OMV AG

Magdalena Moll - IR Rainer Seele - Chairman of the Executive Board and CEO Reinhard Florey - CFO

Mehdi Ennebati - Societe Generale Michael Alsford - Citi Henri Patricot - UBS Marc Kofler - Jefferies Lydia Rainforth - Barclays Hamish Clegg - Bank of America Tamas Pletser - Erste Bank

Yes, thank you. Good morning, ladies and gentlemen and welcome to OMV's Q4 and full-year 2016 conference call.

OMV’s performance in the first quarter was strong and we continued to deliver on our strategic target. OMV again generated a positive free cash flow after dividend including non-controlling interest changes of EUR803 million in the fourth quarter and EUR1.1 billion for the full-year 2016.

And this morning ladies and gentlemen, the Executive Board proposed to the Annual General Meeting a dividend in the amount of EUR1.20 per share. With me on the call today to explain the results Rainer Seele, our Chairman of the Executive Board and Chief Executive Officer and Reinhard Florey, our Chief Financial Officer.

Rainer will update you on OMV’s achievement in 2016 and comment on the Company’s future strategic direction. Afterwards Reinhard will talk about the segment details in much more detail and discuss key aspects of the financial statement with you.

Rainer will conclude the outlook for the full-year 2017 and OMV’s vision for 2020. So with this, I’d like to hand over the presentation to Rainer.

Thank you, Maggie. Ladies and gentlemen good morning and thank you for joining us.

Let me start with the review of the economic environment in 2016. Well in 2016, oil markets were characterized by significant oversupply.

On January 20, we saw US$26 per barrel, an eight-year low Brent price, followed by a strong recovery throughout the year. Of course, the OPEC agreement in November 2016 to cap production at 32.5 million barrels per day had a supportive effect on the price level.

OMV’s assumption for 2017 is that the oil price will reach an average of US$55 per barrel. Within the last few years, European gas markets have turned into a state of constant oversupply, which is expected to stay.

European Gas prices were marked by extremely strong volatility in the course of 2016, caused by weather influences, unscheduled maintenances in the North Sea as well as storage interruptions in the UK. However, at the beginning of Q4 2016 a clear upward trend started.

This was due to the early start of the winter season with below average temperatures combined with supply shortages. OMV sees an upward trend in average gas prices on European spot markets in 2017.

In the European refining business, market fundamentals have not changed in 2016. We experienced persistent overcapacity and were faced with supply of competitive middle distillates from Russia and the Middle East.

In the second half of 2016, higher crude prices could only be partly passed on. Strong competition is expected to continue in Europe and therefore OMV expects its indicator refining margin to trend downwards.

Petrochemical margins in 2016 were somewhat lower than in 2015. Supply considerably improved as cracker outages returns to normal levels compared to the exceptionally high number in the previous year.

In such a volatile market environment, OMV stayed on track delivering on its strategy. OMV countered these challenges by successfully achieving important milestones in 2016.

First, we reshaped the portfolio and successfully completed several transactions which I will discuss in more detail on the next slides. Second, OMV has made excellent progress implementing the cost-cutting and efficiency program.

Strict cost management measures throughout the entire organization led to savings of around EUR200 million, EUR100 million more than we have targeted. Compared to 2015, we also reduced CapEx, and exploration and appraisal expenditure by 32% and close to 50%, respectively.

This was the basis to achieve our third milestone, a positive free cash flow after dividends of EUR1.1 billion including the sale proceeds of the minority stake of Gas Connect Austria. This represents an impressive improvement of EUR1.7 billion compared to 2015.

Fourth, the Executive Board decided on a new dividend policy for the Company. OMV intends to grow the dividend progressively from 2016 onwards.

For 2016, we proposed a dividend per share of EUR1.20 to the Annual General Meeting. So let’s talk about the important strategic steps we have taken last year.

We made significant progress in focusing OMV’s Upstream activities and created a more sustainable portfolio. Our actions comprised divestments, acquisitions and building on strategic partnerships.

In Upstream, profitability took priority over production growth. OMV pushed the portfolio redesign forward and successfully divested 30% of Rosebank as well as 100% of the UK Upstream subsidiary.

We have received a total of US$920 million in cash for these assets until February 2017. We also agreed on contingent payments in the amount of up to US$290 million for both transactions depending on the Rosebank Final Investment Decision.

Through these divestments, OMV reduced its planned CapEx in the North Sea by EUR3.7 billion, freeing-up funds for investments in lower-cost countries. With respect to our position in Sub-Saharan Africa, we ceased activities in Namibia, Gabon and the on-shore areas of Madagascar.

Following our strategic goal to build a new core area in Russia, we signed the binding basic agreement with Gazprom for the asset-swap. OMV will receive a 24.98% stake in the blocks IV/V of the Achimov reservoir in the Urengoy field located in western Siberia, while Gazprom will get a 38.5% participation in OMV Norge.

Moreover, we achieved our goal of a 100% reserve replacement rate in 2016 by adding 118 million barrels of oil equivalent in our 1P reserves. One third of this increase was attributable to Pearl Petroleum Company and one third to the expansion in Libya.

OMV holds a 10% share in Pearl, an operator of gas fields in the Kurdistan region of Iraq. Arbitration proceedings confirmed entitlement to existing production and reserves.

In Libya we expanded our position in the Sirte Basin and I will explain this transaction in more detail in a minute. In addition, we are intensifying our co-operations with the Libyan and the Abu Dhabi National Oil Companies.

In Iran, OMV signed a Memorandum of Understanding with the National Iranian Oil Company. Let me now come to Libya in more detail.

In 2016, OMV restarted production in both the Murzuq and the Sirte basins in Libya. As announced on February 2, 2017 during my visit to Tripoli, OMV acquired 75% of the Second Party Share in four Exploration and Production Sharing Agreements in the Sirte Basin from Occidental Petroleum Company.

OMV and Occidental agreed not to disclose the value of the transaction. The state owned Libyan Oil Company holds the First Party Share and will remain the majority shareholder, with a working interest of 90% in Nafoora Augila and 88% in the blocks C103, NC29/74 and C102.

Consequently, OMV now holds 10% in Nafoora Augila and 12% in the remaining blocks. As a result of this transaction, OMV expanded its production capacity from 30,000 to 40,000 barrels of oil per day and increased its 2P reserves by 52 million barrels of oil.

Considering our increased stake in the fields, OMV now expects to reach a production of 10,000 barrels of oil per day on average in 2017. This transaction also offers OMV field redevelopment opportunities in the Nafoora field.

The redevelopment would increase OMV’s production in Libya to a maximum of 50,000 barrels of oil per day. The project foresees improved oil recovery and infill drilling programs as well as upgrading and expansion of surface facilities.

The execution of the Nafoora redevelopment is highly dependent on the ongoing improvements of the political and security situation in Libya. Libya is a very important country in OMV’s Upstream portfolio.

This acquisition is in line with our strategy to further invest in low cost areas. Now let me give you some more color on the asset-swap with Gazprom.

In December 2016, we signed the binding basic agreement with Gazprom to swap participations in assets of equivalent value. The agreement states economics of the swap transaction with the fixed shareholding of 24.98% in blocks IV/V of the Achimov reservoir and the 38.5% in OMV Norge.

Signing of final transaction documents is expected by mid-2017. The negotiations will now focus only on detailed corporate governance and other customary legal contract terms.

Closing is envisaged by year-end 2018 at the latest and is conditional upon governmental and corporate approvals. Start of production at Achimov IV/V is planned for 2019.

The project will substantially increase OMV’s production and provide a long-term stable production base for the next 20 years. Investment required to bring the field on stream will amount to EUR900 million net for OMV.

Thereof, we expect 40% to be spent for the years 2017 and 2018 and will be paid after closing. We anticipate that from 2020 onwards Achimov IV/V will generate sufficient cash flow to finance its future investment needs.

Production from Achimov IV/V will be transferred to Gazprom at wellhead subject to a take-or-pay agreement. The gas production will be partly sold at Russian domestic prices while the remainder will be exported at European netback prices.

30% of total production represents condensate which is projected to generate better margins than gas. After closing of the transaction, OMV’s interest in the Achimov IV/V blocks will be shown in the income statement as equity accounted investment.

Let’s turn to our Downstream business now. The most important impact on the optimization of Downstream will come from the divestment of OMV Petrol Ofisi.

We have received binding offers and we expect the divestment process to be concluded in 2017. In Q4/2016, OMV reclassified OMV Petrol Ofisi’s net assets as held for sale.

The Downstream Gas business has been significantly restructured to become a lean, low-cost organization. OMV took over EconGas and completed the integration of the sales and trading business now called OMV Gas Marketing and Trading.

Furthermore, the gas sales offensive in Northwest Europe is gaining momentum. We opened a sales office in Düsseldorf, Germany, and already contracted 17 TWh of gas volumes in the German market in 2016.

The increasing marketing volumes in Northwest Europe will also allow for a better utilization of long-term infrastructure capacity bookings at the Gate LNG terminal in Rotterdam. In the gas transportation business, OMV’s focus on non-regulated activities resulted in the sale of a 49% stake in Gas Connect Austria to a consortium of SNAM and Allianz in 2016.

OMV received a total cash consideration of EUR601 million, thereof EUR454 million for the 49% stake and EUR147 million long term financing. The decline in interest rates over the past four years led to an adjustment in the regulated gas transportation tariff from 2017 onwards.

The regulator reduced the weighted average cost of capital by around 20% to 5.2% before tax. This change will result in a significantly lower profit contribution from Gas Connect Austria in the coming years.

In the non-regulated gas transportation business, OMV intended to participate in the Nord Stream 2 project. Due to a statement of objections received from the Polish Merger Control authorities, the consortium had to withdraw the merger control notification and terminated the shareholder and share purchase agreements in August 2016.

Currently, alternative options to support the project are under evaluation. Nord Stream 2 remains strategically important to OMV because it will improve Europe’s energy security.

Now I would like to discuss some highlights of our operational performance in 2016. OMV realized solid operating results in the full year 2016, despite the decrease in oil and gas prices as well as the refining margin.

Brent oil and CEGH spot prices decreased by 17% and 28%, respectively. The OMV indicator refining margin declined even by 34%.

Our clean CCS EBIT decreased by 20% from EUR1.4 billion in 2015 to EUR1.1 billion in 2016. This was mainly attributable to Upstream which showed an earnings decline of 81%.

The clean CCS net income attributable to stockholders decreased by 13% to EUR995 million. Clean CCS Earnings per Share decreased in line with Clean CCS net income to EUR3.05 in 2016 from EUR3.52 in 2015.

The highlight of our operational performance in 2016 is clearly the cash flow development. Free cash flow after dividends incl.

non-controlling interest charges improved from negative EUR581 million to a positive EUR1.1 billion in 2016. This number includes EUR454 million of proceeds from the sale of our 49% stake in Gas Connect Austria as well as a EUR36 million contribution from former minority shareholders in EconGas.

Given the excellent development of OMV’s free cash flow, the Executive Board proposes a dividend payment of EUR1.2 per share to the Annual General Meeting. While the business environment did not support our cash flow in 2016, OMV’s good operational performance was the result of our strict cost discipline.

Upstream production cost decreased by 12% to US$11.6 per barrel of oil equivalent driven by the successful implementation of the cost reduction program coupled with higher production volumes. Our cost reduction measures mainly resulted in lower service, maintenance and personnel costs.

During the course of 2016, we reduced Capital expenditure by 32% to EUR1.9 billion. This was EUR100 million lower than planned.

Despite this reduction, production increased in 2016 to the highest level in the course of the last five years. With respect to exploration, we focused on low cost regions and near-field opportunities in 2016.

As a result, we reduced our Exploration and Appraisal expenditure from EUR607 million to EUR307 million. For the years 2017 and 2018 we expect the Exploration and Appraisal expenditure to remain at the EUR300 million level.

We also continued to make excellent progress with the implementation of our cost reduction and efficiency program. By the end of 2016, we achieved cost savings of EUR200 million, EUR100 million more than we had promised.

This was the result of favorable contract re-negotiations, process optimizations and efficiency initiatives. As we have seen the successful impact of our cost program we will continue on that path in 2017.

Now let’s come to an essential question, what oil price does OMV need to be free cash flow neutral after dividends? In 2015, the actual oil price averaged US$52 per barrel.

The price that OMV would have needed to be able to fund the dividend without increasing its debt level amounted to approximately US$70 per barrel. Now ladies and gentlemen, at an average oil price of US$44 per barrel in 2016, OMV generated a substantial free cash flow even excluding divestments.

This was driven by major efforts to reduce CapEx and cost as well as a stringent focus on cash generation by our operations. As a result, we managed to decrease our free cash flow break-even to an impressively low level of US$35 per barrel in 2016.

This shows that OMV has laid a much more solid business foundation for the future. Now I would like to turn the presentation over to Reinhard Florey.

Good morning ladies and gentlemen from my side as well. Let me present the financial highlights of the year 2016 to you.

In 2016 OMV managed a significant turnaround with respect to its portfolio and at the same time improved its financial stability. Free cash flow after dividends including non-controlling interest changes, which mainly related to the proceeds from divestment of our minority stake in Gas Connect Austria, increased from minus EUR581 million to positive EUR1.1 billion.

Net debt decreased by 26% to EUR3 billion. Consequently, the gearing ratio declined from 28% to 21% in 2016.

Our portfolio optimization measures resulted in net special items of close to EUR1.4 billion, which were mainly related to impairments booked in connection with the divestments of OMV UK Upstream, including Rosebank. As a consequence of its divestment activities, OMV generated until February 2017 substantial financial firepower with directly related cash inflows of EUR1.7 billion, including proceeds from the UK transaction.

These cash inflows will be used according to our strategic capital allocation priorities: capital expenditure, strategic acquisitions, dividend payments and the reduction of debt. We also improved on reported ROACE, one of our main KPIs in our financial steering framework.

In 2016, reported ROACE turned positive to plus 1% while in 2015 it was still negative at minus 6%. On a clean basis, OMV realized a ROACE of 7% in 2016.

Now let’s have a closer look at the details of our cash flow development in Q4 2016. At EUR611 million, cash flow from operating activities was well above Q4 2015.

Changes in net working capital resulted in a cash outflow of EUR266 million, mainly related to a value increase in crude inventories in Downstream Oil and higher excise tax payables. Cash flow used for investments decreased by EUR227 million to EUR401 million as a result of significantly lower capital expenditure, especially in our Norwegian and Romanian Upstream operations.

We recorded a net cash inflow from divestments of EUR226 million. Two examples of divestments were the closing of our sale of the Aliaga terminal in Turkey as well as a 30% stake in Rosebank.

Free cash flow before dividends was EUR436 million, up by EUR579 million compared to prior year. Free cash flow after dividends including non-controlling interest charges amounted to EUR803 million.

This was an improvement of EUR946 million and marked the highest free cash flow of any quarter in 2016. In 2016, reported net income was positive at EUR3 million.

Non-cash items of EUR3.6 billion included net special items mainly related to impairments. Lower investments coupled with divestment proceeds led to a cash flow from investing activities of EUR1.8 billion, which was EUR1 billion below the level of last year.

Free cash flow before dividends amounted to EUR1.1 billion. The dividend payment of EUR466 million was offset by the divestment proceeds mainly from Gas Connect Austria.

Thus, free cash flow after dividends including non-controlling interest changes was EUR1.1 billion. Let me now turn to the performance of our operating segments.

Clean CCS EBIT increased by 68% to EUR315 million in Q4 2016. The increase was mainly driven by Upstream, which rose from minus EUR62 million to EUR85 million as a result of lower exploration and production costs, lower depreciation and higher sales volumes.

Production rose by 2% to 315,000 barrels of oil equivalent per day in Q4 2016. OMV successfully started up production in Libya and reached 3,000 barrels of oil per day on average in Q4 2016.

Sales volumes increased by 3% due to higher liftings in Norway, Tunisia and one lifting from Libya. Downstream Gas Clean EBIT also increased to EUR24 million from minus EUR40 million in Q4 2015.

The performance of Gas Connect Austria remained stable at EUR29 million. This was partially offset by the gas sales result which was negative due to mark-to-market valuation effects.

Downstream Oil clean CCS EBIT decreased from EUR288 million to EUR246 million due to a different product mix and lower jet fuel margins. The refineries utilization rate remained on a very high level of 96%.

OMV’s indicator refining margin decreased from US$5.9 per barrel in Q4 2015 to US$5.6 per barrel in Q4 2016 largely driven by lower naphtha spreads. On a full year comparison, the decrease in oil and gas prices in 2016 also affected Clean CCS EBIT which decreased by 20% to EUR1.1 billion.

This was mainly attributable to Clean EBIT of Upstream which was down at EUR26 million. The impact from lower oil and gas prices was only partly offset by higher sales volumes, lower exploration expenses, depreciation and production costs.

Despite 34% lower refining margins the Downstream result remained strong at EUR1.1 billion supported by the EUR182 million contribution from Downstream Gas. Here you can see the income statement summary of Q4 and the full year 2016.

In Q4 the 396 million deviation between Clean CCS EBIT and reported EBIT was mainly attributable to net special items of EUR415 million incurred by both Upstream and Downstream. Upstream’s net special items amounted to minus EUR120 million and were related to an impairment in Pakistan and other restructuring measures.

Downstream impaired EUR293 million for OMV Petrol Ofisi, Samsun power plant and the Etzel gas storage. The net financial result more than doubled to EUR39 million.

A strong contribution from Borealis in the amount of 86 million and an improved net interest income drove this positive development. OMV recorded tax expenses of EUR103 million, driven by the stronger performance of the international Upstream business and deferred tax asset valuation allowances.

Non-controlling interests were positive at EUR21 million, driven by a substantially higher contribution from OMV Petrom. On a reported basis, net income attributable to stockholders was minus EUR192 million which is equivalent to minus EUR0.59 per share.

Adjusted for special items, clean CCS net income attributable to stockholders amounted to EUR153 million resulting in clean CCS earnings per share of EUR0.47. Clean CCS EBIT in 2016 was EUR1.1 billion down versus last year by 20% driven by a similar reduction of the oil price.

Total net special items close to EUR1.4 billion were recorded. I will explain them to you in more detail on the next slide.

The net financial result of EUR227 million reflected higher income from Borealis and an improved net interest result. OMV recorded tax expenses of EUR47 million.

The clean tax rate was 7% in 2016. Non-controlling interests were positive at EUR118 million, driven by a substantially higher contribution from OMV Petrom.

On a reported basis, net income attributable to stockholders was minus EUR217 million, equivalent to minus EUR0.67 per share. Adjusted for special items, clean CCS net income attributable to stockholders amounted to EUR995 million resulting in clean CCS earnings per share of EUR3.05.

In 2016, we booked negative net special items of EUR1.4 billion mainly attributable to impairments in both Upstream and Downstream assets. Upstream accounted for EUR1.1 billion of impairments mainly driven by the sale of OMV UK Upstream subsidiary, including Rosebank.

In Downstream, we booked net special items of minus EUR296 million. The divestment process of OMV Petrol Ofisi, which was initiated in 2016, is progressing according to plan.

In Q4 2016, OMV reclassified OMV Petrol Ofisi’s net assets as held for sale. Following the reclassification, OMV recognized an impairment of EUR148 million.

The divestment is expected to be concluded in 2017. A decrease in spark spreads in Turkey adversely affected the value of the Samsun power plant and led to an impairment of EUR101 million.

Finally, the gas storage business was impacted by the decrease in summer/winter spreads, which led to a EUR73 million impairment of the Etzel gas storage in Germany. In 2016 OMV made excellent progress implementing the cost-cutting and efficiency program.

Strict cost management measures throughout the entire organization led to savings of around EUR200 million, EUR100 million more than targeted. This strong showing materialized especially in Q4 when we were able to close very favorable contract renegotiations.

For example we renegotiated the maintenance of our power plant turbines, materials sourcing and shuttle services. In our shared service center we managed to further reduce costs through process optimizations and numerous other efficiency initiatives including the streamlining of software licensing.

In our operations we launched a series of cross-divisional initiatives including the benchmarking of operating costs and best practice sharing. For 2017 we commit to cost savings of EUR250 million as compared to our 2015 cost basis.

Now let’s have a look at CapEx. While we projected CapEx to come in at EUR2.4 billion at the beginning of the year, we only spent EUR1.9 billion.

For the next two years, we are planning CapEx of EUR2.0 billion annually which is below our earlier guidance of EUR2.2 billion. In 2016, we reduced Exploration and Appraisal Expenditure by 49% to EUR307 million as a result of reduced exploration activities in Romania and the ceasing of our activities in Sub-Sahara Africa.

OMV’s strategic target for 2017 and 2018 is to maintain Exploration and Appraisal expenditure at EUR300 million. Now I would like to introduce our new dividend policy to you.

OMV is moving away from targeting a payout ratio of 30% to a progressive dividend payment. We are committed to delivering an attractive and predictable shareholder return through the business cycle.

OMV projects a floor dividend of EUR 1 per share provided that this will not be to the detriment of the Company’s long-term financial health or stability. OMV intends to grow the cash dividend progressively from 2016 onwards, in line with the Group's free cash flow and net income development.

The rate of progression will take into account the Group's investment needs and strategic capital allocation priorities. And Rainer has already announced management’s proposal for a dividend of EUR1.20 per share for 2016.

The overriding goal of OMV’s financial steering framework is to ensure an attractive shareholder return and to have a stable rating. The two pillars to achieve this goal are value and cash.

Value is represented by ROACE which is one of our main KPIs in steering OMV. The implication of ROACE on economic value added is accompanied by a special focus on a strong balance sheet demonstrating an optimal mix between leverage and liquidity for investment undertakings as well as dividend payments.

In addition, OMV strives for the generation of substantial free cash flow which forms the basis for the future value added growth of the company. The supporting principles for implementing our strategies with respect to value and cash are efficiency in operations, efficiency in capital management and efficiency in financial/cash management as well as a sound and stable future oriented portfolio management.

OMV’s financial steering framework stands for risk monitored, future oriented value added growth for the company and its stakeholders. With that and for the outlook back to Rainer.

Thanks Reinhard. Ladies and gentlemen let me now summarize OMV’s outlook 2017 for you.

For the year 2017, OMV expects the average Brent oil price to be at US$55 per barrel of oil. The gas market environment in Europe continues to be characterized by oversupply.

However, average gas prices on European spot markets are expected to show an increase in 2017. Our production guidance for 2017 is 320,000 barrels of oil equivalent per day.

Libyan production partially restarted and is expected to contribute on average 10,000 barrels of oil equivalent per day in 2017. In addition, the 2017 production guidance includes close to 8,000 barrels of oil equivalent per day from Pearl Petroleum Company.

OMV’s indicator refining margin is projected to trend downwards due to crude price recovery and persistent overcapacity in the market. Capacity utilization in 2017 is expected to be above 90%.

A planned full site turnaround at the Schwechat refinery is scheduled in Q2 2017 and will last approximately one month. We reduce our CapEx guidance from EUR2.2 billion to EUR2.0 billion in 2017.

We maintain the Exploration and Appraisal expenditure guidance at EUR300 million. We aim to achieve cost reductions of EUR250 million in 2017 as compared to 2015.

Let me finalize with OMV’s vision for 2020. In February 2016 we presented our new corporate strategy to you.

The main theme was where do we want to go and what are the short and the mid-term activities we need to pursue to improve the competitiveness and profitability of our company. 2016 was a transformation year with significant changes in our portfolio.

Restructuring and reducing costs were also important topics. But it is not the time to lean back and say we have done a good job in 2016.

If we want to shape the future of our company we have to continue to change. I have already a clear picture where OMV will go from here.

OMV now has to enter a phase of value added growth. Our priority in the short to medium term is replenishing our reserves base.

We will focus on building a sustainable Upstream portfolio by undertaking projects in low cost areas with rich hydrocarbon reserves, such as Russia and the Middle East. Of course, we will aim to maintain a balanced-risk portfolio.

In addition, in the current portfolio we strive to actively manage our existing fields in order to optimize the production performance. We will apply best-in-class technologies in our operations.

In the coming years we will also focus on growth in our Gas business. Natural gas remains a key fuel in the electric power sector and in the industrial sector.

According to the International Energy Agency outlook in 2016 consumption of natural gas worldwide and Europe is projected to increase by 69% and 42% from 2012 to 2040, respectively. OMV will create a European gas sales business to market OMV’s increasing supply position and better commercialize legacy regas- and transportation capacities.

OMV’s future engagement in the gas transportation business is focused on non-regulated activities. In particular, Nord Stream 2 remains an important strategic project for OMV’s future and we are working on finding a way to support it.

OMV’s Downstream Oil strategy centers on securing and further strengthening the competitive position of the refinery complexes in Schwechat, Burghausen and Petrobrazi. While gasoline and middle distillates demand is anticipated to decline, oil demand for petrochemicals is expected to increase by an annual growth rate of almost 3% according to the International Energy Agency.

Considering the pivotal role of OMV’s petrochemical integration with Borealis, we see significant long term growth potential in this area. We believe in mutually benefiting from attractive and long-term opportunities and hence we will seek to strengthen our relationships with important partners in Russia and the Middle East.

At the same time, OMV will be financially and operationally steered to ensure financial discipline. OMV is on the right pathway for an ambitious transformation.

By 2020 we will continue to produce and market oil and gas and at the same we will be on our way to become an innovative energy and petrochemical supplier. Thank you very much.

Thank Rainer and Reinhard, and now ladies and gentlemen, I’d like to open the call for questions. I ask you to please limit your questions to one at a time so that we can take as many questions as possible but of course I would like to encourage you to rejoin the queue for follow-up question.

Now I would like to start the first question with Mehdi Ennebati. Please ask Mehdi to limit it to one question.

Hi good afternoon, oh yes, I will limit to one question and then come back on the queue. So question on the dividend, the new dividend policy.

So you say that you intend to increase the cash dividend progressively from 2016 onwards in line with group’s free cash flow and net income development. Now if I see what you have in 2016, you’ve increased your dividend by 20% whereas the net income, the net income went down, so should I consider that the free cash flow is a better tracker for you for the future dividend trend.

And second, you’re talking about the group’s free cash flow or the group’s organic free cash flow because in 2017, probably you’re group’s free cash flow will be extremely high given all the asset disposal that you’re going to realize so just wanted to have a better view there. Thank you.

First of all I think the dividend policy should just give very clear indication that we are going away from some of this unpredictability of direct relation to net profit number. So therefore the overall situation of a proximity to cash flow as well as overall strategic path that the company is taking should be an indication.

Now if you take 120, please see that in the context of EUR1 dividend in 2015 and EUR1.25 in 2014. So what does this mean, this means first of all that in spite of more difficult environment we still have been living up to our target to deliver positive free cash flow after dividend and we even made a quite big contribution to our fire power of the future of which we say that there are different means of using that money and dividend is one of them.

Therefore this 20% increase is a tribute to also show that we are coming back to normality rather than the increment of 20% is the yearly increment that you should count on for the future. In terms of general group’s free cash flow, the group‘s free cash flow is certainly there both to support what Rainer has indicated also the growth ambition of OMV in value growth that certainly have to be tracked during the year 2017 and ’18 and this is certainly not something that we restrict just to one year.

Now I move on to the next question from [indiscernible].

Hello, thank you Maggie. Good afternoon gentlemen, thanks for the presentation.

One question for my side, really just to come back a little bit on this financial firepower and the discussions and some of these sort of comments you made already outlining sort of use of this additional headroom now that you have in the balance sheet and the free cash that you're generating. Rainer you talked about entering a phase of value added growth.

Given that CapEx is not really rising from here at least sort of excluding the Achimov asset swap. Can you just talk a little more about sort of how we should think about this?

I mean should we be thinking about sort of a number of acquisitions of producing assets over the next kind of 12, 18 months to sort of to support that or is it something else that you have in mind here, but just a bit more color on that will be very helpful. Thank you.

First of all, the capital level of 2017 of EUR2 billion is more or less a level we are playing for the next years, which is sufficient to keep our production level and to go for increased production, especially in 2018 when two projects are planned to come on stream, Aasta Hansteen and the Nawara project. You might see in effect next year on our production level.

On the other hand, there is an upside potential, as we have said we have restarted the production in Libya. But we are 10,000 barrels per day out of a capacity which you could go now up to 40 given the recent acquisitions in the fourth block.

So there is an upside potential of 30,000 barrels per day and we don't need any additional investment to go for 30,000 barrels per day upside. If we go for further investment in Libya which will be then up to 50,000 barrels per day then we are going for the Nafoora field.

On the other hand I think if we want to go for further additional growth, you’re absolutely right, OMV prepared to sell for acquisitions.

And the next one is now Michael Alsford from Citi.

So I have a quick sort of follow-up on the same theme if I can maybe asking a different way. So the gearing levels for OMV at the end of year was 21% based on your definition.

That will fall based on my estimates in 1Q to less than 15% given the proceeds that are coming in from the [indiscernible] transaction. So I just wanted to confirm whether you still hold that view that you want to be less than 30% gearing and with that should we think that OMV will run a more conservative level of gearing going forward.

So should we think about the capacity on the balance sheet to be up to at sort of 30% threshold. And then just as a second question I had which was more around the tax rate, could you just give us some guidance on what you would expect a clean tax rate would be for 2017 based on your matter of assumptions.

Thank you.

Regarding the gearing levels, what we have said is that we target to stay below 30% over the cycle. So we are well in that range but of course with cash flows improving, the balance sheet improving, in general that keeps up some headroom where you can also think about strategic moves and that is exactly the targeted strategy that we have in mind.

Regarding the tax rate, we came out at a clean tax rate of about 7% in 2016, due to the situation that unfolds here we cannot expect the bid level will stay, we are rather anticipating clean tax rate around say 25% for 2017 of course very much depending on specific, the high tech countries where we are exposed with production. So if we surpass in Libya or in Yemen, Yemen would come back or something like that that could drive it up on the other hand it could also be driven down if we are increasing in other countries where we are paying less.

But take that as a first ballpark number for 2017.

So we coming now to Henri Patricot from UBS. Hello Henri.

One question for me on the downstream oil, in your slide on the OMV Vision 2020 you mentioned extending the value chain refined towards higher value products, so I was wondering if you can share some details with us on the projects that you have for this part of the business, thank you.

Well, if you look on Borealis performance of 2015, they showed up one record year after the other. ’15 was a record, ’16 is a record, while we cannot continue, but what we can say is that we do see growth dynamic in petrochemicals which is interesting for OMV.

So we are going to support - we are going to support Borealis on their strategy to further grow in their markets. So Borealis has a very nice set of good ideas but we do have strict rules and I follow the rules that Borealis will talk about their business as they should not talk about OMV’s business.

So Borealis will explain it also to the public what their ideas are but in our strategy there is a strong support of Borealis to go for further growth. On the other hand, petrochemicals and OMV especially ethylene and propylene, but also butadiene has developed not badly, so we have a clear view that we would like to support the business unit in petrochemicals to look for opportunities along the value chain.

You know that I'm a chemist, you can do a lot of with these molecules and you don't have to polymerize it only. There is more chemistry waiting for OMV.

Now after Henri, we move onto Marc Kofler from Jefferies.

I just wanted to focus on the cash flow and particularly looking forward over 2017 and 2018. Appreciate the upstream downstream split that you provided for 2016, could you give some guidance how you think that 60/40 downstream upstream split moves over the next couple of years.

And at the risk of asking two questions. It looks as if your oil price sensitivity is reducing in 2017.

Can you just add any color on that? Thank you.

Okay. Regarding the cash flow of upstream and downstream split, 60-40 that we have seen in 2016, we anticipate that cash flow in downstream will stay strong on a comparable level with the gas business maybe increasing a little bit.

But this is a major cash provider that will stay also for the next years, provided that of course the margins are there. Upstream, of course, with volumes increasing slightly and our production going up, also participating in opportunities in the Middle East and Africa, we would expect that also the cash flow basis of upstream would increase.

So that in the end, there will be a sound contribution from both sides, maybe upstream increasing and downstream staying on a very strong level.

Your second question, again, could you repeat?

Sensitivities for --

Sensitivities for 2017. Well, what we more or less say is that if we have the Brent oil price down by $1 a barrel, this has an impact on profitability on EBIT side of about 35 million and if we take it on the cash flow side, this will be about 30 million in average.

And if we take our indicator refining margin, if that increases by $1, which is of course comparatively high change, this would have slightly above 100 million EBIT effect and from the cash flow, a little bit about 80 million [ph].

Actually for your information, we have attached a chart with all the sensitivities at the very end of the backup section of the presentation. So you can look at it after the call.

So we are now coming to the next question from Lydia Rainforth from Barclays. Hello, Lydia.

Good morning. Can I just come back to the use of cash flow?

I’m sorry to come back on this, but can you just provide your thoughts about the hybrid bond. So given the cash flow that you're generating, whether that was something that you would consider buying back or whether that is actually a permanent feature within that.

And I’m sorry to do a second one, but related to that, in terms of the breakeven that you’re looking at, you talked about $35 for 2016 is the breakeven, which is an incredibly impressive number, and yet, you’re talking about being free cash flow positive for 2017 at 55. Can you just talk to where you actually see breakeven for 2017?

Thank you.

To your question on the hybrid, first of all, this is not a headache for 2017 actually. The first tranche of our hybrids that we have out there, we have out there would have first call date in 2018.

Until then, we of course will look very closely on how our cash flows, how our debt position will develop and then we make up our minds there. No ideas of calling that early or changing our strategy in that way.

But of course we have interest to optimize our financing costs overall for the group in one or the other way.

Well, Lydia, I know Reinhard now quite a while. He has -- one thing is for clear, he wants to keep the money in his pocket.

He's going to give you an answer only in 2018.

Thank you.

The second question was on the breakeven cash.

For 2018?

For 2017. We had this –

Okay. Yeah.

Oh, yes, well Lydia, it's a little bit too early to give you an indication about 2017. Whether it's $35 per barrel or not, yeah, we have to wait a little bit, but as OMV is very sporty, I assume that we don't want to see too much appraise in the breakeven oil price, but it's too early to give you an indication.

The next question comes from Hamish Clegg, Bank of America.

Hi, guys. Thanks very much for taking my questions.

I just wanted to go in to a bit more detail on reserves and resources. You talk about the 100% reserve replacement ratio.

Am I right in thinking if I take the number you gave us on the call, 118 for the contribution of new assets that the organic reserve replacement would be 90%? You mentioned and just on the same theme, you mentioned this target as 100% RRR, is that an organic target you aim to achieve.

And could you sort of elaborate on how much of your new assets from Achimov particularly have found their way into your 2P resource, sort of one resource question.

All right. Well, first of all, we would just want to ask the trade on the one period of statement because this is, when I say I would like to replenish my production, it's important that I fill up the 1P reserves.

Yeah. So that's a reason why we would have -- that we are targeting 100% reserve replenishment, which means that we are replenishing the production, which means 100% 1P reserves.

The second question is on new assets in Achimov, we have not booked any reserves of Achimov because as we first have to close the deal and we have not finalized our deal with the Gazprom. Therefore, we have not taken into account Achimov in to -- you don't find in our 2P, neither in our 3P reserves.

So the next question comes from Tamas Pletser from Erste Bank.

Yes. Hi, everyone.

Hello. Just one question on Libya.

Can you elaborate a little bit about the situation in Libya? What is the major obstacle for you to boost the production and the activities over there?

So can just tell us what's going on there?

Yeah. I'm delighted.

I was two and a half weeks ago in Tripoli. Yeah.

And I was looking at all the media reports and I was surprised to see that this city really looks pretty peaceful. So during my visit, I discussed with NOC what can we do together to improve production.

They are doing quite a good job. Our major obstacle in Libya, as we speak about this production, is availability of transport capacities.

The ports are more or less free to load our crude oil and to send it to the international markets, that the availability of transportation capacity is one point. The second is the availability of natural gas for gas injection, especially in the Sirte basin as we speak about C103.

So if other neighboring fields would come back on stream, yeah, producing more associated gas, which we can inject into our field, we can further upgrade our production. But we do see some progress, especially with NOC freeing up transportation capacity, so that I really see an upside potential for OMV.

But right now, it's too early to say what the upside is going to be, because we have to see whether or not the agreements, the National Oil Company has closed with the [indiscernible] blocking the transportation routes, whether this is a sustainable agreement or not.

Okay. Can you say any guess what can be the production end of the year or is it too early to say anything?

Come on. It’s early February.

It's a bit too early. I think if you calculate with the 10,000 barrels per day, we have mentioned you are on the safe side.

So now we come to the follow-on questions. The first one comes from Mehdi.

Mehdi, you may even ask two now.

You have no worry too, Mehdi.

No. In fact, I had four, but I will only ask two.

So first question about the realized gas price, which has been pretty low in 4Q. In fact, since beginning 2016 and the collapse of the European spot gas price, your realized price has been roughly stable.

And now the spot gas price started increasing in Europe. Your realized gas price is collapsing.

So I wanted to know is this eventually due to Romania and if you can provide us some information there. If there is also some time lag effect that means that you will not benefit the full quarter from the spiking European spot gas price.

The second question is regarding, in fact just one that I’ve read on Bloomberg saying that [indiscernible] announced that production might reach 350 KBPD by the end of 2018. So I just wanted to have some position here, because this is the total you have in my model and what is the contribution of Libya and Yemen that you put on this 350 KBPD number that apparently you’ve announced.

Mehdi, thanks for the question. Let me answer the first question on the realized gas prices.

The impact on the realized gas prices in Q4 2016 actually was less of an impact from Romanian gas prices and differences there. Rather than that, in fact have been time lag effect.

Hedging effect that have been calculated into this in order to reflect also the expectation, what is result wise to come in Q4. So that was also one intention when giving you the trading update before that that is an indication how this also from this lag time effect in Q4 would be impacted.

On your second question, Mehdi, when we are talking about 350,000 barrels per day production, this is the potential we can see nowadays for 2018, if we are both very, very positive. For example, I have said we are at 320 with 10,000 barrels per day production in Libya.

So if Libya would come theoretically next year and the full capacity, you are up to 350. So this is the capacity and this is a capacity.

But there is a second upside potential, yeah, with the two projects I have mentioned already with Aasta Hansteen and with Nawara. Yeah.

They also have substantial impact on our production. So that's why we are talking about the potential, we can see as a production -- daily production next year.

Okay. So just to make it clear, by end 2018 because we are talking about end 2018.

If I remove Libya, okay, so 350 minus 40 from Libya, that means you expect to remain in 2017 and 2018 at 310 KBPD including the positive impact from Aasta Hansteen and Nawara?

Well, first of all, what we have said also last year, first of all, my colleague Johann Pleininger made the statement of the 350. He was very optimistic, but he said following his development timetable for the two projects I have mentioned, Aasta Hansteen and Nawara, yeah, we have to look at the end of 2018 and not the beginning of 2018.

That’s the first point. The second point, up to your math, yeah, I only can help you what we have said also in our previous conference call, yeah, given our current portfolio with the current CapEx plan, we can keep the level of 310,000 barrels per day point.

So last, Mehdi, you’re totally satisfied and we move on to the next question. [indiscernible]

Hi. Good afternoon, again and thanks for taking my follow-up.

It's actually a very quick follow-up. You gave some very helpful color on Libya.

I just wanted to know if you would be able to tell us where production is today. You talked about 3000 barrels a day as being an average for Q4, although I know that this only started at the back end of the quarter and you are averaging, you expect to average around 10,000 in 2017, but just in terms of getting an idea of where we are today.

If you could just tell us where production is as of sort of last week or two. Thanks.

Well, all we can say is we have seen the 10,000 barrels per day in average. We're well on track with the 10,000 barrels per day.

Good. And then the final question comes from Lydia Rainforth.

Thanks. I've got lots of questions today.

So, I’d just stick to two more. On the Libya side, have you actually given what the kind of earnings and cash flow sensitivity is to Libyan production coming back from what I remember back in, I’m going back to 2012 when also we had very different oil prices.

And the second one was on the cost savings, you have said that [indiscernible] can you just talk through sort of whether this is now a fresh target for you in where you’re seeing those benefits come from? Thank you.

All right. I take the first difficult question, is a really good one, but you don't get an answer.

I’ll leave the second question for my board.

Okay. For the cost savings, the target of 250, I think it's important to be understood as compared to the cost basis of 2015.

So that’s more or less an additional 50 million on the level that we have reached by the end of 2016. However, taking to account that of course in every year, where you have cost savings, there are some one-time cost savings in there as well.

So, the threshold that we have set ourselves is of course much higher than the 50 million, but we are more than confident that this is a target reachable for us. We have shown in 2016 a very good performance of our teams in order to deliver on the target.

So we're confident that also the real bottom line 250 improvement targets in 2017 will hold.

Going to very final, final question that comes from Michael Alsford but then we really have to stop. Michael, last question.

Yes. Thanks for prolonging the call.

But just one follow-up, just wanted to get a sense, I know activity in exploration has come down quite a lot, that has just come down quite a lot in 2017, but I just wondered if you could give some sense as to where the money is going. Is it focused mainly on Romania and replacing reserves there or are you planning other wells within your portfolio?

Thank you.

Exploration wells. Well, first of all, we will have some E&A, an E&A focus on Abu Dhabi, the tower gas fields we have mentioned.

It’s Shuwaihat as well as the gas field. So we would go for an appraisal program in Abu Dhabi.

That’s where we are going to focus on. Then, we do have participated also in licensing rounds in Norway.

So with Norway, we are going to continue in exploration, especially in the Barents Sea, in the neighborhood of our Wisting field. We would like to further explore it and of course Romania is going to be a major focus, continues with about one-third of our exploration spending.

So with this ladies and gentlemen, we have come now to the end of our conference call. For your information, OMV will next report on the first quarter 2017 results.

This will be in May 11, 2017. But I hope that many of you will see beforehand on the one of the other roadshow and the meetings.

And I would like to thank you all for joining us. And should you have any further questions, please contact the Investor Relations team and we will be happy to help you.

With this, we would like to wish you a nice afternoon and hope to speak to you soon. Bye-bye.

Bye-bye,

Thank you.