On 26 June, Rosneft published its consolidated IFRS financial results for 1Q15.
“Despite unfavourable sector dynamics effective from the beginning of the year, such as the drop in oil prices, volatile exchange rates, an increase in tariffs of natural monopolies, a high level of key bank rates and an increase in tax rates, the company demonstrated stability in terms of key production, processing and commercial indicators,” said I.I. Sechin, Chairman of the Rosneft Management Board. “The company continued to actively perform geological exploration, maintaining the volume of the key programme elements at the level of 1Q14. The company continued to supply petroleum products to the domestic market at a stable price, meeting the needs of Russian consumers.”
“During 1Q15, the company repaid financial debt at its expense, or refinancing for the total amount of approximately US$16 billion. The bridge loans raised to acquire TNK-BP are fully repaid,” Sechin continued. “The company continues to manage effectively operating costs and generate positive free cash flow. Operating costs decreased by 3.1% to RUB157/boe in 1Q15 compared with 4Q14 at times of increased production price by 11.8% in the same period. This confirms the viability of selected business models and the high resilience of the company’s business.”
Sales proceeds amounted to RUB1,288 billion in 1Q15. Despite the decline in world prices (-12% in Ruble terms compared to 1Q14) the company efficiently allocated its resources and used high margin distribution channels, which resulted in the compensation of the decrease in revenue comprising 6.3% compared to 1Q14.
Adjusted earnings before interests, tax and depreciation (EBITDA) was RUB286 billion. In 1Q15, the margin of adjusted EBITD? was 22% against 21% in 1Q14. In this regard, the company continues to take measures for effective regulation and reduction of operating and administrative costs. Based on performance in 1Q15, administrative costs decreased by 10% compared to 4Q14.
Net income of the company in 1Q15 was RUB56 billion, which exceeds net income in 1Q14 by 30.2%. The level of net debt in dollar terms decreased by 4.8% compared to 1Q14. In 1Q15, the company made an early final repayment of approximately US$7.2 billion, including accrued interest, under the bridge loan facility raised to finance the acquisition of TNK-BP. Total consolidated debt in dollar terms decreased by 7.4% for 1Q15.
Positive free cash flow reached RUB130 billion in 1Q15 (7.4% more than in 1Q14) due to effective measures for control over the working capital turnover, that consistently provides the repayment of all the financial obligations when due.
The Board of Directors of JSC NK Rosneft recommended the payment of a dividend of 8.21 RUR per share on 2014 results, that is 25% of net income under IFRS.
Adapted from press release by Rosalie Starling