Page 86 - RusRPTDec20

8.3.2 ​ Dividends dynamics
● Oil & gas
The​ ​Tatneft​ board of directors did not discuss a 3Q20 dividend or make a decision on the subject ​during its meeting on 27 November, implying that no such dividends will be paid out for 3Q20. The company’s local and pref shares were down 2.6% on 27 November. The BoD also disclosed that it would not transfer some fields to the excess profit tax (EPT) scheme. Following the virtual meeting with CEO Nail Maganov on 20 November, we believe the market was expecting Tatneft to pay out 3Q20 dividends of up to RUB 12.57/share, or 100% of RAS net income. However, Tatneft did not discuss a 3Q20 dividend during its meeting last week, suggesting that the company will not pay one out.
Gazprom Neft​ approved a small 9M20 dividend analysts say is a positive sign ​in that it likely confirms Gazprom Neft’s 50% payout policy. Meanwhile, the sale of a large stake in an early-stage project keeps the company’s long-term growth prospects in focus. BoD approves a 9M20 divi and sale of 50% of a Gydan asset to Shell. The dividend was approved at 5 RUB/sh on as-yet unpublished 9M20 IFRS results (they are to be announced tomorrow). On our estimates, a 50% payout should have resulted in a dividend of c5.7 RUB/sh, implying either that our 3Q net income estimate is a bit high, that the BoD rounded the number down to the nearest whole integer, or some combination of the two. This news is only modestly positive due to the smallness of the dividend – only a c1.6% yield – given the trough nature of the first part of 2020. The 4th quarter is looking substantially better, but a return to significant yields will have to wait until FY2021 for almost all Russian oil & gas stocks (barring SurgutNG prefs), not just SIBN. The Gydan assent in question is “Gazprom Neft Aero Bryansk”, which owns the Lyeskinsky and Pukhutsyayakhsky blocks on the peninsula, and is part of the Yenisei project, per Interfax. The two blocks are little explored, but estimates are they may hold 135mn tons of hydrocarbons between them (c1bn boe). Although at a very early stage, attracting a significant outside investor – and one that has substantial LNG experience, should such a project be necessary to market gas from the gas-prone region – is a positive for SIBN.
Rosneft​’s call confirmed our view that 2020 dividends will be low or even zero ​on FOREX issues, that the recent tax changes will hardly touch EBITDA, and that the buyback program will be extended to YE2021.
Rosneft held its 3Q20 IFRS call on Friday afternoon, touching on dividends, buybacks, CapEx, and the relatively neutral effect of the recent tax increases.
The elephant in the room – 2020 dividends: Management was asked if Rosneft’s dividends would be zero on 2020 due to FOREX losses (Rosneft pays 50% of IFRS net income, and barring a significant rally
86 ​RUSSIA Country Report​ December 2020 www.intellinews.com