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Introduction & Market Context
Romanian natural gas producer Societatea Nationala de Gaze Naturale Romgaz SA (BVB:SNG) reported its first quarter 2025 results on May 16, highlighting revenue growth despite challenging market conditions. CEO Răzvan Popescu presented the company’s performance against a backdrop of evolving energy transition and regulatory pressures in Romania.
The Romanian natural gas market saw consumption rise by 2% to 41 TWh in Q1 2025, with imported gas volumes surging by almost 70% to represent 21% of total consumption, up from 13% in the same period last year. This occurred as average reference prices on the Central European Gas Hub increased by approximately 60%.
As shown in the following chart of natural gas consumption and pricing trends:
Romgaz continues to operate within a regulated environment, with the government maintaining a regulated gas selling price of 120 RON/MWh for households and heat producers through March 2026, down from 150 RON/MWh in Q1 2024. While this regulation exempts the company from windfall profit taxes on regulated sales, it also constrains pricing flexibility.
Quarterly Performance Highlights
Romgaz maintained stable natural gas production at 1.29 billion cubic meters (bcm) in Q1 2025, representing a marginal decrease of 0.4% year-over-year but 0.6% higher than the quarterly average over the past three years. The company achieved this performance through targeted operational improvements, including the reactivation of 38 inactive wells that contributed an additional 32.03 million m³ of production.
The following chart illustrates Romgaz’s natural gas production trends:
Total (EPA:TTEF) revenues increased by 4.7% to 2.38 billion RON compared to 2.27 billion RON in Q1 2024. Gas sales volumes grew by 15% to 1.386 billion cubic meters, generating revenues of 2.09 billion RON, a 5% increase year-over-year. However, this volume growth was partially offset by lower average selling prices due to the reduced regulated price regime.
Romgaz maintained its dominant position in the Romanian gas market, accounting for 36% of total gas deliveries and approximately 45% of domestically produced gas consumption in Q1 2025, as shown in the following chart:
Detailed Financial Analysis
Despite revenue growth, Romgaz’s profitability metrics declined compared to the exceptionally strong Q1 2024. EBITDA fell 18% to 1.309 billion RON, while net profit decreased 24% to 951 million RON. However, the company emphasized that Q1 2025 net profit still exceeded the quarterly average of the past three years by 44%.
The decline in profitability was largely attributed to a substantial increase in taxation. The windfall profit tax surged more than fourfold to 322 million RON, compared to 77 million RON in Q1 2024, primarily due to a lower proportion of sales to households. Overall, taxes increased by 86% to 496 million RON.
Despite these pressures, Romgaz maintained robust profitability margins, with EBITDA margin at 55.0%, EBIT margin at 47.5%, and net profit margin at 40.0%, as illustrated in the following chart:
The company’s electricity business showed mixed results, with production increasing to 200 GWh in Q1 2025, while revenues from electricity improved by 3.5% to 113 million RON. This improvement was attributed to the removal of price caps starting January 1, 2025.
Storage services remained resilient, generating revenues of 136 million RON, with capacity reservation and withdrawal services accounting for 54% and 44% respectively of storage revenues.
Strategic Initiatives
Capital expenditures increased significantly to 854 million RON in Q1 2025, with 73% allocated to the development of the Neptun Deep offshore project. This strategic investment represents Romgaz’s commitment to future growth and maintaining its position as Romania’s leading gas supplier.
The following chart shows the breakdown of capital expenditures:
The Neptun Deep project, a joint venture with OMV Petrom, is progressing according to schedule, with the first gas production well spudded in Q1 2025. The companies remain on track to deliver first gas in 2027, with total investment expected to remain within the 4 billion EUR guidance.
Romgaz also reported approximately 98% completion of its Combined-Cycle Gas Turbine power plant in Iernut, though the company noted challenges including the contractor’s financial situation and technical issues that could potentially delay final commissioning.
On April 29, 2025, shareholders approved a total gross dividend of 604 million RON, or 0.1568 RON per share, representing a 20% payout ratio. This conservative dividend policy allows Romgaz to retain capital for its ambitious investment program, as shown in the dividend history below:
Forward-Looking Statements
Looking ahead, Romgaz remains focused on the development of the Neptun Deep project as its primary growth driver. The company also highlighted ongoing efforts to enhance its onshore portfolio through well reactivation, infrastructure optimization, and field rehabilitation projects.
The company published its Sustainability Statement for 2024 on April 30, prepared in accordance with European Sustainability Reporting Standards, providing investors with insights into the company’s sustainability policies, actions, and targets.
Romgaz faces ongoing challenges from regulatory pressures and increased taxation, but its strong market position, robust margins, and strategic investments position the company to maintain its leadership in the Romanian energy sector as the country navigates its energy transition.
Full presentation:
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