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Rosneft Oil Company

November 25, 2015

Financial results for Q3 2015 and 9M 2015:

  • Keeping low operating expenses at 157 RUB/boe in conditions of 12% growth in producer price index in 9M 2015
  • Increase in adjusted EBITDA by 1.0% to RUB 879 bln in 9M 2015 despite lower oil prices in RUB terms
  • 16.1% increase in net income to RUB 303 bln and corresponding net margin improvement to 7.8% in 9M 2015
  • Considerable financial leverage cut and a structural improvement incredit profile

Consolidated IFRS financial results for Q3 2015 and 9M 2015:

 

9M
2015

9M
2014

Change,
%

Q3
2015

Q2
2015

Change,
%

Financial results

RUB bln (except %)

Revenue  

3,866

4,192

(7.8)%

1,266

1,312

(3.5)%

EBITDA

820

869

(5.6)%

244

311

(21.5)%

Adjusted EBITDA1

879

870

1.0%

267

326

(18.1)%

Adjusted EBITDA margin

22.7%

20.8%

 

21.1%

24.8%

 

Net income

303

261

16.1%

113

134

(15.7)%

Adjusted  net income

303

2162

40.3%

113

134

(15.7)%

Net income margin

7.8%

6.2%

 

8.9%

10.2%

 

Adjusted free cash flow 3

517

404

28.0%

177

210

(15.7)%

 

USD bln4 (except %)

Revenue  

66.8

118.5

(43.6)%

20.6

25.2

(18.3)%

EBITDA

15.0

24.7

(39.3)%

4.2

6.3

(33.3)%

Adjusted net income

5.3

6.02

(11.7)%

1.8

2.5

(28.0)%

Gross debt

47.5

65.6

(27.6)%

47.5

54.3

(12.5)%

Net debt

24.5

45.0

(45.6)%

24.5

39.9

(38.6)%

Adjusted free cash flow

9.7

11.6

(16.4)%

3.0

4.2

(28.6)%

For reference

 

 

 

 

 

 

Average Urals price, USD per bbl

54.6

105.1

(48.0)%

49.4

61.8

(20.1)%

Average Urals price, th.RUB per bbl

3.24

3.72

(12.9)%

3.11

3.25

(4.4)%


1 Adjusted for forex effect from the recognition of revenue under long term oil supply contracts in the amount of RUB 23 bln in Q3 2015 and RUB 15 bln in Q2 2015.
2 Excluding gain from the sale of LLC “Yugragazpererabotka” of RUB 45 bln (net result) (USD 1.3 bln at average March 2014 exchange rate) in Q1 2014.
3 Excluding the effect of interest expense and one-off effect from prepayments under long-term supply oil agreements.
4 Calculated using average monthly Central Bank of Russia exchange rates for the reporting period. Gross debt and net debt are estimated using the closing exchange rate of Central Bank of Russia as of September 30, 2015.

Commenting the results for 9M 2015, I.I. Sechin, Chairman of Rosneft Management Board, said:

“Despite of challenging economic environment, the Company keeps improving its efficiency. This is demonstrated by keeping operating costs in rouble terms at sustainable level in conditions of 12.0% increase in industry prices. Preserving the cost base and efficient risk management contributed to an increase in profits for 9M 2015 compared to 9M 2014 despite oil price drop. The Company achieved a structural improvement in the credit profile, while the debt burden was reduced to the target level.”

Financial performance

Revenue

In Q3 2015 revenue amounted to RUB 1,266 bln (USD 20.6 bln), declining by 3.5% compared to Q2 2015 due to lower crude oil prices in RUB terms by 4.4%. The main compensating factors were an increase in domestic petroleum products sales volumes by 9.6% and in crude oil export to non - CIS markets by 2.0%.

In 9M 2015 revenue amounted to RUB 3,866 bln (USD 66.8 bln), decreasing by 7.8% compared to 9M 2014. Despite deteriorating market environment the Company increased sales volume of crude oil and oil products (+2.0%), sales of gas (+5.6%) and improved output of light oil products to 55.3%. Thus, Rosneft managed to reduce the negative impact of decline in crude oil prices by 12.9% in RUB terms and by 48.0% in USD terms.

Adjusted EBITDA1

Adjusted earnings before interests, tax and depreciation (EBITDA) was down by 18.1% to RUB 267 bln (USD 4.2 bln) due to a negative effect of export duty lag and an increase in export duty rate in RUB terms. Adjusted EBITDA margin reached 21.1% in Q3 2015. In deteriorating macroeconomic environment the downstream segment managed to improve profitability compared to Q2 2015 on the back of 8,4% increase in yield of Euro 4/5 motor fuels. The upstream segment keeps demonstrating effective control over operating expenses. In Q3 2015 lifting costs decreased by 1.3% q/q to 156 RUB/boe (2.5 USD/boe). Over the past three quarters the Company maintained low operating expenses per boe in RUB terms in conditions of elevated inflation levels.

Adjusted EBITDA in RUB terms increased by 1.0% up to RUB 879 bln despite of lower crude oil prices by 12.9% in RUB terms and a negative effect from tax maneuver at RUB 64 bln.

Net income

In Q3 2015 net income amounted to RUB 113 bln (USD 1.8 bln). In 9M 2015 net income reached RUB 303 bln, increasing by 16.1% compared to 9M 2014 despite the deteriorating macroeconomic environment.

Free cash flow

In Q3 2015 unit capital expenditures amounted to 254 RUB/boe (4 USD/boe). Thanks to the management efforts to maximize profits and efficient management of working capital adjusted free cash flow was at RUB 177 bln for Q3 2015. At this stage sustainable cash flow generation ensures payment of dividends, decreasing financial leverage and financing the investment program.

Debt burden

Gross debt decreased by 21.5% since the beginning of the year in USD terms and amounted to USD 47.5 bln as of the end of Q3 2015 due to repayment of a substantial part of short-term debt. A structural improvement in the credit profile of the Company was achieved mainly by generating stable free cash flows and receiving funds under long-term crude oil supply agreements for the last quarters.

Rosneft Information Division
tel.: +7 (495) 411 54 20
fax: +7 (495) 411 54 21
November 25, 2015

 

 

 

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