Page 10 - FSUOGM Week 08 2020

FSUOGM PERFORMANCE FSUOGM
Gazprom Neft profits up in Q4
RUSSIA
Investors are eagerly awaiting news on Gazprom Neft’s dividend policy.
RUSSIA’S Gazprom Neft reported has increased profits in 2019 on the back of higher output and a stronger ruble.
The oil arm of state-owned Gazprom posted a RUB400.2bn ($6.14bn) income attributable to shareholders in the year, versus RUB 400.2bn. Adjusted core earnings (Ebitda) were down 0.5% at RUB795.13bn, but cash flow from operations grew 13.3% to RUB609bn.
Company turnover was unchanged at around RUB2.49 trillion, as lower oil and gas prices were more than offset by a 3.5% growth in hydrocar- bon output to 1.95mn barrels of oil equivalent per day.
The ruble rose 8% against a basket of other major currencies last year, resulting in a RUB10.5bn foreign exchange gain for Gazprom Neft, versus a RUB33.6bn loss in 2018. The com- pany also benefitted from increased financial income.
Operating expenses came to RUB2.04 tril- lion, up only 0.3% y/y despite the growth in production.
Oil and gas companies across the world came under strain towards the end of last year as a result of weak prices. The oil market remains subdued, as efforts by the OPEC+ alliance to prop up prices continue to be undermined by
lacklustre demand in Asia and rising produc- tion in the US and other areas. The coronavirus outbreak has put additional downward pressure on prices this year.
Gazprom Neft’s Q4 results were also strong considering the bearish market conditions, with profits to shareholders up 2.8% y/y at RUB80.2bn. Revenues were down 7.2% at RUB613.8bn, however, while adjusted core earn- ings fell 2.9% to RUB179.6bn.
Like other Russian producers, Gazprom Neft had to keep its oil output in check last year because of Russia’s OPEC+ commitments. As such, its oil production rose by 0.6% last year to 1.29mn barrels per day, in contrast to strong growth in previous years. However, its gas out- put - which is not restricted under OPEC+ quo- tas - rose 9.8% to 40.8bn cubic metres, thanks to higher output at the Novoportovskoye field in the Russian Arctic, as well as other projects.
Investors are eagerly awaiting news on Gaz- prom Neft’s dividend policy, after parent firm Gazprom said in an investors’ day on February 11 in New York that all its subsidiaries would shortly switch to paying out 50% of profits in dividends. Gazprom has since said that a second public offering (SPO) at Gazprom Neft is not currently on the cards. ™
KMG oil output flat in 2019
KAZAKHSTAN
Output was up at Kashagan, Tengiz and down elsewhere.
OIL output at Kazakhstan’s national oil com- pany (NOC) KazMunayGas (KMG) was flat in 2019, as growth at the Kashagan and Tengiz oil- fields was offset by decline at the Karachaganak deposit and other projects.
Production amounted to 23.6mn tonnes (485,000 barrels per day), the company reported on February 19, virtually unchanged from the level in the previous year. KMG netted 130,000 bpd of oil from its 20% stake of Tengiz’s produc- tion, up 4.1% year on year, and 25,000 bpd from its 8.4% share at Kashagan, up 6.9% y/y. The company’s 10% share of production at Karacha- ganak came to 22,000 bpd, down 7.3% y/y.
Production decline also accelerated at fields operated by KMG, with the company’s share of output at these projects shrinking 1.6% to 307,000 bpd. KMG pointed to steep reductions at its Kazgermunai and PetroKazakhstan joint ventures of 18% and 16% respectively.
Kazakhstan’s national production growth similarly stalled last year, edging up only 0.1% from the 2018 level, arriving at 90.5mn tonnes (1.82mn bpd). Kashagan suffered from techni- cal issues late last year, causing output disrup- tions, and maintenance work was also carried out at Tengiz and Karachaganak. Kazakhstan
has also promised to restrict its output as a member of the OPEC+ alliance, but has largely reneged on its commitments because of growth at Kashagan.
Many of Kazakhstan’s other major fields were first developed in the Soviet era and are now in decline. In recent years the country has signed deals aimed at discovering new fields and boost- ing output at existing projects with a number of foreign companies, including BP, Italy’s Eni, Norway’s Equinor, Russia’s Lukoil and Tatneft and Azerbaijan’s SOCAR. But it is too early to say what results these partnerships will yield.
KMG’s gas production in contrast rose 3.9% last year to 8.445bn cubic metres, the company said. It produced 3.26 bcm from its share of Ten- giz, up 4.2%, 1.86 bcm from Karachaganak, up 1.6%, and 700mn cubic metres from Kashagan, up 10.4%. Kazakhstan needs more gas to under- pin its national gasification programme, and to support exports to China that began in late 2017.
KMG also published its reserves estimates in line with Society of Petroleum Engineers’ PRMS standards. Its proven and probable reserves at the end of 2019 were assessed at 3.99bn barrels of oil and condensate, 189mn barrels of natural gas liquids and 6.3tn cubic feet (178 bcm) of gas.™
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w w w. N E W S B A S E . c o m Week 08 26•February•2020