Igor Sechin promised the growth of Rosneft’s dividends at the end of the year

“Rosneft» in the first half of 2022 increased net profit attributable to the company’s shareholders by 13% to RUB 432 billion. and reduced its debt obligations by 12% since the beginning of the year. This is stated in the financial statements of Rosneft for the first half of the year under IFRS, published on September 15.

As a result “Rosneft”may increase dividends for 2022 and pay interim dividends, said Igor Sechin, chairman of the board and chief executive officer of the company, whose words are quoted in the release. “Financial results for 1H 2022 form a solid basis for interim dividends and further growth in total payments for the year,” he said.

In June of this year, Rosneft shareholders approved dividends for 2021, which exceeded 441 billion rubles, recalled the chairman of the board of Rosneft. 50% of IFRS net profit was used to pay shareholders. Payment in June amounted to 23 rubles. 63 kop. per one ordinary share, and taking into account interim dividends paid in November 2021, the total dividend per share amounted to 41 rubles. 66 kop.

Sechin noted that the British BP (owns 19.75% in Rosneft) received dividends, which had previously announced plans to withdraw from all its Russian assets, but has not yet done so.

After the start of the Special Military Operation (SVO) in Ukraine, many foreign oil and gas companies announced their decision to stop investing in Russia and withdraw from their Russian assets, including joint ventures with companies from the Russian Federation. BP announced at the end of February that it had decided to sell its stake in Rosneft, as well as in a joint venture with a Russian company: Taas-Yuryakh neftegazodobycha (BP owns 20%), Yermakneftegaz (49%) and Kharampurneftegaz (49 %). The British company estimated the loss from the exit from its Russian assets, including its stake in Rosneft, at $24.4 billion.

But on August 5, Russian President Vladimir Putin signed a decree banning foreign companies from conducting transactions with their Russian assets in the fuel and energy complex. To carry out such a transaction, it is now necessary to obtain permission from the president. The document is valid until the end of 2022, but it can be repeatedly extended.

The Rosneft IFRS report reports that the company’s revenue for the first half of 2022 increased by 32.5% to almost 5.2 trillion rubles. compared to the same period last year. Capex for the reporting period increased by 14.1% to RUB 527 billion. mainly due to the planned increase in investments in the Vostok Oil megaproject, the report explains. Also “Rosneft» paid record-breaking taxes following the results of six months – their amount increased by 20% year-on-year to 2.1 trillion rubles.

The company also said that on behalf of the President of the Russian Federation “Rosneft» translates settlements in foreign trade into rubles and the national currency of friendly countries. On September 15, the company also announced that it had placed its debut bond issue in Chinese yuan. The coupon rate was 3.05% and the issue volume was 15 billion yuan.

Production of hydrocarbons by Rosneft in the first half of the year increased by 1.5% in annual terms and reached 4.85 million barrels of oil equivalent (boe) per day. The share of new large projects launched since 2016 in the company’s total production increased by 7.6% year-on-year and amounted to 529,000 barrels per day.

Gas production in the first half of the year also showed an increase of 9.2% compared to the same period last year and amounted to 1.12 boe/day. The share of gas in Rosneft’s hydrocarbon production rose to a record 23%.

In the first half of the year, Rosneft increased its oil sales by 5.7% year-on-year, while the figure more than doubled on the domestic market. Sales of refined products on the domestic market also rose by 6.5% yoy, the report said.

On September 7, Putin spoke about the expansion of Rosneft supplies abroad. According to him, the company “reached specific agreements” with the authorities of Mongolia on the supply of oil and oil products.

Analysts consider it likely that Rosneft will be able to pay interim dividends. Head of Information and Analytical Content Department “BCS The World of Investments” Vasily Karpunin adds that earlier Rosneft paid interim dividends based on the results of half a year, but this year the payments may be based on the results of nine months.

Investment strategist of Arikapital Management Company Sergey Suverov recalls that interim dividends are paid in the amount of at least 50% of net profit. That is, the payment to Rosneft should be at least 216 billion rubles. Dividends per share could be about 20.4 rubles, if the company does not adjust the profit for the half year, or 5.5% at current prices, adds Karpunin.

Dividends for 2022 may also grow, Suverov said, but he found it difficult to estimate the growth. According to Karpunin, the company’s results for the second half of the year with such a strong ruble exchange rate “are unlikely to be better” than those of the first six months of 2022. According to the analyst, the final dividend yield for the whole of 2022 (including interim and final dividends) may be about 7.5-8.5%. “It will be a good result,” he concluded.