Rosneft Reached Record Revenue and EBITDA in 9 Months

Rosneft’s IFRS revenue in January-September 2022 grew by 15.7% year-on-year to RUB 7.2 trillion, while EBITDA increased by 21.8% to RUB 2 trillion, the company announced on December 7. The figures set a record in the history of the company for nine months, Rosneft noted.

The company’s net profit attributable to shareholders for 9 months amounted to 591 billion rubles. “The dynamics of net profit was largely due to the influence of non-monetary factors,” Rosneft noted. The report explains that the transfer of Rosneft’s assets in Germany into external management by the Federal Grid Agency had the greatest negative impact on earnings in the third quarter. As a result, the company recognized an additional loss of 56 billion rubles, and the amount of cash decreased by 76 billion rubles. At the same time, the company’s investments in assets in Germany exceeded $5 billion.

In mid-September 2022, the German government decided to transfer two Rosneft subsidiaries, Rosneft Deutschland GmbH (RDG) and RN Refining & Marketing GmbH (RNRM), under external management. They owned a controlling stake in the large oil refinery PCK Schwedt (54.17%), shares in the MiRo refinery (24%) and Bayernoil (28.57%). These enterprises account for about 12% of oil refining in the country. The country’s authorities explained their decision by the fact that the work of the refinery was allegedly under threat due to the unwillingness of contractors to work with Rosneft. In the middle of OctoberRosneftfiled a lawsuit in the Leipzig court against the German government.

The report also states that the company’s capital expenditures in January-September 2022 increased by almost 20% year-on-year and reached a record 822 billion rubles. This growth, the company explained, is mainly due to the planned increase in investment in the Vostok Oil project. The level of debt on prepayments and financial debt of Rosneft decreased by 17% compared to the beginning of 2022.

“As a result, in the nine months of 2022, the company increased hydrocarbon production and successfully optimized distribution channels: oil supplies to Asia increased by about a third and fully compensated for the decline in supplies to European buyers,” said Igor Sechin, CEO of Rosneft. the words of which the press service cites.

In January-September 2022, the company increased hydrocarbon production by 2.2% year-on-year to 4.97 million barrels. oil equivalent (boe). per day. At the same time, the production of liquid hydrocarbons remained at the level of 2021 and amounted to 3.81 million barrels per day. Gas production for 9 months increased by 10.6% compared to the same period in 2021 to 1.16 million barrels. n. e. The share of gas in the company’s hydrocarbon production in January-September 2022 amounted to 23%, the company plans to increase the figure to 25%.

Rosneft reports indicate that oil supplies to non-CIS countries in January-September increased by 4.8% to 77.3 million tons, while exports to Asian countries increased by about a third and amounted to 52.4 million tons. III In the quarter, the share of Asian countries in the structure of oil exports to non-CIS countries amounted to a record 77%.

In nine months, Rosneft processed 71 million tons of oil, of which 25.2 million tons were processed in the third quarter. The volume of sales of petroleum products on the domestic market increased by 6.5% year-on-year, and in general – by 3.3% year-on-year to 87 million tons per year.

According to the results of the first half of 2022, Rosneft received a record net profit of 432 billion rubles, which became the company’s historical maximum. In November 2022, the Board of Directors of Rosneft recommended the payment of interim dividends in the amount of 20.39 rubles. per share (Vedomosti wrote about this on November 14).

Sechin previously stated that dividends for 2022 could exceed the figure for 2021, when a record 441.4 billion rubles, or 41.66 rubles, were paid. per share. “Financial results for the 1st half of 2022 form a reliable basis for the payment of interim dividends and further growth in total payments for the year,” said the CEO of Rosneft.

Investment strategist of Arikapital Management Company Sergey Suverov notes that the company can allocate about 216 billion rubles for interim dividends. Paying dividends in the current geopolitical and economic environment gives investors confidence in the future of the company, he adds. According to the Moscow Exchange, on the morning of December 7, Rosneft shares were trading at 332.5 rubles. for paper.

Leading analyst at the National Energy Security Fund Igor Yushkov believes that Rosneft managed to achieve record financial performance due to the rise in oil prices in 2022. Due to the imposition of sanctions, he continues, Russian companies had to give buyers a discount on oil, but Rosneft has many long-term contracts, including with China. Perhaps the pricing formula in these contracts made it possible to maintain the price of the company’s oil, Yushkov notes.

After the strengthening of anti-Russian sanctions, world oil prices began to grow rapidly. The maximum came at the beginning of March, when the price of Brent approached $130/bbl. Then it gradually decreased and fixed at the level of $80-90/bbl. February Brent futures traded at $78.99/bbl on Dec. 7, according to the ICE exchange. After the imposition of sanctions by the United States, Great Britain and the European Union (EU), Russian companies had to redirect oil to Asia and give buyers a discount to Brent. At its peak, it reached $35/bbl, and in the fall it fixed at $25.

Analyst FG “Finam” Sergey Kaufman says that in April-May, “Rosneft” was faced with the need to quickly redirect supplies from Europe to Asia. But in the following months, these problems were resolved, which allowed the company to restore production of liquid hydrocarbons, the analyst specified. According to Kaufman, Rosneft’s production will continue to grow in the fourth quarter. Difficulties, in his opinion, will have to be resolved no earlier than February 2023, when the EU embargo on sea supplies of oil products from Russia comes into force.

Rosneft also reported that in January-September 2022, it reduced the PSER-1 industrial safety event ratio by more than 20% compared to the baseline in 2021 (the company plans to achieve a zero accident rate by 2030 or earlier). As part of the program to eliminate the ecological “historical heritage”, Rosneft reclaimed 107 hectares of contaminated land. It is planned to reclaim all “historical heritage” by 2035 or earlier.