Morningstar DBRS Confirms OMV AG's Issuer Rating at A (low) With a Stable Trend

DBRS Ratings GmbH (Morningstar DBRS) confirmed OMV AG's (OMV or the Company) Issuer Rating at A (low) with a Stable trend.

KEY CREDIT RATING CONSIDERATIONS
The A (low) credit rating reflects the diversified nature of OMV's business with high integration in the Downstream segment, solid credit metrics with conservative financial policies, and a strong market position in the Chemicals segment. The Company is a significant gas supplier in Austria. The credit rating also considers Morningstar DBRS' implicit support assumption from the Republic of Austria (rated AAA with a Negative trend by Morningstar DBRS) as 31.5% of the Company is owned by the Austrian state holding company Österreichische Beteiligungs AG (ÖBAG). In addition, OMV's operations are of high systemic importance to the government as OMV has an industry-leading position in the country.

CREDIT RATING DRIVERS
Morningstar DBRS could consider a positive credit rating action if credit metrics were to improve significantly, such as if cash flow-to-debt were to migrate above 65% combined with an improvement in the Company's size and diversification.

Morningstar DBRS may consider a negative credit rating action if the financial metrics of the Company were to deteriorate to the point where cash flow-to-debt trends below 45% on a sustained basis combined with a deterioration in its overall business profile. Morningstar DBRS may also consider a negative rating action if our assumption of implicit support from the Republic of Austria were to be reduced.

EARNINGS OUTLOOK
Based on its base-case crude oil and natural gas price assumptions, Morningstar DBRS expects the Energy segment of the Company to continue to generate material cash flow surplus despite the lower anticipated production. The margins in the refining and chemical segments in 2025 are expected to stay soft and be broadly similar to 2024 with marginal improvements in certain products compensated by slightly lower prices in others. However, the softness in earnings is expected to be partially mitigated by the anticipated higher capacity utilization by the Company in 2025.

FINANCIAL OUTLOOK
Morningstar DBRS expects operating cash flow in 2025 to be broadly in line with 2024 results, based on its base-case commodity price assumptions. OMV's capital expenditure guidance of EUR 3.6 billion for 2025 and dividend outlay are expected to be mostly funded from internally generated cash flows. The Company is expected to continue to follow a conservative financial policy and direct its cash flows towards debt reduction, if required, in line with OMV's target to maintain its leverage below 30%. The financial risk profile of the Company is expected to continue to support the current credit rating levels over the medium term.

CREDIT RATING RATIONALE
Comprehensive Business Risk Assessment (CBRA): BBBH
The product mix of the Company is well-balanced with 53% liquid production and 47% natural gas production, with the majority of its assets in European countries. OMV operates three refineries in Europe, which provide essential feedstock for its C&M segment. Through its joint ventures, OMV also operates petrochemical facilities in United Arab Emirates--through its subsidiary Borouge, in a joint venture (JV) with Abu Dhabi National Oil Company (ADNOC)--and in the United States (through its subsidiary Baystar, in a JV with TotalEnergies). OMV, thus, has highly vertically integrated operations in its Downstream segment. The announced combination of Borealis GmbH with Borouge and the acquisition of NOVA Chemicals into an entity jointly owned by OMV and ADNOC will create, once fully operational in 2026, a leading player in the polyolefin industry.

The scale of operations of the Company remains relatively small compared with rated peers in the similar credit rating category. The Company had a total proven reserve size of 979 million barrels of oil equivalent (mboe) for YE2024 and a total production of 340 thousand barrels of oil equivalent per day (kboe/d). However, the relatively small size is somewhat alleviated by the fact that it has a strong market position in some European countries like Austria, Germany, and Romania.

In December 2024, OMV ceased to receive gas supply from Russia and successfully managed to replace these flows through transportation agreements from Germany and Italy until 2026, therefore ensuring certainty in supply for its customers in the near term. Also, OMV sources natural gas from its own production in Norway and Austria, as well as from Norwegian natural gas producers. The company further secured additional 29 TWh of European transportation capacities into Austria for the period from 2026 until 2029. Further to this, OMV is developing the Neptun Deep project in the Black Sea, which is expected to be operational in 2027 and add about 70 kboe/d of natural gas equivalent to OMV's production.

Comprehensive Financial Risk Assessment (CFRA): BBBH/BBB
The strong commodity prices from a couple of years ago and the associated very strong cash flow generation in the Energy segment contributed to the improvement of the overall financial risk profile of the Company through debt repayments and a large cash balance. As of YE2024, the Company reported leverage ratio of 12%. The Company also maintains a conservative financial policy and has set its leverage target below 30%.

Intrinsic Assessment (IA): BBBH
The IA is based on the aforementioned CFRA and CBRA. Taking into consideration peer comparisons, amongst other factors, Morningstar DBRS places the IA in the middle of the Intrinsic Assessment Range.

Additional Considerations: Third-Party Support
The Issuer Rating includes a half notch positive adjustment to the IA to take into account Morningstar DBRS' implicit support assumption by the Republic of Austria as a result of the strategic nature of OMV for the energy security of the country. OMV is a significant natural gas player in Austria and is partially owned (31.5%) by the Austrian government's investment holding company ÖBAG alongside ADNOC which holds 24.9%. OMV is critical to the energy security of the country, and therefore a potential default could have a cascading effect on key industries related to the energy sector. Morningstar DBRS thus makes an implicit support assumption, which uplifts OMV AG's final credit rating outcome.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
Environmental (E) Factors
The following Environmental factor had a relevant effect on the credit analysis:
The Carbon and Greenhouse Gas (GHG) Costs Environmental factor had a relevant effect on the credit analysis of OMV. This factor is relevant because compliance with ever-increasing environmental regulations and standards limits the growth potential and adds costs for all oil and gas companies, including OMV. The relevant Environmental factor was considered in OMV's CFRA.

There were no Social or Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (16 May 2025), https://dbrs.morningstar.com/research/454196.

Further details on the Issuer's Intrinsic Assessment can be found at https://dbrs.morningstar.com/research/458779.

Notes:
All figures are in euros unless otherwise noted.

Morningstar DBRS applied the following principal methodology: Global Methodology for Rating Companies in the Oil & Gas, Oilfield Services, and Pipeline and Midstream Energy Industries (6 May 2025), https://dbrs.morningstar.com/research/453396.

Morningstar DBRS credit ratings may use one or more sections of the Morningstar DBRS Global Corporate Criteria (3 February 2025), https://dbrs.morningstar.com/research/447186 which covers, for example, topics such as holding companies and parent/subsidiary relationships, guarantees, recovery, and common adjustments to financial ratios.

The following methodologies have also been applied:
-- Morningstar DBRS Global Corporate Criteria (3 February 2025), https://dbrs.morningstar.com/research/447186.
-- Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (16 May 2025), https://dbrs.morningstar.com/research/454196

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

A description of how Morningstar DBRS analyses corporate finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/431153.

The primary sources of information used for this credit rating include annual report, investor presentation, earnings call, quarterly reports. Morningstar DBRS considers the information available to it for the purposes of providing this credit rating to be of satisfactory quality.

With respect to FCA and ESMA regulations in the United Kingdom and European Union, respectively, this is an unsolicited credit rating. This credit rating was not initiated at the request of the issuer.

With Rated Entity or Related Third-Party Participation: NO
With Access to Internal Documents: NO
With Access to Management: NO

Morningstar DBRS does not audit the information it receives in connection with the credit rating process, and it does not and cannot independently verify that information in every instance.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS trends and credit ratings are under regular surveillance.

For further information on Morningstar DBRS historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: https://registers.esma.europa.eu/cerep-publication. For further information on Morningstar DBRS historical default rates published by the Financial Conduct Authority (FCA) in a central repository, see https://data.fca.org.uk/#/ceres/craStats.

The sensitivity analysis of the relevant key credit rating assumptions can be found at: https://dbrs.morningstar.com/research/458780.

This credit rating is endorsed by DBRS Ratings Limited for use in the United Kingdom.

Lead Analyst: Amaury Baudouin, Senior Vice President, Sector Lead
Rating Committee Chair: Ravikanth Rai, Associate Managing Director
Initial Rating Date: 15 July 2024
Last Rating Date: 15 July 2024

Information regarding Morningstar DBRS ratings, including definitions, policies, and methodologies, is available on https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.

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