Company Announcements

I^ST HALF YEAR REPORT

REGARDING THE ECONOMIC-FINANCIAL ACTIVITY OF ROMGAZ GROUP

AS OF JUNE 30, 2019 (January 01, 2019 - June 30, 2019)

IDENTIFICATION DETAILS ON REPORT AND ISSUER

ROMGAZ GROUP¹  PERFORMANCES

Operational and financial performances of Romgaz Group achieved in HI 2019 continued to be high, confirming the established trend.

In the first 6 months of 2019 the national gas consumption recorded a 3% decrease, while Romgaz deliveries remained similar to the previous year having a sub-unitary variation. As a result, Romgaz share on the gas deliveries market reached 46.3%, by one percent higher than the share held in the previous period (45.3%).

Natural gas production reached 2,700 million m³, higher by 59.5 million m³ than the production recorded during the similar period of the previous year (+2.3%) and higher by 8.8 million m³ than the production schedule (+0.3%).

Romgaz electricity production of 171.66 TWh decreased as compared to the similar period of 2018 (466.22 TWh). This production placed Romgaz at a market share of 0.64%² .

The margins of the main profitability indicators: net profit (33.9%), EBIT (39.2%) and EBITDA (51.9%) confirm a high profitability of Romgaz Group activity. 

The American company DeGolyer&MacNaughton performed in HI 2018 an external audit of Romgaz natural gas reserves and contingent resources, the final report being sent to Romgaz on May 31, 2018.

The results of the report confirm the evaluation of gas resources and reserves performed by Romgaz with the reference date on December 31, 2017, and confirm an average 78% annual reserves replacement ratio for years 2013- 2017, value above the target of 70%.

Relevant Financial Results (consolidated)

                                                                                                                *RON million*

^*)EPS is calculated based on the individual results of SNGN ROMGAZ SA

The figures above are rounded. Therefore, small differences may result upon reconciliation.

Note: income and expenses do not include in-house works capitalized as non-current assets.      

Confirming the trend, the Group recorded in Q2 2019 an increase of the main indicators compared to the similar period of 2018, as follows: revenue +17.1%, EBIT +40.2%, EBITDA +30.2%. The profitability margins have also remained at significant values.

Summary of the Group's main indicators for HI 2019:

Ø Total Income, higher by RON 465.5 million, rising by 19.0% while total expenses recorded an increase of 16.1%.

Gross result of HI 2019 is higher by 23.8% as compared to the previous year further to the following influential factors:

·    16.18% higher revenue as compared to HI 2018 further to an increase of gas sales, both from internal production and from gas purchased for resale (+20.83%);

·    the positive effect triggered by the increased revenue reflected on the profit was affected by the increased additional income tax (+65.6% representing an increase of RON 174.7 million) and by the 2% contribution of electricity and gas licence titleholders from the revenue recorded from activities that relate to the licences granted by ANRE (RON 41.85 million)

Ø Net profit is by RON 193 million higher than the profit for the previous period due to increased income and influenced by the rise of expenses due to the above mentioned causes (+24.7%);

Ø Labour productivity increased by 15.44% compared to the previous period, from RON 403.54 thousand revenue/employee in HI 2018 to RON 465.85 thousand  revenue/employee in HI 2019;

Ø Net profit margins, EBIT and EBITDA are higher compared to HI 2018 as a consequence of a higher revenue;

Ø EPS of RON 2.5 by 24.7% higher than in HI 2018.

Operational Results

Note: the information is not consolidated, namely contains transactions between Romgaz and Depogaz.

Gas production was in the parameters expected when preparing the 2019 production schedule; the achieved level represents 100.33% of the schedule.

Romgaz produced 2,700 million m³ natural gas during the first half of 2019, 59.5 million m³   (2.3%) more than the volume produced in the same period of the previous year. 

The high production recorded in HI 2019 was triggered by:

Ø maximum production from Caragele field by finalising investments to extend production infrastructure and connecting the wells to this infrastructure;

Ø continued rehabilitation projects on the main mature gas fields that led to arresting the production decline on such fields;

Ø well workover operations that reactivated a series of wells with significant flow rates;

Ø relocation of compressor units to optimise production from some gas fields;

Ø streaming into production new commercial discoveries.

The electricity production decline, as shown in the table below, is closely related to the investments made at CTE Iernut, works that restrict using the old energy units. Therefore, CTE Iernut did not produce electricity in Q2 2019 due to:

Ø the works performed at the outer electric station;

Ø the works performed at the main water cooling circuits, such works are in connection with the existing power plant;

Ø works performed at the existing cooling circuit (hydro-technical dam, cooling water pumps, cooling towers, mixing chambers etc.) these will also be used for the new investment; such works had to be performed only when the power plant was shut down.

                                                                       *MWh*

¹Romgaz Group consists of  S.N.G.N. Romgaz S.A. ("The Company"/"Romgaz") as parent company, Filiala de Înmagazinare Gaze Naturale Depogaz Ploiești SRL ("Depogaz") the subsidiary 100% owned  by Romgaz, and its associates SC Depomureş SA (40% of the share capital) and SC Agri LNG Project Company SRL (25% of the share capital).

²Source: CNTEE Transelectrica SA 

The full version of the I^st Half Year Report on the Economic-Financial Activity of Romgaz Group as of June 30, 2019 (January - June 2019) and the Consolidated Condensed Interim Financial Statements for the Six-Month and Three-Month Periods Ended June 30, 2019 prepared in accordance with International Accounting Standard 34, with the Independent Auditor's Review Report are available on company's website www.romgaz.ro - Section Investor Relations - Interim Reports and on RNS website at:

http://www.rns-pdf.londonstockexchange.com/rns/9931I_1-2019-8-14.pdf