Mariana Gheorghe, chief executive officer of Petrom: “The unfavorable oil price environment and deteriorating economic situation that continued through the first quarter of 2009 burdened our results. However, we benefited from the positive influences of both our hedging strategy and our ongoing restructuring efforts, which helped mitigate the effects of the current difficult operating environment. We will continue to pursue our sizeable investment program, although at a slower pace compared to 2008, in order to achieve the company’s long-term development objectives.

The corporate loan of up to EUR 300 million secured through the EBRD at the end of March 2009, as part of a larger financing program agreed in 2008, further strengthens our financial standing and supports our efforts to ensure the sustainable development of our business. With a continuous emphasis on efficiency improvement and cost monitoring coupled with prudent financial leverage, we are confident in the company’s ability to successfully overcome the challenges of a weakening market environment and to consolidate its leading position in the oil and gas industry.”

As compared to fourth quarter of 2008 (Q4/08), Petrom’s net turnover in Q1/09 decreased by 19%, driven by decrease in fuels selling prices and quantities.

Operating expenses in first quarter of 2009 (Q1/09) decreased by 3% compared to first quarter of 2008 (Q1/08), to RON2,719 million . Main impacts result from the decrease in raw materials by RON281 million due to the decrease in prices for imported crude, partially compensated by an increase of depreciation by RON141 million due to higher investments.

EBIT amounted to RON180 million, considerably below that of Q1/08 (RON1,029 million), significantly impacted by the decrease in operating revenues caused by lower selling prices for petroleum products. The EBIT of Q1/09 was considerably higher than the EBIT registered in Q4/08 RON1,200 million as this was impacted to a large extent by the charges for employees’ litigation provision.

The company’s financial result increased in Q1/09 to RON360 million from RON123 million in Q1/08, predominantly as a result of realization of oil price hedging and higher net foreign exchange gains. Oil price hedging generated a financial gain as average oil prices in Q1/09 were below $65/bbl, and therefore Petrom had a positive effect of $15/bbl for the hedged quantity of 40,000 bbl/d, that was realized in Q1/09. As compared to Q4/08 the company’s financial result increased in Q1/09 mainly due to realization of the oil price hedging and exchange rate gains.

The corporate tax charge decreased by RON142 million in Q1/09 compared to Q1/08, reaching RON34 million, as a result of lower gross profit and higher non-taxable income related to use of provisions. The corporate tax charge increased by RON7 million in Q1/09 compared to Q4/08, reaching RON34 million, due to an increase in gross profits, partly compensated by a decrease in non-deductible expenses.

Net profit decreased significantly in Q1/09 compared with Q1/08 as a consequence of the reduced operating result; compared with Q4/08, the net profit of Q1/09 increased, as consequence of positive impacts from both operating and financial activity.

Despite the company’s significantly reduced results, the contribution to the State budget is almost the same. Petrom contributed RON1,422 million to the State budget in Q1/09, only 2% less than in Q1/08. In Q1/09, profit taxes stood at RON34 million, royalties amounted to RON125 million and social contributions paid totaled RON112 million. Petrom’s contribution to the state budget via indirect taxes was mainly represented by excise (RON845 million) and VAT (RON140 million).

Total investments in Q1/09 were RON1,172 million, 43% down from Q1/08.

Exploration and Production (E&P)

— Q1/09 saw the return to a positive EBIT, despite the low oil price environment; a stronger USD could mitigate the burden of a weaker oil price to some extent

— Domestic production costs in RON/boe were 12% higher compared to Q1/08, but significantly lower in USD terms due to the strengthening of the USD

Beginning with Q1/09, Petrom is reporting its segment results before taking into account the necessary elimination of intersegmental profits. The change in these unrealized profits is reflected in the consolidation adjustment.

EBIT decreased by 74% compared to Q1/08, to RON329 million , as oil prices more than halved – over the same period, average Urals prices in USD fell 53%. E&P EBIT does not include the positive hedging effect registered in Q1/09, which is reported in the financial result according to RAS.

E&P investments in Romania amounting to RON672 million (57% of the total investments), were 62% lower compared to the same period the previous year as Q1/08 investments included the acquisition cost of the oil service business from Petromservice. In Q1/09 E&P investments focused mainly on the drilling program and development of the most promising fields. Petrom SA exploration expenditures amounted to RON31 million in Q1/09, all of which were expensed; an additional RON21 million was expensed for wells that commenced drilling in 2008.

The domestic realized crude price decreased by 54% compared to Q1/08 to $38.94/bbl, in line with the lower prevailing oil prices. In RON terms, the domestic realized crude price decreased by only 39% compared to Q1/08, supported by the strengthening of the USD against the RON.

Domestic production costs in RON/boe increased 12% in comparison to Q1/08, to 47.09 RON/boe, driven by higher material and service costs. However, when expressed in USD, domestic production costs registered a 16% reduction, to $14.36/boe, due to the strengthening of the USD which more than compensated for the negative volume effects.

Group oil and gas production fell by 4% to 17.3 million boe compared to Q1/08. Oil and gas production in Romania amounted to16.82 million boe in Q1/09, 4% lower than in Q1/08. Group oil production reached 8.28 million boe, 2.81% lower than Q1/08, as a result of the lower level of oil production in Romania. In Q1/09, domestic crude oil production amounted to 7.89 million boe. Oil production registered a decrease of 3% compared to Q1/08, on account of the lower additional production achieved from the new wells, due to lower investments, and from the reduction of workovers.

Natural gas production was 1,366 million cbm, 5% lower than in Q1/08. Gas production decreased mainly due to the reduction of the activity of fertilizer and chemical producers and to the transportation limitations incidental to a higher pressure system. Compared to Q1/08, the higher contribution from new wells and workovers has partially offset the decline of the old gas wells (six new wells drilled in Q1/09 vs two wells drilled in Q1/08). During the Russian-Ukrainian gas crisis in January 2009, Petrom has made a significant contribution ensuring the security of gas supply for Romania by putting on stream three additional high producer wells – 20 Valeni, 571 Torcesti and 19 Paraieni.

Oil and gas production in Kazakhstan amounted to 482 thousand boe in Q1/09, 6.6% higher compared to Q1/08, as a result of a successful well workover intervention program.

Turnaround program

The Q1/09 drilling program registered a total number of 42 wells completed, 14% less than same quarter last year due to the budget constrains.

Development of the Mamu field has continued, with drilling of the first gas well 4335 Mamu finalized. The well was completed and production tests started. Work to upgrade the existing gas treatment facilities has continued. Several options are currently under review, taking into account the limitations in the national transportation system and the gas market forecast in Romania.