Page 9 - FSUOGM Week 33 2021

FSUOGM PERFORMANCE FSUOGM
Surgut’s cash pile tops $51bn in Q2
RUSSIA
RUSSIAN oil major SurgutNefteGas (Surgut or SurgutNG) posted net loss of RUB24.3bn ($0.3bn) in 2Q21 under Russian Account- ing Standards (RAS), but still showed positive EBITDA of RUB132bn ($1.8bn) and increased its infamous cash pile by $1bn quarter on quarter to $51.1bn.
SurgutNG is the Russian oil sector’s “dino- saur” known for its ultra-conservative financial policies, basing operations only in rubles, and its $50bn-odd cash pile, which is almost as much as Russia’s sovereign reserves.
BCS Global Markets commented that in the reporting quarter only at the net income line did SurgutNG slightly underperform versus the expectations, while EBITDA and the ‘cash pile’ both beat expectations.
“Given the strong FX headwind, the net loss booked on the quarter is not concerning,” BCS GM commented, while maintaining a Buy call on company’s shares.
VTB Capital also noted that the loss in 2Q21 was smaller than expected on the back of the smaller than anticipated FX loss.
“The bottom line implies a RUB 1.43/share 2Q21 contribution to the 2021 dividend per
preferred share (nonannualised 3.8% contri- bution to FY21 dividend yield). For FY21, we expect a 9.9% DY for Surgut’s prefs,” VTBC estimated, while still affirming a Sell rating for SurgutNG shares.
Previously in April 2021 shares of SurgutNG jumped on no appreciable news flows, and investors could have anticipated a declaration and cancellation of the company’s ‘phantom’ treasury shares. In 2020 rumours that SurgutNG could dismantle its treasury holdings also caused a temporary rally of its shares.
The company is moving in and out of Russia’s top dividend payers ranks, depending on cur- rency fluctuations.™
Rosneft posts 55% jump in second-quarter profits
RUSSIA
RUSSIA’S state-run Rosneft has posted a 55% quarter-on-quarter jump in its April-June net profit, with the company attributing the rebound to stronger international oil prices.
The oil major said on August 13 that its sec- ond-quarter profit amounted to RUB233bn ($3.18bn), up from RUB149bn ($2.03bn) in the January-March period.
Rosneft’s first-half income of RUB382bn ($5.2bn) marks a return to form for the com- pany, after it posted a RUB113bn ($1.54bn) loss in the same period of 2020.
The company’s revenue in the first six months of 2021 climbed by almost 40% year on year to RUB3.9 trillion ($53.11bn) compared with RUB2.8 trillion ($38.13bn) in the same period of 2020.
Commenting on the results, Rosneft CEO Igor Sechin said: “In the reporting period, despite all the challenges stemming from the COVID-19 pandemic, we managed to ensure continuity of our business and demonstrated strong financial and operating results.”
The stronger financials came despite a nearly 10% slide in the company’s first-half oil and
gas production. Rosneft said its production amounted to 4.87mn barrels of oil equivalent per day, down 9.9% from the 5.4mn boepd produced in the same period of 2020.
Most of this lost production was in the Jan- uary-March period, with Rosneft noting that it produced 4.97mn boepd in April-June, down 1.5% year on year but up 4.4% quarter on quarter.
Rosneft said: “[Second quarter] 2021 liquids production reached 354.7mn barrels (47.8mn tonnes) having increased by 5.1% QoQ due to the gradual restrictions easing under the OPEC+ agreement.”
In terms of the company’s upstream efforts, Sechin highlighted ongoing work at the Rospan gas project and Vostok oil project.
He said two production lines had been brought onstream at Rospan, increasing pro- duction to the point where the asset had become the company’s largest gas producer. At its “flag- ship” Vostok oil project, meanwhile, Rosneft is constructing six exploration wells and has started work on the project’s main infrastructure facilities.™
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