Good afternoon, ladies and gentlemen, and welcome to conference call for discussing the results recorded by Romgaz Group in the first quarter of 2024. After introducing the speakers, Miss Gabriela Trânbițaș, Chief Financial Officer, will make an opening speech. Thereafter, the Q&A session will take place. Please be advised that this conference is being recorded for internal purposes. On behalf of the company, the following speakers attend in this conference: Miss Gabriela Trânbițaș, Chief Financial Officer, Mr. John Foidas, Production Department Director, Mr. Radu Moldovan, Energy Trading Director, and the Investor Relations Department. Now, I would like to give the floor over to Miss Gabriela Trânbițaș, who will open the conference call with an opening speech. Good afternoon, ladies and gentlemen. Thank you for joining our conference call to discuss the results recorded by Romgaz Group in the first three months of 2024. Yesterday, we released a quarterly report, which includes the presentation of our economic performance and the consolidated interim financial statements. Also, presentation of Romgaz activities is available on our website in the investor section. I would like to emphasize some aspects regarding the gas market environment and also to highlight the group's performance. Let me start with some aspects regarding the market context in the first quarter of this year. According to our assessment, natural gas consumption in Romania increased by 5.5% year-on-year. Imported gas volumes recorded a significant increase of 69% year-on-year, reaching a 13% weight in total consumption, compared to 8% in the similar period of the previous year. On the Central European Gas Hub, the average reference price dropped by around 60% year-on-year, according to data provided by the Romanian Agency for Mineral Resources. The Romanian Commodities Exchange recorded a similar downward trend in Q1, with a weak liquidity due to regulations in force. Regarding the fiscal environment in Q1 and for full year 2024, Romgaz activities continued to be influenced mainly by the government's emergency ordinance number 27, i ssued in March 2022, and subsequently amended and supplemented. The main legal provisions applicable to gas producers include regulated gas sales price of RON 150 per megawatt hour for the gas of the households and suppliers of households, and also to heat producers and their suppliers, but only for the production of thermal energy for households. According to Government Emergency Ordinance 32, issued in 2024, starting April 1st of this year and until the end of 2024, the new regulated price is 120 RON per megawatt hour. Gas sold at regulated prices is exempt from payment of the windfall profit tax, while gas royalties are computed based on these regulated prices instead of CEGH reference prices until the end of 2024. For energy producers, which started operations before September 1st, 2022, a contribution to the Energy Transition Fund is in force, where price is exceeding the regulated level of 450 RON per megawatt hour until March 31, 2024, and 400 RON per megawatt hour after April 1st, 2024, until March 31, 2025. Also, a government emergency ordinance number 21, issued in October 2023, increased gas royalties with approximately 1.5 percentage points and gas storage royalties with 0.5 percentage points. For comparison reasons, please recall that the solidarity contribution introduced by Government Emergency Ordinance 186 in December 2022, was due only for fiscal years 2022 and 2023. Regarding the operational and financial performance record by Romgaz Group in the first three months of 2024, we can point out the following aspects: Natural gas production amounted to 1.29 BCM, 4.4 higher compared to Q1 last year, and also up by 1.4% compared to Q4 2023. We succeeded to achieve this good performance due to restarted production at some inactive wells as a result of our corporate operations and capital repairs, lower workover periods and operation optimization at gas compression and dehydration capacities, higher productivity at low level- low debit wells, and continuous rehabilitation projects in the main mature reservoirs. Regarding the investments made in our gas production facilities, I can mention that we performed drilling operations for 1 production well, finalized surface facilities to stream into production 2 wells, while other surface facilities are in execution to stream into production another wells wells. Also, we performed the reactivation and capitalizable repairs at a total of 44 production wells. We continue to hold a strong position on the Romanian gas market in Q1. We estimate a market share of 34% of total gas delivered in Romania, and almost 39% of the consumption covered from domestically produced gas. With respect to gas sales to third parties, volumes declined by 7.2% year-on-year in Q1, partially due to lower volumes withdrawn from underground storages. Nevertheless, compared to the fourth quarter of last year, we succeeded to record an increase of 5.7% in the gas volume sold in Q1 this year. Total revenues from the gas sold amounted to RON 1.92 billion, at a 25% decline year-on-year, mainly as a result of a lower average realized gas selling price. Compared to Q4, total gas revenues were elevated by 3.8%, as the average gas selling price was quite stable over the two mentioned quarters. Total revenues from storage services adjusted by 9% year-on-year to RON 137 million, mainly due to lower revenues from capacity reservation, while withdrawal services reported an increase. Still, UGS revenues improved by 7% compared to Q4, based on the contribution of withdrawal services. Revenues from electricity added RON 109 million, 10% lower year-on-year, as a result of declined production in the old power plant. Around 70% of electricity was sold at 450 RON/MWh, in line with Government Emergency Ordinance 27 of 2022. Overall, we reported total revenues of RON 2.27 billion, at an 11% adjustment year-on-year. On the expenses side, the main two taxes included in the taxes and duties item in the P&L statement had a mixed trend as follows: windfall profit tax decreased significantly to RON 77 million due to the exemption for households and their high weight in sales. Gas and UGS royalties rose to RON 185 million, mostly due to higher gas production and royalties quota applied starting end October 2023. Altogether, these taxes, including the duty to the energy transition fund, represented an expense of RON 267 million, 58% lower year-on-year, which had a positive effect on our profitability. Bottom line, we reported a net profit of RON 1.25 billion, up by 28% year-on-year, and at a historically high quarterly value. As already mentioned, the solidarity contribution is not due anymore starting 2024, which translated into a higher profitability this year compared to 2023. Profitability rates were substantial and record high in Q1. EBITDA margin increased to 69.6%, EBIT margin is 63.6%, and net profit margin stood at a strong level of 54.8%. On the CapEx side, Romgaz Group invested a total consolidated amount of RON 460 million in Q1 2024, of which RON 338 million represented the investment of Romgaz Black Sea Limited. For the full year 2024, total investments are budgeted at RON 4.5 billion, mainly due to the high contribution of the Neptun Deep project. Regarding this project, progress of the investment is in line with the work programs and the execution schedule. Main investment activities are related to detailed execution design, procurement of equipment, drilling preparatory works, and permitting activities. The strategic focus is to finalize awarding the main contracts, focus on permitting activities, start construction, and prepare to spot the first well. As a result, ROMGAZ and OMV Petrom are on track to safely deliver the first gas from Neptun Deep in 2027, and the project remains within the up to EUR 4 billion guidance for total investment. Neptun Deep project represents the most important transaction in the Romanian energy sector in the past 30 years, and also a historical milestone in ROMGAZ corporate transformation and development. Another strategic objective is the new combined cycle gas turbine power plant in Iernut. We are now performing the remaining works to finalize the new plant until the scheduled date. Near the end of this presentation, I would like to mention the approval of dividends to be paid this year. On April 25th, the shareholders decided upon total gross dividends of RON 549 million, or a total gross dividend per share of 0.1425 RON. The total payout ratio of 21% for the last year allows Romgaz to partially finance its ambitious investment and development plans. Please note that the stated total gross dividend per share is computed taking into consideration the 10x share capital increase, with nine free shares to be granted for each share owned by shareholders on the registration date, May 29th, 2024. With this, I would like to close our presentation, and thank you for your attention. Thank you for the presentation. The line is now open to take the questions. I would like to remind you that you have the two options to address the questions, either to raise your hand or to address a written question. Ms. Ioana Andrei, please address your question. Good afternoon, and thank you for the presentation. Can you hear me? Yes, we hear you. Okay. I have several questions. First, this year you had a lower payout ratio. Now, I was wondering if this is a new strategy until Neptun Deep kicks in, or it was just special situation this year and we should be seeing dividends higher starting with next year? Second, my question is regarding sales, sales at a regulated new price of around RON 120. What are your expectations regarding volumes this year? And, third, regarding royalties, you've mentioned in the presentation an increase in royalties in some perimeters, and we already seen an increase in the first quarter. Can you tell us exactly for what percentage of the total volumes are the new higher rates applicable? And if I may, one more question regarding the budget. Do you take into consideration a revision of the budget, or do you still consider the estimated net profit achievable? Thank you. Thank you for your questions. Regarding the lower payout ratio, we, the management of ROMGAZ, expect to have this policy until Neptun Deep goes live. Because as you know, it's a capital-intensive project, so we need all available resources and also the support of our shareholders. Regarding sales at a regulated new price, we expect that around 53% of sales this year will be at regulated prices. As for royalties, the royalties quotas are applicable to the entire production, not just to some fields. As for the budget, yes, we are considering revising the budget. Once we finalize the figures, we will go to the shareholders to obtain their approval. Sorry, for the royalties, so the new higher rates are applicable to all, right? Yes. Okay. Starting with this year, well, October. Exactly. Okay. Thank you. Thank you very much. Thank you. Mr. Oleg Galbur, please address your question. Mr. Oleg Galbur, please activate your microphone, and then you can address the question. Can you hear me now? Yes, we hear you. Yes. Thank you very much for the presentation and for the opportunity to ask questions. I have three. You mentioned that the domestic gas consumption increased year-over-year by 5.5%. I was wondering whether you can give us some more details regarding the drivers behind this increase. For example, was it on the industrial consumption side, or was it the colder weather which triggered this increase, or maybe other factors? Second question, looking at the revenue devel- or, better say, earnings development in your core business upstream, and comparing this to the evolution of volume sold, which increased by 6%, if I'm not wrong, and the decline of benchmark prices on the European gas hubs. That would imply a significantly higher realized price for Romgaz. I was wondering if you can explain us what was supporting a strong increase of the realized price. Was it the volume sold to a regulated group of consumers or maybe third parties' sales? Whatever you can tell us would be very helpful. And the third question, what level of impact on earnings would you expect from the regulatory changes, and I refer to the new regulated gas and electricity prices, but also from the increase of a royalty starting this October? Thank you. Regarding your first question, we don't have the information of gas consumption based on markets or type of clients. These are information that ANRE, the national regulator, could provide. Regarding the revenue, we don't understand the question. Prices actually decreased in Q1 2024 compared to Q1 2023. While on Q1 2023, we achieved an average of RON 188 per megawatt hour. In Q1 2024, we achieved an average price of RON 150 per megawatt hour. Regarding the level, the impact on earnings from regulatory changes, as I mentioned previously, we are working on a revised budget, until then, we cannot make any information public. As for the gas royalties, the impact is estimated at about 20% increase compared to 2023 level. Okay. Thank you very much. Maybe a few follow-ups. On the second question, I was rather talking about the quarter-on-quarter comparison, so comparing Q1 to Q4, and looking at the changes in the earnings before tax, which increased significantly higher than the volume sold. But it's okay. Maybe I can discuss this in more details afterwards with the IR team. Then on royalties, you said 20% increase comparing to 2023, but you refer only to the one quarter of 2024, which is the fourth quarter, right? Comparing it to the full year of 2023 or to the fourth quarter of 2023, just to make sure. Full year 2024 should be around 20% higher than full year 2023. Understood. Thank you. Thank you. Ms. Laura Simion, please address your question and activate your microphone. Please, Hello? Yes, we can hear you. Yes, thank you for the presentation. I have a follow-up questions for the volume, for this year at regulated prices. You said 53% of the sales? Yes. If that is correct, I was thinking it's quite low because usually you pay over 80 in 2023. These are the volumes that the National Transmission Operator submitted to us- Okay - based on the demand of the market participants. I have a question about this year's CapEx. Out of the RON 4.50 billion, RON 3 billion are designated to Neptun. For the rest, if you could give us more details about the main destinations. I know you mentioned that you are looking for some renewables projects. Did you plan to start investing? I think... I I mean, in this year, CapEx are included such projects? What about your Neptun? How much CapEx do you need today to complete the project? Regarding the investments in Iernut plant, we expect to have a CapEx of RON 440 million by the end of the year. Regarding other projects in ROMGAZ CapEx plan, we expect to spend around RON 101 million in exploration activities, RON 346 million in upgrade of equipments used in gas production. We are investigating indeed investing in renewables production facilities. At the moment, we completed a feasibility study which is under analysis under internal analysis. Once we will have a result and an outcome on this, we will make the information public. So there, there are no project this year in, in renewables? This is incipient phase and probably will be in the CapEx for the next years. Yes. Okay. Thank you. Ms. Ioana Andrei, you may address your question. I have a follow-up question on Iernut power plant. Considering the level of works in progress, do you believe it will be fully functional starting with the beginning of 2025, or we might witness again some delays? We expect the project to be completed on time. We have constant communication with the constructor. We also have a site supervisor, which is constantly monitoring the evolution of the project. Based on the information we have, we will be able to complete the project. Okay. Thank you. Thank you. ... If there are any other questions? Just a quick question, if I may. Do you plan to sell the gas from Neptun Deep internally, so in the Romanian internal market, or do you plan to export it? In case you plan to do some export, can you tell us if capacity reservation has been done already or if it's physically feasible at all? Thank you. Currently, we are working on setting up the strategy to sell the gas extracted from Neptun Deep. Once we finalize this, we will inform the market. Can you tell us, just out of curiosity, what is actually the export capacity to Hungary that Transgaz actually can make available to Romgaz, for example? This information should be available on Transgaz website. Please consult that information. Miss Daniela Mândru, you may address your question. Hello, can you hear me? Yes, we can hear you. Okay. Thank you for taking my questions. Regarding the sold volumes at the regulated prices for this year, can you disclose the volumes, so terawatts? That would be the first question. And the second question relates to the budget. How come you budgeted such a low profit compared to first quarter results? Practically, in the first quarter, you achieved half of your budget for the full year. So what was wrong and or what is going to be expensed further to reach that level of profit that you budgeted? Regarding your first question, in Q1, we sold 91.7% on the regulated market. Regarding your second question, we will get back to you on that. Regarding the first question, the question was related to the quantities to be sold this year at the quarter, I understood. But for the rest of the quarters, of the three quarters, what I want from you is the volume in terawatts. For the remaining of the year. I don't have the information on hand. We will communicate that via investor relations. Okay, thank you a lot. Yes, hello. Oleg Galbur here again with a follow-up question, if I may. Please. Regarding your comments regarding the dividend payout, which you said that it's rather to stay at last year's level before Neptun Deep goes live. Assuming or based on the expected CapEx for the development of Neptun Deep, and assuming that gas prices stay around current levels, your level of indebtedness, the debt equity ratio would not go or should not go at least above 30% during this high CapEx years. And still, which means that you would have sufficient cash to pay, let's say, a higher share of your net profit in dividends, and yet you try to stay to be very conservative here. Can you explain the reason for such a conservative approach? Does it mean that you plan to spend more CapEx on other large-sized projects such as renewables maybe, or this is just to maintain an extremely healthy balance sheet? What is the strategy behind this? Thank you. Currently, we estimate that on the Neptun Deep project, we are going to spend around EUR 2 billion. Apart from the investment in this project, we also have investments in our onshore production facilities. As already mentioned, we are considering issuing an EMTN program this year. However, this is a process that is taking some time, so we consider that a low level of dividends is securing the cash needed to buffer, let's say, any cash shortfall that might come up if the dividend payout ratio would be higher. Also, please bear in mind that in July, we will have to pay... In June, sorry, we will have to pay the solidarity contribution, which amounts to about RON 1.8 billion. Miss Daniela Mandru, you may address your question. Yes, I'm turning back to my first, to the second, my second question that, from my understanding, was not answered. So regarding the budget, the question was for 2024. The question was, what is so different from the first quarter of 2024? I mean, the results in the first quarter of this year, the net profit is about half of the full budget for the year. So, from where this difference is, or if you budgeted something for the following quarters, a large expense, in order to, to reduce the full year profit, to just RON 2.5 billion, while in the first quarter of the year, you recorded about half of this amount. As already said, we will get back to you on that question. Ah. Through our team of investor relations. Okay, I understood that you'll follow up with the question related to the regulated volumes, quantities. Okay. Thank you. Thank you. Thank you. ... Mr. Oleg Galbur, please address your question.... Mr. Oleg Galbur, please address your question. Yes, sorry, I was not able to unmute myself to follow up with a question on your answer. up with a question on your answer. What I wanted to ask, does your dividend policy somehow correlated with the level of indebtedness that you would like to have during this high CapEx years? Be it in terms of debt to equity or target capital structure, whatever. Meaning that you don't want to go above a certain level of indebtedness, and that's why you decided to stay more cautious with the dividend payout. Yes, the dividend policy is correlated with the level of indebtedness. Higher dividends means higher indebtedness, which again means higher interest expenses, which translate into lower profit, and therefore, lower dividends going forward for the shareholders. Yes, that's, that's clear, of course, but I was wondering if you have a, a level in mind which you don't want to cross, in terms of, again, debt-to-equity ratio or some sort of, indebtedness ratios. Because so far you have a very healthy balance sheet, and it will not deteriorate much even if you increase the level of debt. This is what I have in mind. According to our plans, we want to keep the indebtedness lower than 4.5 debt to EBITDA. Okay, that's very helpful. Thank you. Mr. Adam Milewicz, please address your question. I ask them directly. First question: How much of gas did you sell to regulated clients, I mean, households and thermal producers, in 1Q? And second question: This 53% of gas sales to regulated clients, is this related to the whole 2024, or period between April and December 2004? Thank you. In Q1, we sold 91.7% of gas at regulated prices, which means roughly 11.6 million megawatt hours. As for the full year 2024, we expect that around 53% of gas will be sold at regulated prices. Okay, so I understand that from April, even lower than this 53% should be sold to households and thermal energy producers here, given the fact that 91% was sold in Q1. Am I right? Yes, you are correct. Okay, thank you. The unknown caller, please activate your microphone and address the question. Regarding the Solidarity Contribution, can you tell us if it was booked as an expense in the previous quarters, or will it be booked later this year? Because I understand that the payment will be made later this year. Thank you. Solidarity Contribution was recorded in 2023. The liability is due in June 2025... 2024, sorry. All right. Got it. Thanks. You're welcome. Miss Daniela Mandru, please address your question. Regarding the budget again, how much power do you budget to sell this year? ... I'm referring to volumes, of course. We estimate that in 2024 we will sell 589,000 megawatt hours. Please be aware that starting September 1 we plan to shut down the current plant in order to start the test on the new plant. Mm-hmm. Yes, and, now, regarding this segment, I've noticed, I don't know, if my computation is correct, you may confirm. I've noticed an increase in realized power price year-on-year in this quarter. It is correct? Just by computing, I assumed a 7% technological consumption. I divided the sales by the net sales, of course, so production minus technological consumption, and I obtained a higher realized price compared with Q1 2023. Are you talking about electricity, right? Or gas? Electricity. Electricity. Yes, electricity. For me, it was just a curiosity. You can, we can, follow up with the IR. But, just I noticed this, and I don't have an explanation for it. Actually, the price was lower. Okay. In 2023, we had an average price of EUR 400 per MWh, and in this quarter, around EUR 445. 45. Yes. Okay, thank you. Thank you. Thank you a lot. Mr. Adam Milewicz, please address your question. Hi, just follow-up questions. Because assuming that 53% of gas sales in this year will be dedicated to regulated clients, it means that these sales will decrease by, I think, 50%, which will help. So who will be selling gas to households and thermal producers in place of you? Because it means that your sales to households and thermal producers could decrease by 50%. Thank you. The quantities we are going to sell at regulated prices were determined by the National Gas Transmission operator, Transgaz. We don't know how the suppliers calculated the quantities needed. Maybe they have the remainder of the quantity in storages. Okay, thank you. If there are any other questions, please feel free to address them. If there are no further questions, we will conclude this conference call. Thank you very much for your questions. If you need further information, please contact our investor relations team. The conference is now concluded. On behalf of ROMGAZ team, thank you for attending today's conference call. Goodbye.