Page 138 - RusRPTDec21

Total revenue increased 7% q/q and 61% y/y to RUB2.3trillion, outpacing our estimate by 4% and consensus by 2%. Revenue from crude sales grew 8% q/q and 89% y/y, while refined product revenue was up 7% q/q and 83% y/y. Our miss is mostly related to the downstream.
Total operating costs were up 5% q/q and 48% y/y to RUB1.9trillion. Production expenses grew slightly, but we note a 13% q/q and 16% y/y increase in downstream costs. Upstream costs grew at a more muted pace of 4% q/q (-1% y/y). We note that downstream EBITDA came in at RUB69bn (+57% q/q), implying a 3% margin. Purchases were up 10% q/q and 163% y/y as volumes increased q/q. SG&A, transportation and exploration were all down q/q. Mineral extraction tax (MET) was up 9% q/q to RUB601bn, while excess profit tax (EPT) increased 22% q/q to RUB181bn, ahead of our estimate. Excise tax came in as a benefit of RUB3bn thanks to the positive impact of RUB146bn from the reverse excise tax. Rosneft now discloses that it paid RUB8bn in CO2 emission taxes and the “other” line of taxes other than income. Total tax other than income amounted to RUB812bn (+7% q/q and +50% y/y), which was below our forecast, as we estimated higher MET and no positive impact from excise tax.
EBITDA was up 12% q/q and 74% y/y to RUB638bn, the second highest number on record behind 3Q18, beating our estimate by 4% and consensus by 1%. The EBITDA margin improved q/q and y/y to 28%.
Above the bottom line, finance income increased q/q and y/y, and the company booked a RUB10bn FX gain. Other income was up to RUB16bn, though no details were provided in the report, while other expenses came in at RUB20bn, with RUB13bn related to the sale and disposal of PP&E. Net income increased 35% q/q to RUB314bn vs. a net loss of RUB64bn in 3Q20. Net income for 9M21 was at its highest level on record at RUB696bn. If Rosneft were to pay an interim dividend for 3Q21, which it will not, implied DPS would be RUB14.8/share (vs. RUB18/share for 1H21). We think Rosneft’s net income is well positioned to top the RUB1trillion mark for FY21, which would imply DPS of at least RUB47/share for the year.
Rosneft closed the sale of a 5% stake in Vostok Oil to a consortium of Vitol S.A. and Mercantile & Maritime Energy Pte. Ltd for €3.5bn (RUB299bn). The cost of €3.5bn is in line with what Trafigura paid for a 10% stake in Vostok Oil in 2021.
Capex was down 4% q/q but up 12% y/y to RUB227bn, which is below our forecast. Upstream capex fell q/q, including investments at Vostok Oil. Downstream capex rose from RUB12bn in 2Q21 to RUB18bn in 3Q21. OpCF was higher than we expected, which also helped with unadjusted FCF, which came in ahead of our estimate at RUB250bn. FCF using Rosneft’s method, adjusting for prepayments, was RUB375bn ($5.1bn), up 19% q/q. Net debt fell to RUB2.7trillion vs. RUB3trillion in 2Q21 and at YE20. This improvement comes from the increase in cash, as total debt was up q/q to RUB4.5trillion but down
138 RUSSIA Country Report December 2021 www.intellinews.com