Prime Transaction estimates a value of 0.8604 lei for the OMV Petrom share, above the market price

• "The company's position in the energy sector is very well consolidated, operating in every segment of this field", say the brokerage house's analysts

• "For valuation, Prime uses a combination of the market multiples method and the Dividend Discount Model"

The analysis team of the Prime Transaction brokerage house estimates an intrinsic value of 0.8604 lei for the OMV Petrom (SNP) share, about 8.5% above yesterday's market price in the first part of the trading session, of 0.793 lei, after as shown in the attached report.

"The company's position in the energy field is very well consolidated, operating in every segment of this field: from the extraction and refining of crude oil and gas, to the generation and sale of electricity," the Prime report states.

According to analysts, the company's most important oil product is diesel, representing 44% of the entire amount produced. "In the case of sales, the discrepancy between the products is more pronounced, with diesel accounting for more than 50%. This aspect is to be expected when the countries where OMV Petrom trades its products are taken into account, being countries where the automotive industry is dominated by cars with diesel engines," Prime writes.

Sustainability has become one of the company's priorities, with its management stating that it plans to become the first major producer of renewable fuels in South-Eastern Europe by investing more than 560 million euros in the production of sustainable aviation fuels (SAF) and hydrotreated vegetable oil ( HVO).

"The most recent dividend distribution guidance that the company has published proposes an annual value increase of the basic dividends by 5% - 10% until 2030. Also by the end of this decade, SNP plans to distribute total dividends between 40% - 70% of cash flows from operating activities. A final aspect mentioned by the company is the possibility of distributing special dividends, if the investment needs of the company are satisfied", the Prime report also states.

According to analysts, society benefits from Europe's renunciation of Russian gas. On the other hand, the decrease in demand for hydrocarbons and natural gas, as well as the aggravation of geopolitical instability in the vicinity of Romania, are seen as threats for OMV Petrom.

To evaluate the SNP share, the Prime Transaction team uses a combination of the market multiples method and the Dividend Discount Model (DDM).

In the case of the valuation based on multiples, the analysts chose for comparison only companies that, like OMV Petrom, own the entire oil value chain, among them Exxon Mobil, Chevron, Saudi Arabian Oil or Oil & Natural Gas Corp. Using this method, the Prime team estimated a value for the SNP share of 0.9611 lei, about 21% above the company's share price yesterday, as of lunchtime.

In order to evaluate DDM, the analysts calculated the future dividends based on the policy offered by the company, using a series of premises including: "Revenues from condensed crude oil will have a constant growth rate of 1% annually", "The initial decrease in gas revenues and electricity, but substantial increases starting in 2027, against the background of the realization of the Neptun Deep project, to which are also added the revenues from investments in green energy sources" and "Substantial increases for revenues from fuels until 2028, following a downward trend" . Using the DDM method, the Prime team estimated an intrinsic value for the OMV Petrom share of 0.7596 lei, below yesterday's market price.

Thus, taking both methods into account, the resulting average value is 0.8604 lei per share.

The Prime Transaction Report is not an investment recommendation. The estimated value is not a target price that analysts expect the issuer's stock to reach, but only an intrinsic value, dependent on the confirmation of the assumptions detailed in the report. The report represents general information and is not a substitute for investment consulting services, it is mentioned in the analysis carried out by de Prime, which can be consulted in the attached document.