Page 15 - FSUOGM Week 46

FSUOGM PERFORMANCE FSUOGM

Rosneft returns to loss in Q3

RUSSIA RUSSIAN oil giant Rosneft returned to a net loss in the three-month period, down 42% year on
in the third quarter, on the back of ruble devalu- year but up 40% quarter on quarter. Oil prices
Core earnings ation and low prices. slumped in March and April, only to recover in
outperforme, though, The company swung to its first net loss since the subsequent months, thanks to a recovery
thanks to solid free 2012 in Q1 after sustaining heavy impairments, in fuel demand after historic lows during lock-
cash flow. but rebounded to profit in Q2. The company suf- downs, as well as OPEC+ cuts to supply.
fered another loss of RUB64bn ($800mn) in Q3, These cuts led Rosneft to reduce its overall
though, owing to a weaker ruble. This compared hydrocarbon output by 9.5% in the first nine
with a RUB225bn profit a year earlier. months of the year to 5.232mn barrels of oil
Rosneft’s EBITDA performed better, arriv- equivalent per day (boepd). This was led by a
ing at RUB366bn ($5bn) in Q3 2020, beating a 10% drop in oil and condensate output to 155mn
forecast by BCS Global Markets (BCS GM) by tonnes (4.14mn barrels per day).
6%. This is versus RUB544bn of earnings in Q3 The company’s gas production also dipped by
2019 and RUB170bn in Q2 2020. Its net loss was 6% to 46.75bn cubic metres in the nine-month
also 7% less than the Moscow-based brokerage period. Rosneft blamed this too on OPEC+ quo-
projected. tas, which led to the loss of some associated gas
Core earnings outperformed thanks to solid supply. Its gas output was already falling before
free cash flow (FCF), BCS GM said, noting this OPEC+ cuts came into effect, however, owing
“confirmed a significant recovery in the mac- to natural decline. The producer has sought to
roeconomic environment for Russian oil pro- advance a number of new projects to boost sup-
ducers. We consider this to be a positive for the ply but progress has been slow.
stock.” The company’s upstream costs shrank to $2.8
FCF came to RUB146bn ($2bn), down from per boe from $3.2 per boe a year earlier, but this
$4.4bn in Q3 2019 but up from $0.6bn in Q2 was almost entirely due to the ruble weakening.
2020. At the same time, Rosneft expanded its Its net debt also grew to RUB4.9 trillion at the
capital expenditure by 8% quarter on quarter to end of September from RUB3.2 trillion three
$2.7bn. But capex was still lower than an average months earlier, on the back of an increase in
of $3.1bn in the previous six quarters. long-term debt. However, its net debt to Ebitda
Revenues totalled RUB1.44 trillion ($20.1bn) ratio remains at a manageable 2.5. ™

Week 46 18•November•2020 www. NEWSBASE .com P15