OMV AG

Florian Greger – Head of Investor Relations Rainer Seele – Chief Executive Officer Manfred Leitner – Executive Board Member Johann Pleininger – Executive Board Member Reinhard Florey – Chief Financial Officer

Mehdi Ennebati – Societe Generale Hamish Clegg – Bank of America Merrill Lynch Josh Stone – Barclays Henri Patricot – UBS Rob Pulleyn – Morgan Stanley Marc Kofler – Jefferies. Giacomo Romeo – Macquarie

Yes. Thank you, Stephy, and good morning, ladies and gentlemen, and welcome to OMV’s earnings call for the fourth quarter of 2017.

With me on the call are Rainer Seele, OMV’s CEO; Reinhard Florey, our CFO; Johann Pleininger, the Executive Board Member, responsible for Upstream; and Manfred Leitner, the Executive Board Member, responsible for Downstream Segment. Reinhard will walk you through the highlights of the quarter and discuss OMV’s financial performance.

Afterwards, all four board members are available to answer your questions. Before we start the presentation, I would like to invite you to our Capital Markets Day, which will take place on March 13 in London.

The Executive Board will provide you with an update on these strategic developments and inhibitions for growth and performance going forward. And now, I would like to hand it over to Rainer.

Yes. Good morning, ladies and gentlemen, and thank you for joining us today.

When I look back, 2017 has been an outstanding year for OMV. We were able to deliver a very strong operational performance throughout the year, and this is clearly reflected in our financial results.

Let me start by reviewing the economic environment of the last quarter of 2017. The crude prices rallied strongly in the fourth quarter of 2017, with Brent averaging $61 per barrel.

This was 24 percent higher than the average during the same period in 2016. The oil price strengthened on the back of continued demand growth, strong OPEC compliance and several supply disruptions in Norway and United Kingdom.

Geopolitical risks, particularly in Saudi Arabia, Iran and Libya also supported prices. On average, gas prices were 16% above Q3 2017 and 11% above the same period last year, given the colder than average weather as well as several unplanned supply disruptions such as the Forties pipeline shutdown in the North Sea.

The refining indicator margin was down 19% compared to third quarter of 2017 reflecting the strong upwards momentum of the crude price. In the third quarter, margins were also supported by supply outages caused by Hurricane Harvey in the Gulf of Mexico.

The most significant decline compared to the previous quarter was in gasoline due to a lower demand from North America and a weaker West African market. Heavy fuels also dropped from outstanding high crack-levels.

Margins for both ethylene and propylene fell versus the previous year quarter. Higher prices could not compensate for the significant surge in feedstock costs driven by a recovery in oil prices.

Butadiene margins declined as well. Prices remained stable compared to the third quarter of 2017, as a result of a rather balanced market in Europe.

So let’s talk about the financial highlights of 2017. It was a year of transformation and we have seen a strong delivery from both business units.

Clearly, I can say that we continued to execute our strategy successfully. The strong operational performance is reflected in our full-year financials.

OMV achieved its highest earnings in the last five years. The clean CCS operating result doubled versus 2016.

And, all this was accomplished at an average Brent price of $54 per barrel. Compared to a similar market environment in 2015, the clean CCS operating result increased by 70%.

Reflecting our strong operating result, clean CCS Earnings per Share rose to roughly €5 per share. Very impressive is the development of OMV’s free cash flow.

Since two years, we had a strong focus on cost and profitability. Together with our active portfolio management, we could substantially improve our cash flow.

In 2017, we delivered a free cash flow after dividends of €1 billion. Thus, 65% higher than 2016 and €1.6 billion higher than 2015.

This illustrates the strong cash generating capability of our adjusted portfolio, with each business division pursuing a strategy of operational excellence and value generation. As a consequence, we managed to further decrease our cash flow break-even oil price to $25 per barrel.

In our benchmarking, this is the lowest among all our European peers. Before I explain the details of our business performance, let me briefly point out the highlights of the last quarter of 2017.

Our hydrocarbon production stepped up to 377 thousand barrels per day, which is the highest in OMV’s history. The main highlight of the quarter was certainly the acquisition of the 25% stake in the Russian gas field Yuzhno Russkoye.

The closing of this landmark transaction is a further important milestone in successfully pursuing our corporate strategy. Our stake in Yuzhno Russkoye adds 100 thousand barrels per day to OMV’s production and additional recoverable reserves of 580 million barrels.

Considering the important contribution to our production profile, Russia has become a new core region in our Upstream portfolio. In 2017, we achieved a one-year Reserves Replacement Rate of 191%, the best since 2007 and the second year in a row above 100%.

The main contributors were the acquisition in Russia, drilling and development projects in Norway, better performance in Romania and the contribution from Pearl Petroleum. Our three-year average Reserves Replacement Rate increased from 70% to 116%.

Following the strategic goal to focus on core activities, OMV Petrom finalized the sale of the Dorobantu wind park in Romania. We also made progress in expanding the alternative mobility offer to our customers.

In December, we closed the acquisition of a 40% stake in Smatrics, Austria’s leading e-mobility provider. In addition, we signed an agreement with Ionity, a joint venture of automotive companies aiming to build 400 high-power charging stations with various partners by 2020.

OMV will be the location partner for Austria, the Czech Republic, Hungary and Slovenia. Strict cost management measures throughout the entire organization led to savings of €330 million in 2017, €80 million more than our target and €130 million more than in 2016.

Our production cost stayed below $9 per barrel. Thus, we further improved our competitiveness of the Upstream business.

Last, but not least, we will further increase our dividend, in line with our progressive dividend policy. We will propose a dividend per share of €1.50 to the Annual General Meeting.

Let’s now turn to our financial performance in the fourth quarter of 2017. Our clean CCS operating result increased by 67% to €688 million compared to the same quarter in the previous year, supported by a substantially higher Upstream result.

Clean CCS net income attributable to stockholders rose from €153 million in the fourth quarter last year to €367 million in the same quarter of 2017. The clean tax rate amounted to 28%, 15 percentage points lower than in the fourth quarter of 2016.

The higher tax rate in the prior year quarter was mainly driven by the increase of the valuation allowance for deferred taxes of the Austrian tax group and additional tax expenses from the Turkish tax amnesty. Clean CCS earnings per share more than doubled from €0.47 in Q4 2016 to €1.12 in the fourth quarter of 2017.

OMV’s Group reported operating result in the fourth quarter of 2017 came in at €631 million, significantly above the previous year quarter. Net special items were minus €115 million, compared to minus €601 million in the fourth quarter of 2016.

The negative net special items recorded in fourth quarter of 2016 were mainly attributable to impairments due to the divestment of OMV Petrol Ofisi as well as to impairments of the Samsun power plant and the Etzel gas storage facility. The fourth quarter of 2017 was negatively impacted by unrealized hedging losses in Upstream and a provision booked for the Gate LNG obligation.

Reported net income attributable to stockholders increased from minus €378 million in the fourth quarter of 2016 to plus €311 million. Earnings per share rose accordingly from minus €1.16 in fourth quarter 2016 to plus €0.95 in the fourth quarter of 2017.

Let me now come to the performance of our two business segments. In Upstream, the Clean Operating Result substantially increased from €91 million to €344 million.

This was primarily driven by a more favorable market environment as well as higher sales volumes in Libya. Market effects contributed €105 million.

Higher realized oil and gas prices were partially offset by a weaker U.S. dollar.

OMV’s realized oil price rose by 23% and the OMV realized gas price in Euro per megawatt-hour increased by 18%. In fourth quarter 2017, we recorded a hedging result of minus €27 million compared to minus €33 million in the fourth quarter of 2016.

We continued to improve our operations, resulting in an increased earnings contribution of €129 million compared to the same quarter last year. Hydrocarbon production went up by 63,000 barrels per day, reaching 377,000 barrels per day.

Libyan production increased to 32,000 barrels per day and Russia contributed for the first time 36,000 barrels per day. As we closed the transaction on November 30, 2017, only one month of Yuzhno Russkoye was included in our production figures.

Accounted for the full year, Yuzhno Russkoye adds 100,000 barrels per day to our production. Hydrocarbon sales volumes amounted to 33 million barrels, 15% higher than in the fourth quarter of 2016.

This was mainly attributable to the new contribution from Russian gas sales in December and liftings from Libya. The Clean Operating Result was negatively impacted by higher exploration expenses, primarily due to write-offs of exploration wells in Romania in the amount of around €50 million.

Overall, costs were lower. Depreciation went down by €19 million, reflecting a decreased asset base and positive reserves revisions in the fourth quarter of 2017.

As the fourth quarter is the first quarter to include Yuzhno Russkoye, let me briefly give you some more details about the organizational structure and the financial impact of our stake in Yuzhno Russkoye. OMV holds 24.99% in the operating company, Severneftegazprom, or in short SNGP.

Other shareholders are Gazprom and Wintershall from Germany. In addition, OMV holds 99.99% in the Trader.

Our equity production from SNGP is entirely sold to the Trader at a cost-plus margin. The Trader sells the gas to Gazprom, under a take-or-pay agreement.

50% of the volumes are indexed to the Russian domestic netback price and 50% are based on the German netback import price. SNGP is at-equity accounted.

This means OMV’s share in SNGP’s net income is shown in OMV’s operating result. The Trader is fully consolidated into OMV’s financials.

Upon closing of the transaction on November 30, 2017, the two entities SNGP and the Trader have been reflected in OMV’s financial and operational statements. The two entities contributed €16 million to OMV’s consolidated net income in 2017.

As the transaction was retroactively effective as of January 1, 2017 OMV is entitled to the 2017 dividends. The dividends from the operating company were already paid and the dividends from the Trader will be transferred in 2018.

In total, for the fiscal year 2017, we expect dividend payments for Yuzhno Russkoye of $160 million. Going forward, we expect dividends to increase compared to 2017.

The Downstream business continued to be a key contributor to OMV Group earnings and cash flow. With €356 million, the Clean CCS Operating Result of Downstream was almost at the level of the previous year’s quarter.

A higher result from Downstream Gas partially compensated for the missing earnings contribution from OMV Petrol Ofisi. The clean CCS Operating Result of Downstream Oil declined from €333 million in Q4 2016 to €311 million.

Increased retail earnings and lower fixed costs partially compensated for the missing contribution of OMV Petrol Ofisi, which was €32 million in the fourth quarter 2016. OMV’s indicator refining margin was almost flat at $5.7 per barrel.

The refinery utilization rate was 92%, slightly lower than in Q4 2016, when we built inventory to prepare for the Schwechat refinery turnaround. Excluding OMV Petrol Ofisi, retail volumes and margins grew slightly, whereas commercial sales volumes and margins came down compared to the fourth quarter of 2016.

The contribution from petrochemicals decreased from €53 million to €37 million in Q4 2017. Despite a slight increase in Petchem margins, the drop in earnings was caused by an unplanned shutdown of the Schwechat steam cracker.

Borealis contributed €94 million, which was €8 million higher than in the same quarter of 2016, due to higher results of Borouge and lower fixed costs. In Downstream Gas, the Clean CCS Operating Result increased from €29 million to €45 million.

The previous year’s quarter was impacted by mark-to-market valuation effects. The contribution of Gas Connect Austria decreased by €9 million to €21 million, mainly because of the change in regulated tariffs at the beginning of 2017.

Natural gas sales volumes rose slightly to 31 terawatt hours due to increased sales in Germany, Austria and Turkey. The power business recorded higher electrical output and improved spark spreads in Romania.

The good performance of our business segments was also a result of our ongoing strict cost discipline. At $8.8 per barrel in the fourth quarter of 2017, production cost declined 15% compared to the fourth quarter of 2016, due to higher production coupled with the successful implementation of our cost reduction program.

The full impact of Yuzhno Russkoye, which has very low production cost, is not reflected in our 2017 figures, as we closed the transaction just before year-end. In the fourth quarter of 2017, the capital expenditures excluding Yuzhno Russkoye acquisition amounted to €548 million, thereof €352 million in Upstream and €186 million in Downstream.

For the full year, we recorded total capital expenditures excluding Yuzhno Russkoye acquisition of €1.7 billion, €1.1 billion less than in 2015. With cost savings of €330 million, we substantially overachieved our target of €250 million in 2017 versus 2015.

A significant part came from savings in procurement and efficiency improvements in our operations. The target overachievement was a result of the strict cost discipline of our employees throughout the entire organization.

Let’s now come to cash flow. In the fourth quarter of 2017, cash flow from operating activities amounted to €742 million.

Cash flow for investments showed an outflow of €579 million for the same quarter. This includes another drawdown under the financing agreement for the Nord Stream 2 pipeline project in the amount of approximately €45 million.

In the same period, we also accounted a cash outflow for acquisitions of €1.6 billion following the closing of the Yuzhno Russkoye transaction. Looking at the full year 2017, OMV generated an operating cash flow of €3.4 billion, an increase of 20% compared to 2016.

As a result of our portfolio changes, we recorded net divestments of €185 million. The cash inflow from divestments amounted to €1.8 billion, with approximately 90% of the amount from the two major portfolio changes: the sale of OMV Upstream in the UK and the sale of OMV Petrol Ofisi in Turkey.

For the full year 2017, the cash outflow for acquisitions amounted to €1.6 billion. Cash flow for investments amounted to €2 billion and included financing the Nord Stream 2 project of €324 million.

In 2017, we also paid total dividends of €668 million. This means, ladies and gentlemen, that in 2017 we generated a free cash flow after dividends of €1 billion, 65% more than 2016.

As of year-end 2017, OMV’s net debt increased from end of September, 2017 by €1.6 billion to €2 billion due to the acquisition of Yuzhno Russkoye. Despite the acquisition, we were able to reduce net debt by €1 billion compared to the end of 2016.

Cash and cash equivalents decreased from €4.6 billion in Q3 2017 to €4 billion. OMV’s balance sheet remained very healthy and shows strong liquidity.

In order to take advantage of attractive financing conditions and ensure financial flexibility, in December 2017 OMV issued a €1 billion international bond with a coupon of 1% maturing in 2026. The cash will be used according to our strategic capital allocation priorities: capital expenditures, strategic acquisitions, dividend payments and reduction of debt.

The gearing ratio increased to 14% compared to the end of Q3 2017, comfortably below our long-term gearing ratio target of max 30%. Ladies and gentlemen, OMV is committed to delivering an attractive and predictable shareholder return throughout the business cycle.

According to our progressive dividend policy that we announced last year, we intend to grow the cash dividend going forward. As already mentioned, for the fiscal year 2017, we propose a dividend of €1.50 per share to the Annual General meeting.

This is an increase of 25% compared to the previous year and marks a new record in OMV’s history. Let me conclude with the outlook for 2018.

At the beginning of this year, we saw an oil price reaching the $70 per barrel mark for the first time in more than two years. For the full year 2018 we are forecasting an average oil price of $60 per barrel.

Average European gas spot prices are anticipated to be on a similar level compared to 2017. CapEx is projected to come in at around €1.9 billion, with Upstream CapEx at around €1.3 billion.

These figures exclude acquisitions. OMV expects a total production of 420,000 barrels per day.

Production from Russia is planned to contribute around 100,000 barrels per day and Libya is anticipated to be at 25,000 barrels per day, similar level to 2017. Exploration and appraisal expenditures are expected to be €300 million.

Refining margins are projected to be lower than in 2017. Petrochemical margins are forecasted to be at a similar level compared to 2017.

In OMV’s markets, retail and commercial margins are forecasted to be on the similar level as in 2017. The utilization rate of the refineries is expected to be above 90% in 2018.

This includes the planned full-site turnaround at the Petrobrazi Refinery scheduled for approximately six weeks in the second quarter of this year. Natural gas sales volumes are projected to be higher in 2018 compared to 2017.

We expect that the clean tax rate for the year 2018 will be in the high 20’s excluding impacts from M&A projects. OMV will continue to finance the Nord Stream 2 pipeline subject to the progress of the project financing from the capital markets.

One of the milestones in 2018 is the closing of the asset swap with Gazprom, which is expected to take place by end of the year. Thank you for your attention.

Now my colleagues and I are more than happy to take your questions.

Yes. Thank you, Rainer.

I would like to open the call for questions and ask you to please limit your questions to only one at a time, so that we can take as many questions as possible. First, you are always welcome to reach onto the queue for follow-up question.

The first question comes from Mehdi Ennebati of Societe Generale. Please go ahead, Mehdi.

Thanks. Hi.

Good morning all of you. So, just would like to know maybe regarding the additional payment that you could due to get upon this year in 2018 related to Nord Stream 2.

Can you tell us what could be the maximum payment and if you expected to be reimbursed after the closer of the project financing with the capital markets. And maybe just another small question, regarding the EPS trend, so you have been able to materially improve your EPS over the last two years, now even that you’ve sold Petrol Ofisi, which was positively impacting the EPS.

And given that you expected the lower trend in the refining margins do you still think that you will able to grow the 2018 EPS as 2017. Thank you.

I think the first question was on Nord Stream, I think connection is very good. So your question was on Nord Stream…

Yes. On Nord Stream 2.

Can you repeat it? Okay, so just can you tell us what could be the maximum payment that OMV will do to Gazprom this year if – Nord Stream 2 is not able to finance itself for the capital markets.

Yes, Mehdi I would answer it. That in 2017 we have spent €324 million on Nord Stream 2.

And there is no maximum amount for 2018 because we will be financing in accordance with the broker rates of the project. And at the same time there will not be – and there has been planned that any project financing will kick in already in 2018 but only in 2019.

Okay. Thank you.

And the other question was on the EPS development, I think?

Yes.

The question was whether you would see a further increase in earnings per share. If you look at the earnings per share development such we are of course looking at that very much from our operating result and then from the tax rate that we are seeing.

So if you look at it in total we are expecting that of course with the oil prices slightly increasing compared to 2017. On the other hand the downstream side being affected by slight decreasing refining margins that we would roughly same level of activities there.

Of course, it depends very much on the volume development which we cannot entirely foresee, from tax situation you will see that some of the tax would carry forward will be depleted in 2018. So tax rate might raise for 2018 compared to the 25% that we had in 2017 by the way exactly what we have predicted.

So in that sense, hard to progress, we are not guiding on the EPS 2018, right now. But in the same ballpark slightly lower it’s probably something that you could put into your own.

Mehdi, when I was listening to Rainer, one thing is obvious, too many question marks left that we can give you a clear guidance on the EPS for 2018. So give us a little bit more time how the numbers are kicking and during the year I promise you will get better answer from us.

All right, thank you very much.

Thanks, Mehdi. The next question is from Hamish Clegg, Bank of America Merrill Lynch.

Good morning guys, another impressive result. Two quick ones from me.

I wanted to check on just what your organic reserve replacement would have been without the deals. And if you confirm to us your 1P and 2P results day so we can better understand that.

And leading on from that – a few headlines this morning just reading the press during the call even about potential M&A, if you could maybe update us on this situation particularly in Abu Dhabi and what the scale of that could be. Secondly, on Gazprom I know we’re still waiting on the action of side of things.

Could you confirm just for the more ASG minded people what the corporate governance issues actually are with Gazprom. And finally in line with the ESG angle, could you explain to Smatrics and your renewal strategy, is this really just keeping with your peers doing a few things or you honestly see this as a cash contributing business line.

Well, Hamish, thank you for the last question. Manfred is more than happy to answer this.

He is our Smatrics expert in the board. I take the two easy ones, Abu Dhabi is actually Mark, and Hans will then give you an idea about the organic reserve replenishment.

Both in Abu Dhabi, it’s very obvious that we do have an interest to increase our activities in Abu Dhabi’s, depending on opportunities, which might arise, which opportunities might arise, I don’t want to speculate with you, but what I can say is that OMV is targeting, and we will leverage more on this strategic idea that we’re targeting to build up integrated business in different regions. And especially in Abu Dhabi, we are thinking more about in integrated corporation model with our partner ADNOC.

Then it purely asset-based production model. So that’s a reason why we have signed in May last year an agreement with ADNOC that we thought levirate opportunities to work together also in Downstream.

So this is more or less and our focus how long it will take? Hamish, what I have learned in the region is that our partners have told me that, Reinhard, you’re owning the watch, and we are owning the time.

And that’s why I hate to wait, but I think I have to show more patience. But what I can say is, during the year we would like to have through the year 2018, we would like to have a clear picture on Abu Dhabi, and I think, we would get this.

The Achimov’s transaction, well, one thing is for clear, we have to sit together, and we have to decide how we would like to work in the two companies? In the development of the Achimov reservoir and in Norway where we do have the existing business, the main questions we are discussing, how many managers we can send into the company’s in Siberia?

How many managers they can send into our company in Norway? What is the business model we will have in mind?

What is the business plans we would like to agree on? What is the development plan and so on.

So all these type of questions we have to find an agreement together with Gazprom, and one thing is for clear, I would like to have a big influence in Russia. I would like to avoid a big influence of my partner in Norway.

And this is describing the conflict we have to solve together and this is taking time. But we have in our master plan the milestones that within the year, we are going to resolve the issue, and we are going to start the application for the necessary approvals in Norway as well as in Siberia.

And we are planning that the approval process will take some several months. We don’t have any experience so far.

How long the approval will take, but this what we have in our plan and following that schedule, we’re targeting to close the swap transaction at year-end. So now, I look to my colleagues who is smiling more, this is a Smatrics smile.

Coming to your question on our alternative fuel strategy, first of all, what we experienced last year was a significant increase into market with detail in our market. And carefully we were more or less stable.

I think, this is something, which already gives you a certain idea whether we see there’s a new business segment that we’re building you or whether, we chat what we’re really actually having in mind to offer our customers, a broader alternative fuel valproate validation to make them more attractive multiple back behind competition. And that’s the main topic that we’re having, because what we need to, obviously, prepare for is, an increase in electro mobility, this is coming.

Smatrics is the – in Austria at least, the most comprehensive provider of electro mobility services, and if you see for instance this joint venture that has been mentioned by Reinhard before that synergy where this is going exactly into the direction that we like to see. The car producers are a joint venturing in order to invest into stations – invest into our stations is better that we invest in the stations of our competitors.

And at the same time, Smatrics will play a role here, because they will have the power management at fuel station, so that we get synergy out of it on top of it. But I can reconfirm that we are most building up – most for the time building a new business segment that is called alternative fuels.

So to be very clear, it’s about sustaining your market share in the – and so the retail business, correct?

Exactly, I mean, what we’ve done for instance on the fuels, on the fossil fuels to be specific. We have increased our retail space volumes last year but I have sustained.

And this is more than the market growth. So obviously, we have increased our market share even before falling back on the support of the mobility.

Very clear, thanks very much.

Hamish, I will give you two figures on reserve replacement rate, but I will not disclose all the details. As you might know, replenishment replacement rate is driven by on the one hand revisions, you know existing fees, projects, new projects coming on stream, like Nevada, Aasta Hansteen, Neptun where you can expect more in the upcoming future.

E&A activities and M&A activities. But we don’t disclose the figures on all those categories.

What I can tell you is that our one year reserve replacement rates in 2017 claimed up 291%. In the three years, average on reserve replacement rates went beyond 100%, exactly to 116%.

Okay.

One more comment. If you remember, what we have said what our replenishment strategy OMV is?

We have reduced our E&A spending, dramatically from a level of several 100s to now last year below 300. So the contribution can’t be up that level, we’ve seen in the past.

But we have clearly said that, the major reserve replenishment in the next years will come by acquisition. So that the organic reserve base is the small number compared to the total number, which is fully in line with our new replenishment strategy.

Thanks, Hamish for your four questions. Next question comes from Josh Stone from Barclays.

Hi, good morning. It’s Josh Stone from Barclays.

I’ve got a question on dividend. I assumes, you could talk us through your process assessing that what sort of metrics you look at and talk about the attractive shareholder returns?

I presume, looking at dividend yield, but also perhaps maybe payout ratios? I just sort of – growing cash dividend also wants to just confirm, that means, we should interpret the €1.05 per share being a flow.

I do have a quick housekeeping question on gas realization? So wondered, if could just say what this would’ve been in the quarter, if you didn’t have the Yuzhno volumes in the mix?

Thank you.

The second part – the first part we got.

First part, you got. So the second part was just on the gas realization that came in $5.01.

I wanted to see what those works that you excluded the production from the Yuzhno assets?

So you are talking about the realize gas…

Realize gas price.

Okay. Josh, on the dividend, first of all, of course, in the consideration before both dividend of €1.5, we kept exactly to the dividend policy that we have given out, which means as we looked at our free cash flow and our net income and both have clearly improved.

But then it is very much about strategy that we have that we gradually increase the dividend payment, which means that with the environment that we are in, with our abilities, given for instance in 2017, we have the chance to find and solve our acquisitions more or less from the divestment part and entered into a very good free cash flow situation, which gave us the room for even larger increase from 2016 to 2017 than from 2015 to 2016. However, it stays, what we say our intention is to keep the dividend in rising level.

We have not that 1.5 floor, but the intention is clearly to see that we are in a position to live up to that dividend policy that we have and all our strategic plans that you will hear on March 30 are in line with that.

Well Josh, we do know that the dividend yield of OMV is not in the top league, let me call that way, yes? Given that we have that always in mind, I think, it’s another convincing argument that we are targeting a progressive dividend policy, which means depending of course on the business development and the financial situation of the company and it shall go up and not down.

And, therefore, I think we should not discuss any floor. Your second question, Josh, is a very delicate one, because from some – for some reasons, which has to do with some confidentiality with the agreements we have signed its on, we would like to keep some information really confidential.

And what we don’t want to disclose is the pricing formulas, we do have together with Gazprom and Yuzhno Russkoye production, or we can do is giving you some guidance about the structure of the pricing model, the gas price in Russia is a state regulated price, which is published for three years period. And the German border price was a net pack calculation is also published.

This is the only guidance I can give you, but we don’t want to release any prices, neither the prices we have in Russia nor in some other regions.

Okay, great. Thank you.

The next question is from Henri Patricot from UBS.

One question on Libya, and your guidance for 2018 of 25%, which is flat compared to 2017 average, but down from the 32,000 you have in the fourth quarter? Is that because you being a bit conservative or the situation deteriorated so far this year?

And secondly, what could be the upside case if everything goes well this year in Libya for your production?

Well, Henri, you’re absolutely right. As we speak about our production capacities we do have, yes?

And we could drive in a quarter. We are talking about a level of 30,000 barrels per day.

The number we take into our calculation is strongly depending on how much infrastructure for the export of our production is available. And as a good educated gas, we have said, okay, we take the same situation of last year for 2018.

If the entire infrastructure, the pipe transport to the ports is available then there is an upside to the 30,000 barrels per day.

And what is the upside potential?

5,000. so from 25 to 30.

Okay. Thank you.

The next question is from Rob Pulleyn from Morgan Stanley.

So If you look at the guidance for production in 2018 of the 420 and if we exclude, obviously, the Russian additions and compare it to the underlying number in 2017, it looks like, you’re guiding for about a 6% decline in your underlying production, yes not including Russia. I just wanted to check that that was the right impression, and of course, the obvious question is how do they plan to set those declines?

And if I may also ask on the refining margin coming you published in the outlook, how much lower year-on-year do you envisage is 4Q $5.7 a barrel is that a good indicator for 2018? Who should we be thinking higher or lower?

Are you taking the production numbers. So the 420 – let me start with refining margin we be at.

To – now give you are refining margin in very much detail in 2018, this will not be the responsible. What the main reason why we believe it is lower than 2017 is simply, because in 2017 you had a few incidents that have been one-off for instance, the Hurricane Harvey in the third quarter in the U.S.

I do not believe – I mean, we have been planning that this is repeated and at the same time in Europe, there have been some outages, which have been unplanned off-peak refining have such as refinery for instance in the Netherlands. If you take that together, it’s very difficult really to get it into details numbers in the digits, but I would believe, it could be something like below 5, up 5 on average for 2018, if there is no one-offs repeating.

We roughly start with conservative numbers in the beginning of the year. We will give you better guidance in our next Q1 report of 2018.

Okay. It sounds very well.

Thank you very much.

Thanks, Rob. Next is Marc Kofler from Jefferies.

Thanks for taking my question. I just want to come back to the dividend and some of the comments you are making today.

I think you are talking a lot about predictability around the dividend. Can you see a lot more words about that?

How my supposed really will you tend to have considered a dividend policy going forward that also – a bit more color in subsequent years beyond 2018.

Regarding the dividend, I think, we have impressively mentioned, what the reasoning of our dividend policy is. And I think that if we give you the guidance that we’re looking in to a positive development of the company into strategic growth and intention to live up to the dividend policy, which said that that would be increasingly higher dividend over the years, which is exactly our intention.

The intention also is that the dividend yield goes away from bottom of peer group. However, we have seen in 2017 simply an extremely positive development of the share price.

And I think we shouldn’t complain about the dividend yield. The total shareholder return that we have achieved in 2017 is 61%.

So this is clearly at the top of the group. So, therefore, we have to take that into account.

I understand and fully appreciate the stability of the dividend paid out. We have lived up to that dividend policy that we have given in 2015 for 2016 and in 2017 our intention is to continue like that.

Mark, since we have announced our strategy two years ago, we have now increase the dividend twice. What shall I do different to give you good guidance.

I think, we have come to the next question. Marc are you still there.

Next question is from Giacomo Romeo from Macquarie.

Good morning, thanks for taking my question. Perhaps, if you can talk a little bit more on what sort of the investment you’re doing in Romania and Austria to offset the production decline?

And you’re already partially touched up on that, but it would be interesting to hear if you are to what expense you are stepping up investments there? Second question is, if you can perhaps talk a little bit of the progress you’re doing towards FID at Domino?

Okay, I’d like to start with investment. So we are planning to invest in 2018 in Upstream €1.2 billion, €1.3 billion.

They also will invest in Romania, but after €600 million where €100 million are going to the Neptun investment already, so we are drilling in Romania around 115 wells compared to the right 63 wells in 2017. So we increase substantially our drilling activities in Romania and this will also help to minimize the decline.

The same we are doing in Austria. So in Austria, we are going to drill 16 wells, so which one drilling rig in the drilling program.

We will drilling Austria as well from the 16 wells they have four exploration wells, where we will drill two key wells in Austria. So this is explaining more or less how long to minimize the decline.

And as I said before when I answered the question, the decline in 2017 was roughly 3% in Romania and in Austria. With led drilling activities can we plan for 2018, so there’s a good chance that we even come out with the lower the guidance rate end of 2018 than in 2017 in Romania and Austria.

Regarding Domino, we are progressing with the project. We are expecting to take FID, second half – beginning of second half 2018 and we’re expecting for first gas, in 2020 and 2021.

Thank you.

Next is Mehdi again.

Okay. Thank you very much.

Just a follow-up question mainly on Domino. You just said that you expect to take FID in H2 – beginning H2 2018.

What kind of breakeven price are you working on – are you targeting please for this project, for this gas project. And you were also talking about and we have light hedging losses at the end of 2017, so there might be you know negative cash impact in 2018.

Can you just tell us the level, the amount of those unrealized hedging losses? Other questions regarding the dividend that you might receive.

So can you please tell us what will be the dividend – the remaining dividend that we do receive from [indiscernible] for the year 2017. And when would it be?

And second question regarding Borealis dividend, do you – or would you know what would be the dividend level? And are you expecting something, which is relatively close to what you received last year?

Thank you.

This is Maggie. We missed out on the first question, we have a very bad connection today.

Can you please repeat the first question again?

Yes. The breakeven price for Domino, because you said that the FID will be taken in H2 2018.

So you pulled back to what you already have good idea about the breakeven price you’re working on, please?

I take your first question, what have you mentioned that Mehdi please understand that we don’t talk about prices, yes? It’s a general policy.

Especially not the breakeven price because then all my potential customers know what price I need at minimal to get when I will negotiate contracts. So please understand that I don’t answer your question on prices, all I can say is that we are looking for prices brought of Romania, and we have to stop an intensive marketing program and that’s the reason why we are to closed on making any comment on prices, because we first have to lock in the contracts with potential customers.

So please understand that we cannot comment on this. Then we have hedging.

So maybe just on that – can you tell us what kind of return – internal return rate are you working on for Domino, please?

So I think we have a general policy Mehid, that we have a certain threshold for our investment we are taking and this also applies to the offshore project in Romania. We need to have a double- digit percentage rate of return after-tax that’s the main criteria we have.

It can be higher and much higher, but not lower.

Okay, thank you.

Reinhard.

Regarding hedging policy, of course, we are taking some steps in hedging, but we are not in any way speculatively hedging. We are looking hedging as a more of a defensive strategy, in order to secure our profitability bases that we have.

Regarding the hedging intakes in 2017, in total we have slightly as you take it from hedging, specifically in quarter four. If we’re looking into hedging for 2018, of course I cannot predict any kind of impact there, because, of course, the volatility of the oil and gas prices would determine that.

But yes, there is a certain amount of hedging in place, and specifically, when it comes to Russia when we are trying to protect ourselves against now.

So if you know the hydrocarbon [ph]prices remain at let’s say the current level should we expect material negative impact on material positive impact in terms of hedging?

It is very difficult to take assumptions there. You have seen what development in Q4 wasn’t very effect in Q4, and the situation in 2018 will be probably more balanced one and it’s very difficult to say how oil versus gas will develop because the direct relationship between the prices has been clearly weakened.

And therefore we are trying to take our own internal expertise to optimize what we can do.

Thank you.

So Mehdi, I would take your last two questions. The dividend from Yuzhno Russkoye, the total dividend of Yuzhno Russkoye as I have said for 2017 is $116 million roughly.

And the dividend from the trader will be paid in 2018, whereas, we have received a dividend payment from the operating company, Severneftegazprom already in 2017 and the magnitude of €50 million not dollars euros.

All right. Thank you.

And on Borealis dividend.

But this number – the other part was considered in purchase price adjustment, so that’s a little bit more complicated. But from a cash perspective take the €50 million for 2017 and the rest up to $160 million will paid then as dividend in 2018.

Yes, Borealis is doing a good job, you’re absolutely right, they have repeated their record here with €1.1 billion net profit, they haven’t decided on the dividends, yes? Am I hungry?

Of course, I am messy, but I decided, no. So we have to wait the decision on Borealis management, what they would like to gone on as the dividend level.

So we have to wait another week then we will have a clear answer from Borealis management.

All right. Thank you very much.

Thanks Mehdi. We’ve already extended the call a little bit.

Ladies and gentlemen with that we would like to hand our conference call, and we’d like to thank you for joining us. Should you have any further questions, please contact the Investor Relations team and we will be happy to help you.

Goodbye, and have a nice day.

Bye-bye.

Bye-bye.