OMV Petrom S A : Directors' Report and Separate financial statements for H1 2022

Directors' Report on OMV Petrom S.A.'s interim condensed separate Financial Statements prepared in accordance with Ministry of Finance Order no. 2844/2016 and in compliance with the Regulation no. 5/2018, Appendix 14, issued by the Financial Supervisory Authority

Overview of the Company's nature

The Company's headquarters is located at Coralilor Street no. 22, district 1, Bucharest, Romania. The Company was set up according to the Government Ordinance no. 49/October 1997, approved by Law no. 70/April 1998. The Company is registered with the Trade Register under number J40/8302/1997 and has as unique fiscal registration code RO1590082. The Company has as main activities exploration and production of hydrocarbons, sale of natural gas, refining of crude oil, marketing of petroleum products, as well as production and sales of electricity. OMV Petrom performs its activity either directly or through its affiliates in Romania (marketing of petroleum products), Bulgaria (exploration and marketing of petroleum products), Georgia (exploration of hydrocarbons), Serbia and Republic of Moldova (marketing of petroleum products).

The Company is the parent company of OMV Petrom Group ("the Group"). Interim condensed separate financial statements for the six month period ended June 30, 2022 are prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Union (EU), as the Ministry of Finance Order (MOF) no. 2844/2016 stipulates that Romanian listed companies must prepare financial statements in accordance with IFRS as endorsed by European Union. The interim condensed consolidated financial statements are also prepared by the Company in accordance with IFRS as endorsed by the EU.

OMV Petrom S.A. ("OMV Petrom") has vertically integrated activities and is organized into three operating business segments: Exploration and Production (former Upstream), Refinery and Marketing (former Downstream Oil) and Gas and Power (former Downstream Gas), while the management, the financing activities and certain service functions are concentrated in the Corporate and Other segment.

As at June 30, 2022 and December 31, 2021 the total share capital amounted to RON 5,664,410,833.50, representing 56,644,108,335 shares (December 31, 2021: same number) with a nominal value of RON 0.1 per share.

The shareholders' structure as at June 30, 2022 is presented below:
June 30, 2022	No. of shares	Percent
OMV Aktiengesellschaft	28,894,467,414	51.011%
Romanian State	11,690,694,418	20.639%
Legal entities and private individuals	16,058,946,503	28.351%
Total	56,644,108,335	100.000%

On January 26, 2022, Fondul Proprietatea reduced its shareholding by four percentage points through an Accelerated Book Building (ABB).

The shareholders' structure as at December 31, 2021 is presented below:
December 31, 2021	No. of shares	Percent
OMV Aktiengesellschaft	28,894,467,414	51.011%
Romanian State	11,690,694,418	20.639%
Fondul Proprietatea S.A.	3,963,548,078	6.997%
Legal entities and private individuals	12,095,398,425	21.353%
Total	56,644,108,335	100.000%

The interim condensed separate financial statements for the six-month period ended June 30, 2022 are unaudited and an external review by an auditor was not performed.

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Financial highlights
Q2/22	Q2/21	Δ% in RON mn	6m/22	6m/21	Δ%
12,247	4,110	198	Sales revenues 1	23,165	8,033	188
4,115	737	458	Operating Result	6,288	1,329	373
1,886	390	383	Operating Result Exploration and Production2	2,994	681	339

2,124	667	218	Operating Result Refining and Marketing	2,803	1,038	170
346	(227)	n.m.	Operating Result Gas and Power	941	(94)	n.m.
(39)	(20)	(92)	Operating Result Corporate and other	(72)	(58)	(26)
(202)	(73)	(177)	Consolidation	(378)	(239)	(58)

(114)	31	n.m.	Net financial result
4,001	768	421	Profit before tax
13	7	85	Effective tax rate (%)

(206)

(3)

n.m.

6,082 1,326 359

14 10 41

3,475	714	387	Net income	5,203	1,190	337
(10,643)	(5,040)	111	Net debt/(cash) including leases	(10,643)	(5,040)	111

1. Sales excluding petroleum excise tax;
2. Excluding intersegmental profit elimination shown in the line Consolidation.

Key events 6m/22

• OMV Petrom has completed the first photovoltaic park that supplies green energy for its own operations, in Q1/22
• At the Annual General Meeting of Shareholders held on April 27, 2022, the shareholders of OMV Petrom S.A. approved the distribution of dividends for the financial year 2021 for the gross amount of RON 1,932 mn (gross dividend per share of RON 0.0341). Total dividends paid during 6m/22 amounted to RON 1,913 mn.
• On April 27, 2022, the Ordinary General Meeting of Shareholders (OGMS) approved the 2022 Income and Expenditure Budget of OMV Petrom S.A. with investments estimated at RON 4.38 bn.
• The OGMS reappointed Ernst & Young Assurance Service S.R.L. as the Company's financial auditor for 2022.
• The OGMS approved the appointment of Mr. Alfred Stern and Mr. Martijn van Koten as members of the Supervisory Board of OMV Petrom for the remaining period of the mandates of Mr. Rainer Seele's and Mr. Wolfram Krenn's respectively, further to the waiver of their mandates as members of the Supervisory Board. The Supervisory Board approved the appointment of Mr. Stern as President of the Supervisory Board.
• OMV Petrom announced in June the first batch of sustainable aviation fuel at Petrobrazi.
• At the OGMS held on July 26, 2022, the shareholders of OMV Petrom S.A. approved the distribution of special dividends for the gross amount of RON 2,549 mn (gross dividend per share of RON 0.045). Payment will be made starting September 2.
• Based on the authorization received from the Extraordinary General Meeting of Shareholders dated April 27, 2022, the Executive Board and Supervisory Board approved the share capital increase with RON 121 mn, in kind contribution of the Romanian State, and with up to a maximum of RON 464 mn, cash subscription of other shareholders. The subscription period will be for at least one month, estimated to occur during the September to October 2022 timeframe. The subscription period will be included in the prospectus, that will be submitted for approval to the Financial Supervisory Authority and subsequently published.

2

Analysis of performance

January to June 2022 (6m/22) vs. January to June 2021 (6m/21)

Sales revenues of RON 23,165 mn for 6m/22 increased by 188% compared to 6m/21, mainly supported by higher commodity prices and higher sales volumes of petroleum products and electricity. Refinery and Marketing segment represented 51% of total sales revenues, Gas & Power segment accounted for 49% while Exploration & Production segment accounted only for 0.1% (sales in Exploration and Production segment being largely inter-segment sales rather than third-party sales).

The Reported Operating Result of RON 6,288 mn was 373% above the 6m/21 level of RON 1,329 mn, due to much higher contribution of all business segments, following increase in prices in Exploration and Production segment, significantly higher refining margins in the Refining and Marketing segment as well as strong margins on gas from storage and third party transactions in the Gas and Power segment. The result also reflects increased purchases, in terms of both volumes and prices for all products, and higher Exploration and Production taxation. The Consolidation line had a negative contribution in 6m/22 of RON (378) mn reflecting mainly the quotations evolution, compared to RON (239) mn in 6m/21.

Net financial result was a loss of RON (206) mn in 6m/22 compared to a loss of RON (3) mn in 6m/21, mainly due to higher interest expenses in relation to the discounting of receivables, partially offset by higher interest income on bank deposits.

As a result, the profit before tax for 6m/22 of RON 6,082 mn, was higher compared with the result for the similar period of the previous year of RON 1,326 mn.

Income tax amounted to RON (879) mn, while the effective tax rate was 14% in 6m/22 (6m/21: 10%).

Net income was RON 5,203 mn (6m/21: RON 1,190 mn).

Investments of RON 1,396 mn in 6m/22 were 17% higher than RON 1,192 mn in 6m/21. Exploration and Production investments in 6m/22 were RON 1,109 mn, compared to RON 1,028 mn in 6m/21, accounted for 79% of total investments for 6m/22, the increase of 8% being mainly due to higher investments for running business projects, partly counterbalanced by lower drilling activities. Refining and Marketing investments amounted to RON 249 mn (6m/21: RON 147 mn), with majority of investments directed to the ongoing major projects in the Petrobrazi refinery, for coke drums replacement and for a new crude oil tank, and to recognition of right of use assets under IFRS 16 Leases for a long term contract for securing railway access to Cluj storage. Gas and Power investments amounted to RON 25 mn (6m/21: RON 9 mn), majority of investments being directed to the planned outage at the Brazi power plant. Corporate and Other investments were RON 14 mn (6m/21: RON 7 mn).

Due to the significant cash balance at June 30, 2022, OMV Petrom maintained a net cash position including leases of RON 10,643 mn (December 31, 2021: RON 7,733 mn).

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Summarized interim statement of financial position

in RON mn	June 30, 2022	December 31, 2021
Assets
Non-current assets	31,844	32,415
Current assets (including assets held for sale)	22,984	16,463

Total assets	54,828	48,878
Equity and liabilities
Total equity	36,116	32,870
Non-current liabilities	6,730	7,277
Current liabilities	11,983	8,731
Total equity and liabilities	54,828	48,878

Compared to December 31, 2021 non-currentassets decreased by RON 571 mn, to RON 31,844 mn, mainly due to decrease in property, plant and equipment, as depreciation and decrease in decommissioning asset following reassessment, exceeded the additions during the period.

The net increase in current assets (including assets held for sale) was triggered mainly by higher cash and cash equivalents, higher inventories following increase in volumes and in unit costs in line with quotations, higher trade receivables following higher sales and higher financial assets mainly in relation to derivatives.

Equity increased to RON 36,116 mn as of June 30, 2022, compared to RON 32,870 mn as of December 31, 2021, mainly as a result of the the net profit generated in the current period that was partially offset by the dividend distribution for the financial year 2021. The equity ratio stood at 66% as of June 30, 2022, slightly lower than the level of 67% as of December 31, 2021.

As at June 30, 2022, total liabilities increase by RON 2,704 mn as compared with December 31, 2021. The increase in current liabilities was largely due to higher financial liabilities mainly in relation to derivatives, higher trade payables following higher acquisitions, higher provisions and higher income tax liabilities. This increase was partially offset by the decrease in non-currentliabilities mainly due to the reassessment of provisions for decommissioning and restoration obligations. Net discount rate applied for calculating of decommissioning and restoration costs at June 30, 2022 was 4.69% (December 31, 2021: 2.41% for onshore, 5.22% for offshore). Total provisions for decommissioning and restoration obligations decreased to RON 5,620 mn as at June 30, 2022 (December 31, 2021: RON 6,234 mn), driven mainly by revision in estimates amounting to RON 662 mn, largely following the increase in net discount rate.

4

Cash flow

Summarized cash-flow statement (in RON mn)	6m/22	6m/21	Δ%
Cash generated from operating activities before
working capital movements	8,180	2,888	183
Cash flow from operating activities	6,394	2,394	167
Cash flow from investing activities	(1,494)	(815)	(83)
Free cash flow	4,900	1,579	210
Cash flow from financing activities	(1,990)	(1,659)	(20)
Effect of exchange rate changes on cash and cash equivalents	3	9	(64)
Net increase/(decrease) in cash and cash equivalents	2,913	(71)	n.m.
Cash and cash equivalents at beginning of period	10,054	7,305	38
Cash and cash equivalents at end of period	12,967	7,234	79
Free cash flow after dividends	2,987	(160)	n.m.

January to June 2021 (6m/22) vs. January to June 2020 (6m/21)

In 6m/22, the inflow of funds from profit before tax, adjusted for non-cash items such as depreciation and impairments, net change of provisions and other non-cash adjustments, as well as net interest received and income tax paid was RON 8,180 mn (6m/21: RON 2,888 mn). Changes in net working capital generated a cash outflow of RON 1,786 mn (6m/21: 493 mn). Cash flow from operating activities increased with RON 3,999 mn compared to 6m/21, reaching RON 6,394 mn, driven by higher operating result partly offset by adverse evolution of net working capital.

In 6m/22, cash flow from investing activities resulted in an outflow of RON 1,494 mn (6m/21: RON 815 mn) mainly related to payments for investments in property, plant and equipment, largely in the Exploration and Production segment. The net outflow in 6m/21 was also impacted by the net proceeds from the disposal of Kazakhstan subsidiaries in amount of RON 462 mn.

Free cash flow (defined as cash flow from operating activities less cash flow from investing activities) showed an inflow of funds of RON 4,900 mn (6m/21: RON 1,579 mn).

Cash flow from financing activities reflected an outflow of funds amounting to RON 1,990 mn (6m/21: RON 1,659 mn), mainly arising from the payment of dividends of RON 1,913 mn.

Free cash flow after dividends resulted in a cash inflow of RON 2,987 mn (6m/21 cash outflow: RON 160 mn).

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