Rosneft’s net profit increased by almost one and a half times

Rosneft’s net profit attributable to shareholders in the first half of 2023 increased by 45.2% compared to the same period last year and amounted to 652 billion rubles, the company announced on August 30. At the same time, net profit in the II quarter of this year increased by 1.9% compared to the I quarter to 329 billion rubles.

Rosneft’s revenue for January-June 2023 decreased by 25.3% compared to the same period last year to 3.87 trillion rubles, and in the II quarter increased by 12.1% to just over 2 trillion rubles. The company explained that in the calculations for deliveries abroad, “Rosneft» «Gives priority to payments in rubles and national currencies of friendly countries».

The company’s EBITDA in the first half of the year declined less rapidly than revenue. The indicator fell 5.1% to 1.4 trillion rubles. Rosneft explained this by an increase in the volume of supplies of products to the east, an increase in the profitability of export sales, as well as cost control. EBITDA margin was 36%.

After the strengthening of anti-Russian sanctions in 2022, Russian companies had to hastily redirect the supply of oil and petroleum products from the European market to the Asian one. As a result, China and India became the largest buyers of Russian oil in the East in 2022. According to Deputy Prime Minister Alexander Novak, China increased its purchases of oil from Russia by 28% to 89 million tons, and India – by 19 times to 41 million tons.

According to the company’s financial statements, Rosneft’s free cash flow for the first half of the year increased by 21.9% to 434 billion rubles. At the same time, the ratio of net debt to EBITDA in dollar terms amounted to 1.2.

“The company’s financial performance demonstrates stability, despite the volatility of market prices. In many respects, this becomes possible thanks to the continuous work on cost control. So, for example, in the 2nd quarter. In 2023, the cost of hydrocarbon production fell to $2.8 per barrel of oil equivalent (boe). On the other hand, the instability of the tax environment, including the already adopted changes in legislation and new initiatives, complicates the company’s activities,” said Igor Sechin, Chief Executive Officer of Rosneft, quoted by the press service.

Rosneft’s capital expenditures for the six months of 2023 increased by 13.7% to RUB 599 billion. due to the planned performance of work in the Exploration and Production segment. Against this background, the company’s production of liquid hydrocarbons in January-June 2023 amounted to 4 million barrels per day, or 97 million tons. decreased by 2.2% to 3.9 million barrels per day, or 48.2 million tons.

Novak first announced a voluntary cut in Russian oil production in February of this year. The indicator was supposed to be reduced in March by 500,000 barrels per day, but then this measure was extended until the end of 2024. Since May 1, eight more OPEC+ countries, including Saudi Arabia, have joined the voluntary reduction. The total decline in production of nine countries is 1.66 million barrels per day. But Saudi Arabia has announced an additional 1 million bpd cut in July-September this year. Russia will reduce oil exports in August by 500,000 barrels per day, and in September by 300,000 barrels.

Also in the first half of 2023, Rosneft increased gas production by 31.8% year-on-year to 1.5 million boe/day, or 43.7 billion cubic meters. The company explained the increase in production by increasing production at existing fields, as well as the launch of new gas projects in the Yamalo-Nenets Autonomous Okrug in 2022. Sechin specified that the company took first place among independent gas producers in Russia, although in the second quarter the figure fell by 8.7% qoq to 1.4 mmboe/d mainly due to limited oil production and repairs.

The company also reported on the work on the Vostok Oil project. Over the six months of this year, the project completed more than 2,200 linear kilometers of 2D seismic surveys and 1,600 sq. m of 3D work, two exploratory wells have been drilled, drilling of three more has begun, and eight wells are at the testing stage. In the first half of the year, the company drilled 27,000 meters of footage in the Payakhsky cluster and completed drilling of eight production wells. At the Ichemminskoye field, preparatory work is underway for drilling six production wells, and in July of this year, Rosneft began pilot development of the Baikalovskoye field with initial recoverable reserves of 81 billion cubic meters. m of gas and 43 million tons of oil.

The company’s oil refining at Russian refineries is also growing – in the first half of the year by 9.2% compared to the same period last year to 44.1 million tons. In the second quarter of 2023, the figure decreased by 5.1% compared to the previous quarter to million tons of oil, mainly due to scheduled repairs at refineries, the company explained.

Rosneft became the best Russian oil and gas company in the international ranking of the World Benchmarking Alliance and entered the top ten oil and gas companies in the world in several indicators of sustainable development, follows from the message.

The decrease in EBITDA in the first half of 2023 was caused by the fall in ruble oil prices in annual terms, explains Sergey Kaufman, an analyst at FG Finam. Investment strategist at Arikapital Management Company Sergey Suverov explains that the decline in prices for Urals and Brent in January-June 2023 by six months of 2022 affected the results of all oil companies: “Gazprom Oil, Tatneft, Exxon, Chevron, BP, etc.

Also, in the first half of 2022, there was a high marginality of oil refining, adds the head of the information and analytical content department “BCS The world of investments” Vasily Karpunin. At the same time, Rosneft’s EBITDA margin increased significantly due to the high share of the more premium grade of ESPO oil in the company’s revenue, he notes. The sales of ESPO also had a positive impact on the growth of Rosneft’s net profit. Also, the increase in the indicator was caused by an underestimation of net profit in 2022 due to asset write-offs, he adds.

Suverov notes that the company’s EBITDA for the six months of this year fell less than revenue. In his opinion, this indicates an increase in the efficiency of the company and a reduction in operating costs.

Analysts specified that Rosneft’s dividends for the first half of 2023 will amount to 30.8 rubles. per share. In total, the company can pay 326 billion rubles, Suverov notes. In his opinion, by the end of 2023, the indicator will be “at least not lower than in 2022.”

At the end of 2022, Rosneft paid dividends of 17.97 rubles. per share in the amount of 190.4 billion rubles. Taking into account interim payments, the company’s dividends last year amounted to 38.36 rubles. per share, and a total of 406.5 billion rubles were paid.