Page 9 - FSUOGM Week 20 2021

FSUOGM INVESTMENT FSUOGM

Repsol sheds stake in Russian

upstream venture

RUSSIA SPAIN’S Repsol is reportedly selling its stake in Repsol E&P Eurasia in Moscow.
an upstream joint venture in Russia with local Repsol has retained interests in two explo-
Repsol has been scaling partner Neftegazholding. ration joint ventures with Gazprom Neft, Yev-
back in Russia as it The company is selling its 49% interest in rotek-Yugra and ASB Geo, however. The two
adjusts to the energy AR Oil & Gas to Alliance Oil, a subsidiary of enterprises have accumulated licences for a
transition. Neftegazholding, which in turn is controlled number of blocks in the Kondinsky district
by Russian businessman Eduard Khudainatov, of Russia’s main oil province of Khanty-Man-
Spanish news agency Europa Press reported cit- siysk. The pair are continuing work apprais-
ing sources. AR Oil & Gas holds licences for 20 ing the 2014 Ourinskoye oil find, estimated at
small oil and gas blocks in the regions of Tatar- the time of its discovery to hold 32mn tonnes
stan and Samara. (235mn barrels) in C1+C2 oil resources. They
Repsol has been scaling back in Russia as part had targeted a final investment decision (FID)
of efforts to prepare its business for the energy at Ourinskoye by the end of 2019, although this
transition. In November it announced a medi- step was not taken.
um-term strategic plan calling for the sale of All told, Repsol spent a mere €1.9mn
upstream assets and for its exit from half of the ($2.3mn) on its exploration activities in Rus-
countries in which it operates, reducing to 14. sia during the first quarter of this year, versus
The Spanish oil producer last year opted €18.3mn during the whole of 2020.
against taking a 25% interest in a joint venture The divestment by Repsol comes a week after
with Gazprom and Royal Dutch Shell to explore reports emerged that BP had withdrawn from
two large oil and gas blocks on the Gydan Pen- plans to develop two blocks in Yakutia in the Far
insula. And in March, it closed its subsidiary East with its partner Rosneft. ™

PERFORMANCE

Rosneft posts record $2bn profit in Q121

RUSSIA RUSSIA'S state oil major Rosneft reported $2bn In Q121 free cash flow (FCF) was positive at
net profit under IFRS in Q121 versus a $2.3bn $2.5bn, flat versus the average of the previous
The three-month period loss for the same period of last year and beating six quarters, BCS Global Markets wrote on May
saw the strongest Q1 the Interfax consensus expectations by 5%. 14. Stable FCF was achieved even as Rosneft
net income for Rosneft As reported by bne IntelliNews, Rosneft suf- increased capital expenditures (capex) 7% q/q to
since before it acquired fered a near 80% drop in bottom line in 2020, as $3bn, which was up versus an average of $2.9bn
TNK-BP in 2013. the coronavirus (COVID-19) pandemic sapped for the previous six quarters.
fuel demand and caused prices to collapse. The analysts at BCS GM commented that
But saw Q121 saw "the strongest Q1 net the outperformance at the EBITDA line ver-
income print for Rosneft since before it acquired sus expectations was supported by a solid FCF
TNK-BP [in 2013], and given where commodity number, confirming a significant recovery in
prices are in 2Q21 so far, we think there is basis the macroeconomic environment for Russian
for a solid dividend for H121," Sova Capital com- oil producers.
mented on May 14, while seeing the results as BCS GM considers the IFRS results publi-
expected and priced in, and affirming a Buy call cation to be a positive event for the stock and
on Rosneft's shares. affirmed a Buy rating for Rosneft shares.
The revenues of Russia's largest crude oil "It was not overly surprising to see a cost cut,
producer declined by 10% year on year and given the noticeable weakening in the RUB/USD
went up by 20% quarter on quarter to $23bn, rate in the period, but this showing seems rela-
beating consensus expectations by 3%. Rosneft's tively strong nonetheless," BCS GM added, com-
adjusted EBITDA of $6bn gained 22% y/y and menting on the upstream operating costs being
25% q/q, beating expectations by 3%. cut 11% q/q and 10% y/y.
The company's total liquids production was BCS GM suggests focusing on Rosneft's
down 7.9% q/q and 20.1% y/y to 46.2mn tonnes, capex guidance for 2021 given rising commod-
and gas production fell 6.8% q/q and 9.9% y/y ity prices and ambitious plans for the Vostok Oil
to 15bn cubic metres. Despite the lower output, project. Other factors to watch are borrowing
Rosneft's revenues were supported by higher plans for 2021, including any additional Chinese
commodity prices. prepayments, if planned. ™

Week 20 19•May•2021 www. NEWSBASE .com P9