February 6, 2019 / 7:15 AM / a year ago

UPDATE 2-Austria's OMV proposes dividend hike after profit surge

* Proposes dividend of 1.75 euros per share, up from 1.50 euros

* 2019 upstream output seen at 500,000 boe/d, from 427,000 in 2018

* Expects 2019 Brent prices to hover around $65 a barrel (Adds detail, background)

By Kirsti Knolle

VIENNA, Feb 6 (Reuters) - Austrian oil and gas group OMV plans to increase its dividend for 2018 after posting a 53 percent jump in fourth-quarter core profit, buoyed by higher sales volumes in Russia and the United Arab Emirates (UAE).

OMV, which has been on a shopping spree in recent months to expand in Asia and the Middle East, will propose a dividend of 1.75 euros per share, up from last year’s 1.50 euros, it said on Wednesday after joining rivals BP, Shell, Exxon Mobil and Chevron in reporting stronger than forecast earnings..

The group is shifting its focus more towards gas exploration and refining as a less polluting alternative to oil. Its purchases included upstream assets in New Zealand, Malaysia and the UAE.

Having bought refining and petrochemical assets from Abu Dhabi National Oil Company for $2.5 billion nearly two weeks ago, OMV said it does not plan any further big acquisitions but will now focus on integrating its new assets.

OMV said its upstream production is forecast to rise to about 500,000 barrel of oil equivalent (boe) per day in 2019, against 427,000 boe per day last year.

The company expects 2019 Brent oil prices to average around $65 a barrel, down from $71 last year, and predicts a drop in average gas spot prices.

Clean current cost of supplies (CCS) earnings before interest and tax, which exclude special items and inventory gains or losses, came in at 1.053 billion euros ($1.2 billion) in the fourth quarter, beating analyst expectations of 974 million euros.

Adjusted operating contribution from OMV’s exploration and production business, meanwhile, surged 68 percent to 578 million euros despite a sharp drop in crude prices towards year-end. OMV’s refining margin, the company’s earnings from turning crude oil into fuel and diesel, dropped to $5.24 a barrel from $5.69 in the third quarter.

“Increased crude prices resulted in higher feedstock costs, negatively impacting the indicator refining margin,” the group said in a statement, adding that it expects the refining indicator to be about $5 a barrel this year. ($1 = 0.8778 euros) (Reporting by Kirsti Knolle Editing by Sherry Jacob-Phillips and David Goodman)

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