OMV Petrom S A separate financial statements 2025 according to IFRS

OMV PETROM S.A. SEPARATE FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2025

Prepared in accordance with Order of the Minister of Public Finance no. 2844/2016 approving the accounting regulations compliant with the International Financial Reporting Standards

Contents

SEPARATE STATEMENT OF FINANCIAL POSITION 3

SEPARATE INCOME STATEMENT 4

SEPARATE STATEMENT OF COMPREHENSIVE INCOME 5

SEPARATE STATEMENT OF CHANGES IN EQUITY 6

SEPARATE STATEMENT OF CASH FLOWS 7

NOTES TO THE SEPARATE FINANCIAL STATEMENTS 8

SEPARATE STATEMENT OF FINANCIAL POSITION AS OF DECEMBER 31, 2025

(all amounts are expressed in million RON, unless otherwise specified)

SEPARATE INCOME STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 2025

(all amounts are expressed in million RON, unless otherwise specified)

SEPARATE STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2025

(all amounts are expressed in million RON, unless otherwise specified)

SEPARATE STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31, 2025

(all amounts are expressed in million RON, unless otherwise specified)

For details on equity components, see Note 12.

SEPARATE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2025

(all amounts are expressed in million RON, unless otherwise specified)

OMV PETROM S.A.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2025

(all amounts are expressed in million RON, unless otherwise specified)

1. LEGAL PRINCIPLES AND BASIS OF PREPARATION

   OMV Petrom S.A., with its headquarter based at 22 Coralilor Street, 013329 Bucharest, Romania, hereinafter referred to also as "the Company" or "OMV Petrom", has activities in Exploration and Production (E&P), Refining and Marketing (R&M) and Gas and Power (G&P) business segments and it is listed on Bucharest Stock Exchange under "SNP" code.

   Stockholders' structure as at December 31, 2025 and 2024

   	Percent 2025	Percent 2024
   OMV Aktiengesellschaft	51.157%	51.157%
   Romanian State	20.698%	20.698%
   Natural and legal persons	28.145%	28.145%
   Total	100.000%	100.000%

   Statement of compliance

   These separate financial statements ("financial statements") of the Company have been prepared as required by law, in accordance with Minister of Public Finance Order no. 2844/2016 approving the accounting regulations compliant with the International Financial Reporting Standards, with all subsequent modifications and clarifications.

   The list of investments held by the Company in other entities and details about these investments are presented in Note 8.

   The accounting method used for reflecting the investments in these separate financial statements is presented in Notes 4.3

   i) and 4.3 r).

   The Company also prepares consolidated financial statements in accordance with IFRS as endorsed by the European Union (EU), which are available on the Company's website:

   https://www.omvpetrom.com/en/investors/publications.

   The financial year corresponds to the calendar year.

   Basis of preparation

   The financial statements of OMV Petrom S.A. are presented in RON ("Romanian Leu") and are prepared using going concern principles. All values are presented in millions, rounded to the nearest two decimals. Accordingly, there may be rounding differences. The financial statements have been prepared on the historical cost basis, except for certain items that have been measured at fair value as described in Note 4 Accounting and valuation principles. For details on fair value of financial assets and liabilities see Note 30.

2. EFFECTS OF CLIMATE CHANGE AND ENERGY TRANSITION

   OMV Petrom has considered the short- and long-term effects of climate change and the energy transition in preparing the financial statements. They are subject to uncertainty and they may have a significant impact on the assets and liabilities currently reported by the Company.

   The Company is exposed to climate-related risks, such as risks associated with the energy transition, including risks for stranded assets, decrease in demand for fossil products, and regulatory risks. The risks from climate change and their management are described in the Sustainability Statement chapter, part of the Directors' Report, included in the Report of the governing bodies in the Annual Report.

   The Company's targets and commitments to decarbonization

   In 2021, the Company defined the first time 2030 targets for its emissions reductions and stated its commitment to achieving net-zero operations (Scopes 1 and 2) in 2050. We continue our relentless efforts to reduce our emissions from operations (Scopes 1 and 2), targeting an absolute reduction of 30% by 2030, when compared to the baseline year of 2019. In light of current market conditions and the broader economic environment, we are reassessing some of our Scope 3-targets. We remain committed to pursuing sustainable decarbonisation, in line with the evolving energy transition context: we are repacing our reduction target for the carbon intensity of our energy supply i in 2030 to 10% from 20% before. This target covers Scope 1 direct GHG emissions and Scope 2 indirect GHG emissions for fully owned assets and assets where OMV Petrom's interest is less than 100% but more than 50%, and where OMV Petrom operates a joint venture and Scope 3 indirect GHG emissions from category 11 (use of sold products) to third parties. Our focus remains on reducing absolute GHG emissions from our operations and increasing the share of low and zero-carbon energy products in our portfolio. In addition we have decided to withdraw the previously communicated 2030 absolute Scope 1-3 reduction target.

   OMV Petrom Group allocated for the period 2025-2030 approximately RON 10 billion gross capital expenditure to projects relating to sustainable business transformation, development of low-carbon business solutions, and operational efficiency measures.

   Effects on estimation uncertainty

   The significant accounting estimates performed by management incorporate the future effects of OMV Petrom's own strategic decisions and commitments on having its portfolio aligned with the energy transition targets, short and long-term impacts of climate risks and the energy transition to lower carbon energy sources, together with management's best estimate on global supply and demand, including forecast commodities prices.

   Nevertheless, there is significant uncertainty surrounding the changes in the mix of energy sources over the next 30 years and the extent to which such changes will meet the ambitions of the Paris Agreement. While companies can commit to such ambitions, financial reporting under IFRS requires the use of assumptions that represent management's current best estimate of the range of expected future economic conditions, which may differ from such targets. These assumptions include expectations of future worldwide decarbonization efforts and the transition of economies to net zero emissions.

   ‌i The base for the emission reduction targets are the Group's emissions in 2019.

   The Company uses two different scenarios: the base case and the "net zero emissions by 2050" case. The scenarios differ in the underlying expectations of the pace of future worldwide decarbonization and lead to different assumptions for demand, prices and margins of fossil commodities.

   ‌The base case is guided by the IEA Stated Policies Scenario (STEPS)ii. It considers specific energy, climate, and related industrial policies that have been adopted or put forward, as well as policy intentions not yet codified into law but supported by markets, infrastructure, and financial conditions. The STEPS scenario is not in line with the goals of the Paris agreement of holding warming to well below 2°C above pre-industrial levels. Underlying supply and demand are inspired by STEPS and the corresponding price assumptions were developed internally. The base case is used for mid-term planning as well as for estimates relating to the measurement of various items in the financial statements, including impairment testing of nonfinancial assets and the measurement of provisions.

   In the prior year, the base case price assumptions applied by the Company were inspired by the IEA Announced Pledges Scenario (APS) which was no longer included in the World Energy Outlook published by the IEA in October 2025. Compared to the APS scenario, which was based on the assumption that all decarbonization pledges announced by governments around the world are met on time and in full, the STEPS scenario assumes higher trajectories for oil and gas demand and lower growth rates for renewables. This change in the underlying energy transition pathway resulted in higher oil and gas prices applied in the 2025 mid-term planning and impairment testing in comparison to the previous year.

   The "net zero emissions by 2050" case which is based on a faster decarbonization path than the base case is used for calculating sensitivities in order to recognize the uncertainty of the pace of the energy transition and to better understand the financial risk of the energy transition on the Company's existing assets. The assumptions used in this case are in line with the Net Zero Emissions by 2050 (NZE) scenario modeled by the IEAii. It shows a pathway for the global energy sector to achieve net zero GHG emissions by 2050 and is compatible with limiting the temperature increase to 1.5°C by 2100.

   For investment decisions, business cases are calculated using the price and demand assumptions according to the base case. These assumptions are the same as for mid-term planning and impairment tests. In addition, a stress test based on the commodity price assumptions of the "net zero emissions by 2050" scenario is mandatory for all investment decisions in order to assess the risk of stranded assets in this decarbonization scenario.

   Recoverability of assets

   The following table summarizes the carrying amounts of the intangible assets and Property, plant and equipment (PPE) disaggregated according to the type of assets:

   Carrying amounts as of December 31, 2025

   (RON million)	Segment	Intangible assets	Property, plant and equipment
   Refining and other related assets	Refining and Marketing	19.92	6,155.01
   Oil and gas exploration and evaluation	Exploration and Production	423.15	-
   Oil and gas production	Exploration and Production	2.77	26,342.12
   Power plant, gas assets and other	Gas and Power	80.04	1,408.45
   Other	Corporate and Other	0.02	467.47
   Total		525.90	34,373.05

   ‌iiBased on the World Energy Outlook 2024 report published by the International Energy Agency (IEA).

   Carrying amounts as of December 31, 2024
   (RON million)	Segment	Intangible assets	Property, plant and equipment
   Refining and other related assets	Refining and Marketing	13.48	5,537.72
   Oil and gas exploration and evaluation	Exploration and Production	400.76	-
   Oil and gas production	Exploration and Production	2.94	22,096.95
   Power plant, gas assets and other	Gas and Power	85.65	1,347.55
   Other	Corporate and Other	0.05	450.09
   Total		502.88	29,432.31

   Commodity price assumptions have a significant impact on the recoverable amounts of Exploration & Evaluation (E&E) assets and PPE. For the impairment tests, the price set as defined for mid-term planning and derived from the base case as described above was used. Costs for CO2 emissions are taken into account to the extent that carbon pricing schemes are in place. Disclosures on the impairment tests are included in Note 3c) Judgements, estimates and assumptions and Note 22 Cost information.

   The base case oil and CO2 price assumptions and the exchange rates RON-USD and RON-EUR used for impairment testing are listed below (in 2025 real terms for 2025 and 2024 real terms for 2024):

   2025 Oil and CO2 price assumptions for base case and impairment testing 2026 2027 2028 2029 2030 2040 2050

   Brent oil price (USD/bbl)	64	67	71	69	68	71	71
   RON/USD exchange rate	4.43	4.43	4.43	4.43	4.43	4.43	4.43
   Brent oil price (RON/bbl)	283	298	313	307	301	317	316
   CO2 price EUA (EUR/t)	74	88	102	102	100	135	143
   RON/EUR exchange rate	5.10	5.10	5.10	5.10	5.10	5.10	5.10
   CO2 price EUA (RON/t)	375	448	518	518	508	690	732

   2024 Oil and CO2 price assumptions for base case and impairment testing

   	2025	2026	2027	2028	2029	2030	2040	2050
   Brent oil price (USD/bbl)	73	72	71	69	68	67	63	56
   RON/USD exchange rate	4.64	4.43	4.43	4.43	4.43	4.43	4.43	4.43
   Brent oil price (RON/bbl)	341	320	314	308	302	296	280	247
   CO2 price EUA (EUR/t)	69	86	104	111	118	125	147	147
   RON/EUR exchange rate	5.10	5.10	5.10	5.10	5.10	5.10	5.10	5.10
   CO2 price EUA (RON/t)	350	441	529	566	602	636	750	750

   Sensitivities based on the "net zero emissions by 2050" climate scenario have been calculated to test the resilience of

   assets against the risks of the energy transition.

   The assumptions of the oil and CO2 price used in the sensitivity analysis are included in the table below (in 2025 real terms):

   2025 Oil and CO2 price assumptions for "net zero emissions by 2050" sensitivities 2026 2027 2028 2029 2030 2040 2050

   Brent oil price (USD/bbl)	64	59	54	49	44	32	27
   RON/USD exchange rate	4.43	4.43	4.43	4.43	4.43	4.43	4.43
   Brent oil price (RON/bbl)	283	261	239	217	195	140	118
   CO2 price EUA (EUR/t)	78	91	104	116	127	186	227
   RON/EUR exchange rate	5.10	5.10	5.10	5.10	5.10	5.10	5.10
   CO2 price EUA (RON/t)	400	466	530	591	649	950	1,158

   The "net zero emissions by 2050" sensitivities for oil and gas assets were calculated using a simplified method and are based on a discounted cash flow model in line with the impairment testing calculations. The cash flows are based on adjusted mid-term planning for the next three years and life of field planning for the remaining years until abandonment. The "net zero emissions by 2050" case does not include any changes to input factors other than prices and volumes. The calculation considers an earlier economic cut-off date for oil and gas fields if the revenues impacted by lower prices are not sufficient to cover the costs. But it especially does not take into account any restructurings, cost reduction measures, divestments or other changes in the business plans that are not included in the base case. The amounts presented therefore should not be seen as a best estimate of an expected impairment impact following such a scenario.

   The CO2 costs considered for oil and gas assets are based on the CO2 prices in the IEA NZE by 2050 scenario. CO2 costs

   are included for 100% of OMV Petrom's share of direct emissions.

   The sensitivities calculated based on the "net zero emissions by 2050" case indicate that there is a risk of impairments of oil and gas assets. The carrying amounts of the oil and gas assets with proved reserves would decrease by RON 12 billion. In addition, all oil and gas assets with unproved reserves would be abandoned with a pre-tax loss of RON 0.4 billion. The total post-tax impact on profit or loss would be RON 10 billion.

   OMV Petrom plans to transform its refinery so that it will stay competitive as the decarbonization of fossil fuels progresses. A production portfolio will be developed to adapt the refinery for renewable fuels and sustainable feedstocks production.

   OMV Petrom's refining indicator margins applied for impairment testing average USD 7.3/bbl for the 15 years until 2040. The utilization rates assumed in the impairment test average 92% for the 15 years until 2040.

   Given the high level of uncertainty and the complexity of the interplay between various driving factors in a "net zero emissions by 2050" climate scenario for the refinery, sensitivities based on changes in operating result are disclosed.

   A decrease in the operating result of 20% over the entire cash flow projection period and in the terminal value would not result in impairment of the Petrobrazi refinery.

   The carrying amounts of assets in the G&P segment are not expected to be at risk in "net zero emissions by 2050" scenario.

   Useful life

   The pace of the energy transition may have an impact on the remaining useful life of assets. OMV Petrom has already started implementing an investment program to transform its refinery and retail assets. It is, therefore, predicted that the energy transition will not have a material impact on the expected useful life of existing property, plant, and equipment in the R&M segment.

   In the E&P segment, oil and gas assets are depreciated using the unit-of-production method as described in Note 4.3 e) which is based on proved reserves. According to the current production plans, 44% of proved reserves as of December 31, 2025, will be left by 2030, 5% by 2040, and nil by 2050. The existing oil and gas assets with proved reserves (without considering any future investments) will therefore be significantly depreciated by 2030 and fully depreciated by 2050.

   As OMV Petrom doesn't see the existing assets in the G&P segment materially impacted by the energy transition, there is

   also no material impact on useful lives in this segment expected.

   Decommissioning provisions

   The carrying amounts and maturity profile of decommissioning provisions are as follows:

   Estimation of maturities and cash outflows of decommissioning and restoration obligations 2025 (RON million) Carrying amount Undiscounted inflated costs

   ≤1 year	425.04	453.38
   1 - 10 years	4,254.82	6,206.17
   11 - 20 years	5,555.80	13,884.08
   21 - 30 years	140.66	540.87
   >30 years	-	-
   Total	10,376.32	21,084.50

   	2024
   (RON million)	Carrying amount	Undiscounted inflated costs
   ≤1 year	271.35	293.60
   1 - 10 years	3,393.19	5,226.15
   11 - 20 years	4,674.13	13,033.33
   21 - 30 years	245.20	1,158.41
   >30 years	-	-
   Total	8,583.87	19,711.49

   The speed of the energy transition will influence the timing of the decommissioning of oil and gas wells and facilities. In the "net zero emissions by 2050" scenario, some oil and gas fields could be shut down earlier. Given the low real interest rates used in the calculation and assuming a similar yearly abandonment capacity, there would not be any material impact on the book value of the decommissioning provisions.

   For Petrobrazi refinery site built on owned land, no decommissioning provisions are recognized considering that this plant is a long-lived asset that will continue to be used in an energy transition scenario. There are significant investments planned in the coming years with the goal of transforming the refinery site in the direction of renewable fuels and sustainable feedstock production and implementation of these plans already started.

   Deferred tax assets

   In the "net zero emissions by 2050" scenario, based on the simplified recoverability analysis, deferred tax assets related to

   additional impairments would be considered recoverable.

   Impact on ability to pay dividends

   The management assessed the impact of the "net zero emissions by 2050" scenario on the ability of OMV Petrom to pay dividends. The potential impairment loss in this scenario in the period 2025 would not impact the ability to pay dividends in 2026 because of the strong result and financial reserves at the level of the financial statements of OMV Petrom which are the basis for dividend payments.

   Emissions certificates and CO2 costs

   Directive 2003/87/EC of the European Parliament and the European Council established a greenhouse gas emissions trading scheme, requiring member states to draw up national plans to allocate emissions certificates. The directive sets up a cap-and-trade system, where a cap is placed on the total amount of certain greenhouse gases that can be emitted by installations covered by the system. Companies report their emissions annually and surrender enough allowances to cover their emissions. Romania was admitted to the scheme in January 2007, when it joined the EU.

   Under this scheme, OMV Petrom S.A. is entitled to a yearly allocation of free emissions certificates and purchases additional certificates for any remaining shortfall.

   Total expensed CO2 costs amounted to RON 916.21 million in 2025 (2024: RON 829.45 million). The provisions for CO2 emissions are presented within current other provisions and amounted to RON 916.94 million in 2025 (2024: RON 829.45 million). The accounting policies for emissions certificates are described in Note 4 Accounting and valuation principles.

   In 2026, OMV Petrom expects to surrender 2,791 thousand emissions certificates from the European Emissions Trading Scheme.

   Emissions certificates1

   Number of certificates, in thousands

   European Trading Scheme	December 31, 2025	December 31, 2024
   Certificates held as of January 1	3,209	2,910
   Free allocation for the year	549	549
   Certificates surrendered2	2,922	2,496
   Net purchases/(sales) during the year	2,017	2,246
   Certificates held as of December 313	2,853	3,209

   1One certificate entitles the holder to emit 1 t of green house gases (in CO2e) during a defined period of time.

   2According to verified emissions for the prior year.

   3Amounts in balance related to emission rights are presented in Note 10 Other assets.

3. JUDGMENTS, ESTIMATES AND ASSUMPTIONS

   Preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the amounts reported for assets, liabilities, income and expenses, as well as the disclosures in the notes. Estimates and judgments are continuously evaluated and are based on management's experience and other factors that are deemed reasonable at the date of preparation of these financial statements. However, uncertainty about these assumptions and estimates could result in actual outcomes that may differ from these estimates and may require a material adjustment to the carrying amount of the assets or liabilities affected in future periods.

   Other disclosures relating to the Company's exposure to risks and uncertainties in relation to capital management and

   financial risk management and policies are included in Note 33. Changes in estimates are accounted for prospectively.

   Correction of material prior period errors is made retrospectively, through retained earnings, by restating the comparative amounts for the prior period(s) presented in which the error occurred or if the error occurred before the earliest prior period presented, restating the opening balances of assets, liabilities and equity for the earliest prior period presented. Errors which are not material are corrected in the period when they are discovered, through the income statement.

   Significant estimates and assumptions were required in particular with regards to the effects from the climate crisis and energy transition. These estimates and assumptions are described in Note 2 Effects of climate change and energy transition.

   Estimates and assumptions

   The key assumptions concerning the future and other key sources of uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market change or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

   1. Oil and gas reserves

      The oil and gas reserves are estimated by the Company's petroleum experts in accordance with internal regulations which are aligned with international and industry agreed standards based on the availability of geological and engineering data, reservoir performance data, drilling of new wells and commodity prices, and reassessed at least once per year. The estimates are reviewed externally periodically (usually every two years). The last external assessment for oil and gas reserves for traditional portfolio was performed in 2025 for the reserves evaluated as of year-end 2024.

      The oil and gas assets are depreciated on a unit of production basis at a rate calculated by reference to either total proved or proved developed reserves (please refer to depreciation, amortization and depletion accounting policy below), determined as presented above. Changes to the estimates of oil and gas reserves impact prospectively the amount of amortization and depreciation. The carrying amount of oil and gas assets at December 31, 2025 is shown in Notes 6 and 7.

      The level of estimated reserves is also a key determinant in assessing whether the carrying value of any of the Company's development and production assets should be impaired. Downward revisions of these estimates could lead to impairment of the asset's carrying amount.

   2. Provisions for decommissioning and restoration obligations

      The Company's core activities regularly lead to obligations related to dismantling and removal, asset retirement and soil remediation activities. These decommissioning and restoration obligations are principally of material importance in the Exploration and Production segment (oil and gas wells, onshore and offshore facilities). At the time the obligation arises, it is provided for in full by recognizing the present value of future decommissioning and restoration expenses as a liability. An equivalent amount is capitalized as part of the carrying amount of long-lived assets. Any such obligation is calculated on the basis of best estimates.

      Decommissioning costs will be incurred by the Company at the end of the operating life of some of the facilities and properties.

      Estimates of future restoration costs are based on current contracts concluded with suppliers, reports prepared by OMV Petrom experts or by independent contractors, as well as past experience. Any significant downward changes in the expected future costs or postponement in the future affect both the provision and the related asset, to the extent that there is sufficient carrying amount. Otherwise the provision is reversed to income. Significant upward revisions trigger the assessment of the recoverability of the underlying asset.

      Provisions for decommissioning and restoration costs require estimates of discount rates and inflation rates, which have a material effect on the amount of the provisions (see Note 13).

      The ultimate decommissioning and restoration costs are uncertain and cost estimates can vary in response to many factors including changes to relevant legal requirements, the emergence of new restoration techniques or experience at other production sites. The expected timing and amount of expenditure can also change, for example, in response to changes in reserves or changes in laws and regulations or their interpretation. As a result, there could be significant adjustments to the provisions established which would affect future results.

   3. Impairment of non-financial assets

      The Company assesses each asset or cash generating unit (CGU) at each reporting period to determine whether any indication of impairment exists or whether past impairments should be reversed. When an indicator exists, a formal estimate of the recoverable amount is made, which is considered to be the higher of the fair value less costs to sell and value in use. The assessments require the use of different estimates and assumptions depending on the business such as prices, discount rates, reserves, growth rates, gross margins and spark spreads. The key estimates and assumptions used bear the risk of change due to the inherent volatile nature of various macro-economic factors and the uncertainty in asset or CGU specific factors like reserve volumes and production profiles, which can impact the recoverable amount of assets and/or CGUs. Changes in the economic situation, expectations about climate-related risks or other facts and circumstance might require a revision of these assumptions and could lead to impairments of assets or reversals of impairments in the future.

      The impairments and reversals recognized in the reporting period are presented in Note 22 Cost information.

      Significant assumptions

      The price and margin assumptions used in impairment testing are based on management's best estimate and were consistent with external sources. Whereas prices in the near term are anchored in recent forward prices and market developments, long term price assumptions are developed using a variety of long-term forecasts by reputable experts and consider long-term views of global supply and demand. The Company's long-term assumptions take into consideration the impacts of the climate change and the energy transition to lower-carbon energy sources (see Note 2).

      Impairment testing in Exploration and Production

      The key valuation assumptions for the recoverable amounts of Exploration and Production assets are prices and margins, production volumes, exchange and discount rates. The production profiles were estimated based on reserves estimates (see Note 3 a)) and past experience and represent management's best estimate of future production. The cash-flow projections for the first three years are based on the mid-term plan and thereafter on a "life of field" planning and therefore cover the whole life term of the field.

      The oil price sets used for the value in use calculations are included in Note 2 Effects from climate change and energy transition.

      In 2025, the Company updated its mid- and long-term assumptions, resulting in net impairments for tangible assets in the Exploration and Production segment of RON 616 million, before tax, reported in the line "Depreciation, amortization, impairments and write-ups". These impairments are related to certain oil and gas assets and are mainly due to higher production decline for some mature fields and increased Exploration and Production taxation in the context of the agreed principles between OMV Petrom and the Romanian state for 15 years extension of production licenses. The recoverable amount of related assets, determined based on the value in use, was RON 11,020 million. The after-tax discount rate applied was 9%.

      In 2024, the Company updated its mid- and long-term assumptions. These led to impairments for tangible assets in the Exploration and Production segment of RON 604 million, before tax, reported in the line "Depreciation, amortization, impairments and write-ups". These impairments are related to some oil and gas assets, being mainly driven by updated short-term general operating costs increase in the context of high inflationary pressure. The recoverable amount of impaired assets amounted to RON 3,338 million. The after-tax discount rate used was 9.5%. The recoverable amount was based on the value in use.

      Impairment testing in Refining and Marketing

      In the Refining and Marketing business, besides discount rates, the recoverable amounts are mainly impacted by the indicator refinery margin and the utilization rate in the refinery and by the retail margin and sales volumes in retail.

      In 2025, based on management estimations it was concluded that there were no triggering indicators in Refining and Marketing.

      In 2024, following the analysis of the triggering indicators an impairment test was performed for Petrobrazi refinery which showed no impairment.

      Impairment testing in Gas and Power

      In the Gas and Power business, besides discount rates, the main valuation assumptions for the calculation of the recoverable amounts are the captured spark spreads (being the differences between the captured electricity prices and the cost of gas and cost of CO2 certificates) and net electrical output for the power plant. The assumptions used for prices are based on management's best estimate, considering specifics of local market as well as the correlation between the local and regional markets.

      In 2025 and 2024, based on management estimations it was concluded that there were no triggering indicators for performing an impairment test in Gas and Power.

   4. Exploration and evaluation expenditure

      The application of the Company's accounting policy for exploration and evaluation expenditure requires judgment in determining whether it is probable that future economic benefits are likely either from future operation or from sale or whether activities have not reached a stage which permits a reasonable assessment of the existence of reserves. The determination of reserves and resources is itself an estimation process that involves varying degrees of uncertainty

      depending on sub-classification and these estimates directly impact the point of deferral of exploration and evaluation expenditure.

      The deferral policy requires management to make certain estimates and assumptions as to future events and circumstances, in particular whether an economically viable extraction operation can be established. Any such estimates and assumptions may change as new information becomes available. If, after expenditure is capitalized, information

      becomes available suggesting that the recovery of the expenditure is unlikely, the relevant capitalized amount is written off in the income statement in the period when the new information becomes available. The exploration and evaluation expenditure capitalized is presented under intangible assets in the statement of financial position.

   5. Recoverability of Romanian State receivable

      The management is periodically assessing the receivable from the Romanian State related to obligations for decommissioning and environmental costs, which was recognized based on the privatization agreement. The assessment process is considering, inter alia, the history of amounts claimed, documentation process related requirements, potential litigation or arbitration proceedings and any facts and circumstances with impact on the receivable recoverability. In accordance with the relevant accounting standards, the receivable is reflected in the balance sheet when the recovery is considered virtually certain.

      Judgments

      In the process of applying the Company's accounting policies, the following judgments were made, particularly with respect

      to the following:

   6. Cash generating units

      Management exercises judgment in determining the appropriate level of grouping Exploration and Production assets into CGUs, in particular with respect to the Exploration and Production assets which share significant common infrastructure and are consequently grouped into the same CGU.

   7. Contingencies

      By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events.

   8. Lease term and incremental borrowing rate

   OMV Petrom determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Company has lease contracts which include prolongation and termination options. When determining the lease term to be used for the measurement of the lease, the Company takes into account all the relevant facts and circumstances that create an economic incentive for exercising either the extension or termination option of the lease term, such as market factors, the extent of oil and gas reserves or other relevant facts.

   Optional periods not taken into account in the measurement of the leases exist mainly for Exploration and Production equipment.

   The Company cannot readily determine the interest rate implicit in its leases. Therefore, it uses the relevant incremental borrowing rates to measure lease liabilities. These incremental borrowing rates were determined taking into consideration factors such as the term of the lease, credit risk, currency in which the lease was denominated and economic environment.

4. ACCOUNTING AND VALUATION PRINCIPLES

   1. Changes in accounting policies

      The Company's adopted Amendments to IAS 21: Lack of Exchangeability on January 1, 2025, which did not have any material impact on OMV Petrom separate financial statements.

   2. Accounting standards issued not yet mandatory

      The Company has not applied the following standards and amendments to standards that have been issued but are not yet effective. EU endorsement is still pending in some cases.

      IFRS 18 Presentation and Disclosure in Financial Statements

      IFRS 18 will replace IAS 1 - Presentation of Financial Statements and applies for annual reporting periods beginning on or after January 1, 2027 and it introduces consequential amendments to IAS 7 - Statement of Cash Flows. Even though IFRS 18 will not impact the recognition or measurement of items in the financial statements, its impacts on presentation and disclosure are expected to be significant.

      OMV Petrom is currently working on the identification and assessment of all impacts of the new standard on OMV Petrom's primary financial statements and notes. The following main impacts have been identified:

      • OMV Petrom expects that grouping items of income and expenses in the income statement into the new categories will impact how the operating result is calculated and reported. The main impact will be related to the net income from equity-accounted investments, which will, in the future, be reported in the investing category and therefore no longer included in the operating result. In addition, some items such as interest income and discounting expenses related to long term receivables will no longer be included in financial result but reported within operating result. These changes will not have any impact on the Company's net income.

      • In the cash flow statement, the main impact will come from changes to the presentation of interest received and paid and dividends received. Interest and dividends received will be presented as cash flows from investing activities, which is a change from their current presentation as part of cash flow from operating activities. Interest paid will be presented as cash flow from financing activities and no longer presented within cash flow from operating activities.

      • New disclosures will be required for management-defined performance measures. In addition, a breakdown of the defined nature of expenses for line items presented by function in the operating category of the income statement will be disclosed.

        OMV Petrom will apply the new standard from its mandatory effective date of January 1, 2027. Retrospective application is required, and so the comparative information for the financial year ending December 31, 2026, will be restated in accordance with IFRS 18.

        Other accounting standards

        The following amended accounting standards are not expected to have a significant impact on the Company's financial

        statements:

        Amendments to IFRSs IASB effective date

        Amendments to IFRS 9 and IFRS 7: Classification and Measurement of Financial Instruments January 1, 2026

        Annual Improvements to IFRS Accounting Standards - Volume 11 January 1, 2026

        Amendments to IFRS 9 and IFRS 7: Contracts Referencing Nature-dependent Electricity January 1, 2026 Amendments to IAS 21: The Effects of Changes in Foreign Exchange Rates - Translation to a Hyperinflationary

        Presentation Currency January 1, 2027

   3. Summary of accounting and valuation principles

1. Pre-licence costs

   Pre-licence costs are expensed in the period in which they are incurred. Pre-license prospecting is performed in the very preliminary stage of evaluation when trying to identify areas that may potentially contain oil and gas reserves without having physical access to the area. Related costs may include seismic studies, magnetic measurements, satellite and aerial photographs, gravity-meter tests etc.

2. Licence acquisition costs

   Exploration licence acquisition costs are capitalized in intangible assets.

   Licence acquisition costs are reviewed at each reporting date to confirm that there is no indication that the carrying amount exceeds the recoverable amount. This review includes confirming that exploration drilling is still under way or firmly planned, or that it has been determined, or work is under way to determine that the discovery is economically viable based on a range of technical and commercial considerations and sufficient progress is being made on establishing development plans and timing.

   If no future activity is planned or the licence has been relinquished or has expired, the carrying value of the licence acquisition costs is written off through income statement.

   Upon recognition of proved reserves and internal approval for development, the relevant expenditure is transferred to oil and gas assets within tangible assets.

3. Exploration and evaluation costs

   Exploration expenses relate exclusively to the E&P business segment and comprise the costs associated with unproved reserves. These include geological and geophysical costs for the identification and investigation of areas with possible oil and gas reserves and administrative, legal and consulting costs in connection with exploration.

   Exploration and evaluation costs are accounted for using the successful efforts method of accounting. Costs related to geological and geophysical activity are expensed as incurred. The costs associated to exploration and evaluation drilling are initially capitalized as oil and gas assets with unproved reserves until the existence or absence of potentially commercially viable reserves is determined. If prospects are subsequently deemed to be unsuccessful on completion of evaluation, the associated costs are included in the income statement for the year. If the prospects are deemed commercially viable, such costs are transferred to tangible oil and gas assets upon recognition of proved reserves and internal approval for development. The status of such prospects and related costs are reviewed regularly by technical, commercial and executive management including review for impairment at least once a year to confirm the continued intent to develop or otherwise extract value from the discovery. When this is no longer the case, the costs are written off. Exploratory wells in progress at year-end which are determined to be unsuccessful subsequent to the date of the statement of financial position are treated as non-adjusting events, meaning that the costs incurred for such exploratory wells remain capitalized in the financial statements of the reporting period under review and will be expensed in the subsequent period.

4. Development and production costs

   Development costs including costs incurred to gain access to proved reserves and to prepare development wells locations for drilling, to drill and equip development wells and to construct and install production facilities, are capitalized as oil and gas assets.

   Production costs, including those costs incurred to operate and maintain wells and related equipment and facilities (including depletion, depreciation and amortization charges as described below) and other costs of operating and maintaining those wells and related equipment and facilities, are expensed as incurred.

5. Intangible assets and property, plant and equipment

   Intangible assets and property, plant and equipment are recognized at cost of acquisition or construction (including costs of major inspection and general overhauls) and are presented net of accumulated depreciation and impairment losses.

   The cost of purchased property, plant and equipment is the value of the consideration given to acquire the assets and the value of other directly attributable costs which have been incurred in bringing the assets to their present location and condition necessary for their intended use. The cost of self-constructed assets includes cost of direct materials, labour, overheads and other directly attributable costs that have been incurred in bringing the assets to their present location and condition. Oil and gas assets with proved reserves are included in property, plant and equipment and refer to Exploration and Production assets which are used in the Company's oil and gas production related activities.

   Depreciation and amortization is calculated on a straight-line basis, except for Exploration and Production assets, where depletion occurs to a large extent on a unit-of-production basis. In the income statement, impairment losses for exploration assets are disclosed as exploration expenses, and those for other assets are reported within depreciation, amortization, impairments and write-ups line.

   Intangible assets		Useful life (years)
   Goodwill		Indefinite
   Software		3 - 5
   Concessions, licences and other intangibles		5 - 20, or contract duration
   Business-specific property, plant and equipment
   Exploration and Production	Oil and gas core assets	Unit of production method
   Refining and Marketing	Storage tanks and refinery facilities	20 - 40
   Refining and Marketing	Pipeline systems	20
   Gas and Power	Gas pipelines	20 - 30
   Gas and Power	Gas fired power plant	8 - 30
   Other property, plant and equipment
   Production and office buildings		20 - 50
   Other plant and equipment		10 - 20
   Fixtures and fittings		5 - 10

   For the application of the unit of production depreciation method, the Company has separated the areas where it operates into regions. The unit of production factor is computed at the level of each productive region, based on the extracted quantities and the proved reserves or proved developed reserves as applicable.

   Capitalized exploration and evaluation activities are generally not depreciated as long as they are related to unproved reserves but tested for impairment. Once the reserves are proved and commercial viability is established, the related assets are assessed for impairment and reclassified into tangible assets. Once production starts, depreciation commences.

   Capitalized development costs are generally depreciated based on proved developed reserves/ total proved reserves by applying the unit-of-production method once production starts.

   The right-of-use assets are depreciated on a straight-line basis over the shorter of the asset's useful life and the lease term.

   An item of property, plant and equipment and any significant part initially recognized are derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized.

   Under the successful efforts method, individual mineral interests and other assets are combined to cost centers (fields, blocks, areas), which are the basis for depreciation and impairment testing. If single wells or other assets from a pooled depreciation base with proved reserves are abandoned, the accumulated depreciation for the single asset might be not directly identifiable. In general, irrespective if book values of abandoned assets are identifiable, no loss is recognized from the partial relinquishment of assets from a pooled depreciation base as long as the remainder of the group of properties continues to produce oil or gas. It is assumed that the abandoned or retired asset is fully amortized. The capitalized costs for the asset are charged to the accumulated depreciation base of the cost center.

   Where an asset or part of an asset, that was separately depreciated and is now written off, is replaced and it is probable that future economic benefits associated with the item will flow to the Company, the expenditure is capitalized. Where part of the asset replaced was not separately considered as a component and therefore not depreciated separately, the replacement value is used to estimate the carrying amount of the replaced asset(s) which is immediately written off.

   Assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying value will be recovered principally through a sale transaction rather than through continued use. This classification requires that the sale must be estimated as highly probable, and that the asset or disposal group must be available for immediate sale in its present condition. The highly probable criteria implies that management must be committed to the sale and an active plan to locate a buyer was initiated,

   the transaction should be expected to qualify for recognition as a completed sale within one year from the date of classification (except if certain conditions are met), the asset is actively marketed at a price that is reasonable in relation to its current fair value and it is unlikely that significant changes will occur to the sale plan or that the plan will be withdrawn. Property, plant and equipment and intangible assets are not depreciated or amortized once classified as held for sale.

   Impairment of intangible assets and property, plant and equipment

   Intangible assets, as well as property, plant and equipment (including oil and gas assets), are reviewed at reporting date for any indications of impairment. For intangible assets with indefinite useful lives, impairment tests are carried out annually.

   This applies even if there are no indications of impairment. Impairment tests are performed at the level of cash generating units which generate cash inflows that are largely independent of those from other assets or groups of assets.

   If any indication exists, or when annual impairment test for an asset is required, the Company estimates the asset's

   recoverable amount being the higher of fair value less costs of disposal and its value in use.

   In assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. The pretax discount rate is determined by way of iteration. The cash flows are generally derived from recent budgets and planning calculations, which are prepared separately for each of the Company's CGUs to which the individual assets are allocated.

   If the carrying amount of an asset or cash generating unit exceeds its recoverable amount, the asset is considered impaired and an impairment loss is recognized to reduce the asset to its lower recoverable amount. Impairment losses are recognized in the income statement under depreciation, amortization, impairments and write-ups or under exploration expenses.

   If the reasons for impairment no longer apply in a subsequent period, a reversal is recognized in the income statement. The increased carrying amount related to the reversal of an impairment loss shall not exceed the carrying amount that would have been determined (net of amortization and depreciation) if no impairment loss had been recognized in prior years.

6. Major maintenance and repairs

   The capitalized costs of regular and major inspections and overhauls are separate components of the related asset or asset groups. The capitalized inspection and overhaul costs are amortized on a straight line basis, or on basis of the number of service hours or produced quantities or similar, if this better reflects the time period for the inspection interval (until the next inspection date).

   Expenditure on major maintenance refits, inspections or repairs comprises the cost of replacement assets or parts of assets, inspection costs and overhaul costs. Inspection costs associated with major maintenance programs are capitalized and amortized over the period to the next inspection.

   Cost of major remedial activities for wells workover, if successful, is also capitalized and depreciated using the unit-of-production method.

   All other day-to-day repairs and maintenance costs are expensed as incurred.

7. Research and development

   Expenditure related to research activities is recognized as expense in the period in which it is incurred. Research and development (R&D) expenses are presented in the income statement within the line Other operating expenses and include all direct and indirect materials, personnel and external services costs incurred in connection with the focused search for

   new insights related to the development and significant improvement of products, services and processes and in connection with research activities. Development costs are capitalized if the recognition criteria according to IAS 38 are fulfilled.

8. Leases

   OMV Petrom as a lessee recognizes lease liabilities and right-of-use assets for lease contracts according to IFRS 16. It applies the recognition exemption for short-term leases and leases in which the underlying asset is of low value and therefore does not recognize right-of-use assets and lease liabilities for such leases. Leases to explore for and use oil and natural gas, which comprise mainly land leases used for such activities, are not in the scope of IFRS 16. The rent for these contracts is recognized on a straight-line basis over the contract term.

   At the commencement date of the lease (i.e. the date the underlying asset is available for use), lease liabilities are recognized at the net present value of fixed lease payments and lease payments which depend on an index or rate over the determined lease term with the applicable discount rate. The amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there are changes in the lease term, lease payments or in the assessment of an option to purchase the underlying asset.

   Right-of-use assets are recognized at commencement date and measured at the present value of the lease liability plus prepayments and initial direct costs and presented within property, plant and equipment. After the commencement date, right-of-use assets are measured at cost, less any accumulated depreciation and any accumulated impairment losses (see Note 4.3 e) and adjusted for any remeasurement of the lease liability, if the case.

   Non-lease components are separated from the lease components for the measurement of right-of-use assets and lease liabilities.

   Variable lease payments that do not depend on an index or a rate are recognized as expenses, in the period in which the event or condition that triggers the payment occurs.

   OMV Petrom as a lessor entered into contracts which were assessed as operating leases, for which payments received for rent are recognized as revenue from rents and leases over the period of the lease.

   Property held to earn rentals is classified as investment property and accounted for using the cost model.

9. Financial instruments

   Non-derivative financial assets

   At initial recognition, OMV Petrom classifies its financial assets as subsequently measured at amortized cost, fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVPL). The classification depends both on the Company's business model for managing the financial assets as well as the contractual cash flow characteristics of the financial assets. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

   Debt instruments are classified and measured at amortized cost as the following conditions are met:

   ▶ the assets are held within the business model whose objective is to hold financial assets in order to collect contractual cash flows; and

   ▶ the contractual terms of the financial assets give rise on specific dates to cash flows that are solely payments of principal

   and interest on the principal amount outstanding.

   These assets are subsequently measured at amortized cost using the effective interest method less any impairment losses. Interest income, impairment losses and gains or losses on derecognition are recognized in income statement. The Company's financial assets at amortised cost include mainly investments in treasury bills and government bonds as well as trade receivables.

   OMV Petrom recognizes allowances for expected credit losses (ECLs) for all financial assets measured at amortized costs. The ECL calculation is based on external or internal credit ratings of the counterparty, associated probabilities of default and loss given default. External credit rating is based mainly on reports issued by well-known rating agencies and is reflected in OMV Petrom by grouping financial assets in six risk classes (risk class 1 being the lowest risk category).

   The probabilities of default used for each risk class, as presented in Note 9, are based on Standard & Poor's average global corporate default rates. A loss given default of 45% (for 2025 and 2024) was applied for computation of ECL of financial assets which are not credit impaired.

   ECLs are recognized in two stages:

   1. Where there has not been a significant increase in the credit risk since initial recognition, credit losses are measured at 12 month ECLs. The 12 month ECL is the credit loss which results from default events that are possible within the next 12 months. The Company considers a financial asset to have low credit risk when its credit risk rating is equivalent to the definition of 'investment grade'.

   2. Where there has been a significant increase in the credit risk since initial recognition, a loss allowance is required for the lifetime ECL, i.e. the expected credit losses resulting from possible default events over the expected life of a financial asset. For this assessment, OMV Petrom considers all reasonable and supportable information that is available without undue cost or effort. Furthermore, OMV Petrom assumes that the credit risk on a financial asset has significantly increased if it is more than 30 days past due. If the credit quality improves for a lifetime ECL asset, OMV Petrom reverts to recognizing allowances on a 12 month ECL basis. A financial asset is considered to be in default when the financial asset is 90 days past due unless there is reasonable and supportable information demonstrating that a more lagging default criterion is appropriate. A financial asset is written off when there is no reasonable expectation that the contractual cash flows will be recovered.

      For trade receivables a simplified approach is adopted, where the impairment losses are recognized at an amount equal to lifetime expected credit losses. In case there are credit insurances or securities held against the balances outstanding, the ECL calculation is based on the probability of default of the insurer/securer for the insured/secured element of the outstanding balance and for the remaining amount on the probability of default of the counterparty.

      Equity instruments which are held for strategic purposes and not for trading are irrevocably classified as measured at fair value through other comprehensive income.

      Interests in subsidiaries, associates and joint ventures that are accounted for in accordance with IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements, or IAS 28 Investments in Associates and Joint Ventures are measured at cost less any impairment losses.

      OMV Petrom derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability that reflects the rights and obligations that the Company has retained. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

      Financial assets are written off when there is no realistic prospect of future recovery and all collateral has been realized or has been transferred to the Company.

      Rights to payments to reimburse the Company for expenditure required to settle a liability that is recognized as a provision in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets are outside the scope of IFRS 9.

      Receivable from the Romanian State falls under this category.

      Non-derivative financial liabilities

      Non-derivative financial liabilities are carried at amortized cost except for contingent consideration related to acquisition of financial assets, which is measured at fair value at the date of acquisition and subsequently measured at fair value with the changes in fair value recognized in income statement. Long-term liabilities are discounted using the effective interest rate method (EIR).

      A financial liability (or a part of a financial liability) is removed from the statement of financial position when it is extinguished

      - i.e. when the obligation specified in the contract is discharged or cancelled or expires.

      Derivative financial instruments and hedge accounting

      Derivative financial instruments are used to hedge risks resulting from changes in currency exchange rates and commodity prices. Derivative instruments are recognized at fair value. Unrealized gains and losses are recognized as income or expense, except where hedge accounting according to IFRS 9 was applied.

      At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which it wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge.

      Those derivatives qualifying and designated as hedges are either (i) a fair value hedge when hedging exposure to changes in the fair value of a recognized asset or liability or (ii) a cash flow hedge when hedging exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability or a highly probable forecast transaction.

      For cash flow hedges, the effective part of the changes in fair value is recognized in other comprehensive income, while the ineffective part is recognized immediately in the income statement. Where the hedging of cash flows results in the recognition of a non-financial asset or liability, the carrying value of that item will be adjusted for the accumulated gains or losses recognized directly in other comprehensive income.

      As per IFRS 9 Financial Instruments, contracts to buy or sell non-financial items that can be settled net in cash or another financial instrument, or by exchanging financial instruments, as if the contracts were financial instruments, are accounted for as financial instruments and measured at fair value. Associated gains or losses are recognized in the income statement under sales revenues, purchases (net of inventory variation) or production and operating expenses.

      However, commodity contracts that are entered into and continue to be held for the purpose of the receipt or delivery of nonfinancial items in accordance with the Company's expected purchase, sale or usage requirements are not accounted for as derivative financial instruments, but rather as executory contracts and they fall under own use exemption. OMV Petrom enters into gas forward contracts with physical delivery, creating links within the value chain for the commodity. These contracts are not settled net. Therefore gas forward contracts fall under own use exemption as mentioned above.

      OMV Petrom has contracted several long-term power purchase agreements (PPAs), which are kept in separate portfolios based on their characteristics: PPAs entered into and continue to be held for own use are accounted for as executory contracts; PPAs that can be settled net are accounted for as financial instruments and measured at fair value.

10. Borrowing costs

    Borrowing costs directly attributable to the acquisition, construction or production of qualified assets are capitalized until these assets are substantially ready for their intended use or for sale. Borrowing costs include interest on bank short-term and long-term loans, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange

    differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. All other costs of borrowing are expensed in the period in which they are incurred.

11. Government grants

    Government grants - except for emission rights (see Note 4.3 n)) - are recognized in other operating income or deducted from the carrying amount of the related assets where it is reasonable to expect that the granting conditions will be met and that the grants will be received. These include also receivables from Romanian authorities in relation to compensations for sales at capped prices or other measures introduced via several Government Emergency Ordinances in order to mitigate the consequences of the energy crisis.

12. Inventories

    Inventories are recognized at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the normal course of activity less any selling expenses.

    Cost of producing crude oil, natural gas and refined petroleum products is accounted on weighted average basis, and includes all costs incurred in the normal course of business in bringing each product to its present location and condition, including the appropriate proportion of depreciation, depletion and amortization and overheads based on normal capacity.

    The inventories used in current activities or sold are discharged applying the weighted average cost method.

    Appropriate allowances are made for any obsolete or slow moving stocks based on the management's assessments.

13. Provisions

    Provisions are made for all present obligations (legal or constructive) to third parties resulting from a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount of the obligation can be estimated reliably. Provision for individual obligations is based on the best estimate of the amount necessary to settle the obligation. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is applicable, the increase in the provision due to the passage of time is recognized as a finance cost.

    Decommissioning and environmental obligations

    The Company's core activities regularly lead to obligations related to dismantling and removal, asset retirement and soil

    remediation obligations, more specifically consisting in:

    ▶ plugging and abandoning wells;

    ▶ cleaning of sludge pits;

    ▶ dismantlement of production facilities;

    ▶ restoration of producing areas in accordance with licence requirements and the relevant legislation.

    These decommissioning and restoration obligations are mainly of material importance in the Exploration and Production segment (oil and gas wells, onshore and offshore facilities). At the time the obligation arises, it is provided for in full by recognizing the present value of future decommissioning and restoration expenses as a liability. An equivalent amount is capitalized as part of the carrying value of related property, plant and equipment. Any such obligation is calculated on the basis of best estimates. The capitalized asset is depreciated using the unit-of-production method for upstream activities and on straight-line basis for downstream assets.

    Liabilities for environmental costs are recognized when a clean-up is probable and the associated costs can be reliably estimated. Generally, the timing of recognition of these provisions coincides with the commitment to a formal plan of action. The amount recognized is the best estimate of the expenditure required. Estimates of future remediation costs are based on current contracts concluded with suppliers, reports prepared by Company experts or by independent contractors, as well as past experience. Where the liability will not be settled for a number of years, the amount recognized is the present value of the estimated future expenditure.

    Based on the privatization agreement of the Company, part of its decommissioning and environmental costs will be reimbursed by the Romanian State. The portion to be reimbursed by the Romanian State has been presented as receivable and reassessed in order to reflect the current best estimate of the costs at their present value, using the same discount rate as for the related provisions.

    Changes in the assumptions related to decommissioning costs are dealt with prospectively, by recording an adjustment to the provision and a corresponding adjustment to property, plant and equipment (for OMV Petrom obligation) or to the related receivable from the Romanian State (for the works to be reimbursed by Romanian State).

    Changes in the assumptions related to environmental costs are dealt with prospectively, by recording an adjustment to the provision and a corresponding adjustment in the income statement (for Company obligation) or to the related receivable from the Romanian State (for the works to be reimbursed by Romanian State).

    The unwinding of the decommissioning and environmental provisions is presented as part of the interest expenses in the income statement, net of the unwinding of the related receivable from the Romanian State (for the works to be reimbursed by Romanian State).

    The effect of changes in discount rate and timing assumptions for the receivable from the Romanian State which are additional to the changes in discount rates and timing assumptions for decommissioning costs and environmental costs is presented in the income statement under interest expenses or interest income.

    Pensions and similar obligations

    The Company has defined benefit plans and other benefits. Provisions for pensions and severance payments are calculated using the projected-unit-credit method, which divides the costs of the estimated benefit entitlements over the whole period of employment and thus takes future increases in remuneration into account. Actuarial gains/losses are recognized in full in the period in which they occur as follows: for retirement benefits in other comprehensive income (not reclassified to income statement in subsequent periods) and for other benefits in the income statement.

    Provisions for restructuring programs are recognized if a detailed plan has been approved by management prior to the date of the statement of financial position, and an irrevocable commitment is thereby established. Voluntary amendments to employees' remuneration arrangements are recognized if the respective employees have accepted the Company's offer.

    Provisions for obligations under individual separation agreements are recognized at the present value of the obligation where the amounts and dates of payment are fixed and determined.

14. Emission allowances

    Emission allowances are measured at cost and presented within other short-term assets. Certificates received free of charge from governmental authorities (EU Emissions Trading Scheme for greenhouse gas emissions allowances) are recognized with acquisition cost of zero.

    The emissions caused create an obligation to surrender emission rights. A provision is created for this obligation, which is valued at the market prices at the acquisition dates of the emission certificates acquired, forward market prices of open forward purchases and, for any remaining shortfall, at the market price as of reporting date.

15. Taxes on income and royalties

    Current tax

    Current income tax is the expected tax payable or receivable on the taxable net result for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. The taxable profit differs from the profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.

    Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

    Deferred tax

    Deferred income tax is recognized in respect of temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

    Deferred tax liabilities are recognized for all taxable temporary differences, except:

    ▶ where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

    ▶ in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint

    arrangements, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

    Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized except:

    ▶ where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset

    or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss, and

    ▶ in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in

    joint arrangements, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profits will be available against which the temporary differences can be utilized.

    The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax asset to be utilized.

    Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

    Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized, or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

    Deferred tax relating to items recognized directly in other comprehensive income or equity is recognized in other comprehensive income or equity and not in income statement.

    Deferred tax assets and deferred tax liabilities at Company level are shown net if there is a legally enforceable right to offset and the deferred taxes relate to matters subject to the same tax jurisdiction.

    The Company has applied the mandatory temporary exception to recognizing and disclosing information about deferred tax assets and liabilities arising from Pillar Two income taxes.

    Production taxes

    Royalties are based on the value of oil and gas production and are included in the income statement under production and similar taxes.

16. Revenue recognition

Revenue is generally recognized when control over a product or a service is transferred to a customer. It is measured based on the consideration expected to be entitled to according to the contract with a customer and excludes amounts collected on behalf of third parties.

When the performance obligation is not yet satisfied, but the consideration from customers is either received or due, OMV Petrom recognizes contract liabilities which are reported as other liabilities in the statement of financial position.

When goods such as crude oil, LNG, oil products and similar goods are sold, the delivery of each quantity unit normally represents a single performance obligation. Revenue is recognized when control of the goods has been transferred to the customer, which is the point in time when legal ownership as well as the risk of loss has passed to the customer and is determined on the basis of the Incoterm agreed in the contract with the customer. These sales are done with normal credit terms according to the industry standards.

In the R&M retail business, revenues from the sale of petroleum products are recognized at a point in time, when products are supplied to the customers. Depending on whether the Company acts as a principal or as an agent for the sale of shop merchandise, revenue and costs related to such sales are presented gross or net in the income statement. The Company acts as principal if it controls the goods before they are transferred to the customer. The Company has control over the goods when it bears the inventory risk before the goods have been transferred to the customers. A second indicator for having control of the goods before transferring them to the customer is the Company's ability to establish the price of goods. For sales of non-oil products, the Company considers this as being a secondary criterion, therefore, if the Company has the ability to set the price but it does not have inventory risk before transferring the goods to the customer, it acts as an agent in providing the goods.

The Company's gas and power supply contracts include a single performance obligation which is satisfied over the agreed delivery period. Revenue is recognized according to the consumption by the customer and in line with the amount to which the Company has a right to invoice. Gas and power deliveries are billed and paid on a monthly basis.

Power and gas sales are often subject to fees or tariffs for facilitating the transfer of goods and services. When the Company does not control the services related to such fees and tariffs before they are transferred to the customer and when it is not involved in the rendering of the service nor does it control the pricing, the Company is only an agent in providing these services.

As the revenues are recognized in the amount to which the Company has a right to invoice, OMV Petrom applies the practical expedient according to IFRS 15.121 in accordance with which the amount for unsatisfied remained performance obligations need not be disclosed.

Revenues from other sources include mainly realized and unrealized results from power forward contracts and hedging of sales transactions, as well as rental and lease revenues.