Page 100 - RUSRptSept18

9.2 Major corporate news 9.2.1 Oil & gas corporate news
Russia's natural gas giant and pipeline exports monopolist Gazprom posted IFRS revenues of RUB1.83 trillion ($27bn) in the second quarter of 2018 , declining by 14% quarter-on-quarter due to seasonally lower gas sales and weaker spot prices. Gazprom's Ebitda was at RUB572bn, down 11% q/q, but beat the consensus expectations by 4%, with the margin improving by 1pp to 31%. Net income beat the estimates by 11%, despite 34% q/q and 11% y/y decline due to higher net foreign currency loss on the back of RUB depreciation (RUB97bn loss versus RUB21bn in the first quarter). Aton Equity on August 29 commented that Gazprom's numbers were "solid" and positive for the stock. "The numbers have expectedly revealed a q/q reduction due to seasonally lower gas sales, but outperformed the street’s estimates," Aton notes, while adding that "free cash flow came in 5x higher q/q at an impressive RUB130bn, reflecting a smaller WC [working capital] build-up (-50% q/q) and capex decrease (-18% q/q)." The analysts suggested focusing on management's guidance for 2018 exports , as well as on the mooted pipeline to China associated with the existing Sakhalin-Khabarovsk-Vladivostok route, news on Nord Stream 2’s new route avoiding Danish territorial waters , as well as the state of the Turkish gas market. Gazprom held an annual general shareholder meeting on June 29 , at, which the company approved the dividends of RUB8.04 per share, confirmed record high export guidance, and said it might revise up annual production outlook. The company has been posting record-high export numbers due to harsh weather conditions in Europe, but its reluctance to comply with the Finance Ministry's demand to pay 50% of IFRS net profit could make the government bite into the profits with higher extraction taxes .
Russia's oil pipeline monopoly Transneft has repaid a $10bn loan awarded for the construction of Chinese pipelines ahead of schedule, thus fully cutting its foreign currency debt exposure, Vedomosti d aily said on August 20 citing the president of the company Nikolay Tokarev "We have fully covered our [foreign] currency liabilities, repaid the Eurobonds, and converted the Chinese debt into rubles and also repaid [it]," Tokarev said. In 2009, Transneft received the $10bn loan from China, maturing in 2029, and $15bn in prepayments from Russia's largest oil company Rosneft. Analysts surveyed by Vedomosti w elcomed the repayment of the loan, noting that its servicing costs could have grown due to ruble weakening and reminding that Transneft's only revenue stream comes from ruble-denominated tariffs for oil transportation.
Russia's second-largest oil producer private company Lukoil posted RUB2 trillion revenues in the second quarter of 2018 , jumping 51% year-on-year and beating consensus forecast by 3%. Ebitda was 65% higher y/y to RUB295bn, 4% above expectations, and net income increased by 21% y/y to RUB167bn. Lukoil, with many operations abroad, recently came into investors’ focus by catching up with the capitalisation of Russia's state energy giants Gazprom and Rosneft , despite having smaller output and resource base. The company's new strategy, presented at an investors’ day in London on March 23, was met positively by analysts and investors. The strategy outlined Lukoil's four key goals: organic extraction growth, optimising refining to maximise free cash flow, development of petrochemical segment, and a progressive dividend policy.
Russia's second-largest natural gas producer with an ambitious LNG strategy Novatek plans to build a transshipment sea terminal in Ura Bay, Murmansk with annual capacity of 20mn metric tonnes, Vedomosti daily reported on August 20 citing the head of the company Leonid Mikhelson. Ambitious LNG output plans had Novatek busy looking for shipment solutions.
100 RUSSIA Country Report September 2018 www.intellinews.com