OMV's Two-Speed Story: Geothermal Pivot and a Chemical Buffer Lift the Stock Above Its Headwinds

OMV's Q1 earnings fell short due to Strait of Hormuz disruptions, but shares gained 26% YTD as investors back geothermal project revival and chemical merger. AGM on 27 May to decide €4.40 dividend.

The Austrian oil and gas group OMV is telling two very different tales at once. On one side, geopolitical friction in the Strait of Hormuz drives up costs, distorts supply chains and pushes first?quarter earnings below original targets. On the other, the shares have climbed roughly 26% since the start of the year to trade around €61.00 — well above the 200?day moving average. Investors appear to be looking past the near?term noise and focusing on structural moves that could reshape the company’s earnings profile.

A key piece of that forward narrative is the geothermal heating project for Graz, which is back on the table after a near?collapse in November 2025. The city council had been unable to approve €200 million in liability guarantees, forcing OMV to pause the plans. An advance of around €5 million from Energie Steiermark for seismic surveys got talks moving again, and by late March 2026 a contractual framework was in place. Under the deal, the city of Graz will pay a risk premium of €35 million over ten years and commit to buying the heat produced. OMV and Energie Steiermark plan to set up a joint venture for the drilling. The final green light rests with the Graz municipal council, which is scheduled to vote on 21 May 2026. Seismic work in the East Styrian basin, completed between February and early April, has produced a two?dimensional image of the subsurface to identify geothermal reservoirs. If the results are encouraging and permits are granted, an exploration well could be drilled in the fourth quarter of 2026.

Operationally, the first quarter of 2026 delivered a mixed picture. Clean CCS operating profit came in at roughly €1 billion, with earnings per share of €0.99, while the European refinery indicator margin doubled year?on?year to $13.90 per barrel. Total production in the energy segment reached 288,000 barrels of oil equivalent per day. Yet these figures missed internal planning, largely because of the disruptions in the Strait of Hormuz, which made crude and petrochemical flows more expensive and less predictable. The upstream and refining businesses bore the brunt of higher logistics costs and tighter margins.

Offsetting that weakness was the chemical division, which has become a critical stabiliser. The formal completion of the merger of Borealis, Borouge and Nova Chemicals into the Borouge Group International in March 2026 gave OMV a significantly stronger position in polyolefins. Better margin impulses from plastics helped cushion the impact of the upstream and refining struggles, broadening the earnings base and reducing the company’s dependence on a single oil?price or transport?related factor. Management now sees Brent crude averaging $85?$95 per barrel for the rest of the year, providing some support for forward expectations even as costs remain elevated.

Shareholders have a clear event to watch in the near term. The annual general meeting in Vienna on 27 May 2026 will vote on a total distribution of €4.40 per share — made up of a regular dividend of €3.15 and a special dividend of €1.25. The record date for participation is 17 May, the ex?dividend date is set for 8 June, and payment is scheduled for 11 June. With leverage standing at around 17%, OMV retains financial room to manoeuvre. The dividend policy going forward is expected to tie payouts more tightly to operating cash flow.

For the stock to maintain its upward momentum, the chemical division will need to keep generating solid returns while the Strait of Hormuz disruptions do not permanently slow the energy side. The geothermal project, if approved, adds a long?term diversification angle that few European energy majors currently offer.