with our interest in the other, so to that degree, there is clearly a relationship between the two.

Downstream margins in quarter two have been a little weaker and that's also impacted by the fact that the oil price is recovering. As I mentioned earlier on clearly that puts pressure on the refining margins and marketing margins as well.

The market, although very efficient, is not quite as effective at getting the prices through instantaneously, as they go up and down for that matter but it's clearly having some impact on downstream margins. And in regards to trading opportunities, I mean we clearly are involved in trading but the vast majority of our trading activity is basically ensuring a functioning and efficient supply of crude into our refineries basically in terms of open positions and such like, that's really not what the business is about.

Just a follow-up question on Borealis. So you said, David, that Borealis paid €133 million in Q1 related to 2015.

That represents roughly one-third of the profits that you booked from Borealis in 2015. Should we then consider for the future that the dividend you will receive from Borealis every year will be around one-third of the profits that you book from this company?

Meaning, there is a kind of different policy here, or no? Second question related to Borealis again.

Last year, you made very strong earnings from Borealis. Should we consider that this year should be even higher than that, given that versus Q1 last year, you are almost doubling your earnings from Borealis?

A third of the profits is roughly equivalent to our share in the company clearly, so that means it’s distributed close to 100% of the profits that it's made and in the long term you wouldn’t really expect the company to be able to sustain that level of distribution. The situation at Borealis however is a little different in that it has the investment in Borouge, of course which is booking its share of the profits but it's not receiving cash dividends from Borouge, yet because clearly Borouge is paying down its debt.

Borouge is very profitable even at low oil prices. Clearly as oil prices improve its profitability will also improve but once cash starts to flow out from Borouge into Borealis, there is a potential that the dividend paid-out from Borealis starts to lose a direct relationship with the profit it’s earning because of course it will be receiving finally dividends from Borouge which it wasn't receiving previously.

It only gets relatively low dividends at the moment from Borouge and the capacity for Borouge to pay dividends a much high level in the future, clearly is growing as its debt position improves, and also as the oil price improves. We have seen strong petrochemical margins and as a consequence an improved performance – a continuing strong performance from Borealis in Q1, it’s very impressive and not just in Borouge but also the European petrochemical businesses also were relatively strong.

The outlook for the year is rather more difficult to project. I think it would be fairly aggressive to suggest that we’d have a better year this year than last year, because last year was very good.

But we will see.

Just one clarification. So the €133 million dividend –

It was €153 million by the way, Mehdi.

Okay, €153 million, this is for 100% of Borealis or your share?

No, that’s the cash we receive, so it represents a 36% share of Borealis’ dividends. End of Q&A

Well, as again I said at the beginning it's been a tremendous honor and privilege to have the opportunity to represent the company vis-a-vis the investors and the analysts. And all good things come to an end and I like to thank you for your support.

It's been great dealing with you and your predecessors which of course have been many over the last 14 years. Thanks very much and as ever if you do have any questions in the interim, call Felix and the investor relations team and from the first of June, Mrs.

Mol will be with us and she'll be able to take over. Thank you very much.

Bye, bye.