Page 180 - RusRPTApr23

calculated under IFRS, Sechin added.
Rosneft reported headline IFRS results the full year of 2022, including EBITDA, net income, CapEx, and a few operational numbers on March 20. Revenue was reported indirectly as a percentage increase on 2021 results. We do not expect full release of a typical IFRS or MD&A report, as both have been suspended due to the Ukraine crisis, nor do we expect a conference call to be hosted to discuss the results.
Overall, the results were strong, especially at the net income line, which directly affects dividends payouts (Rosneft pays 50% of IFRS net income without non-cash adjustments, so the read-across should be direct). The 4th quarter slide in revenues vs. 3Q22 was mostly due to a slide in world oil prices from $98/bbl Brent to $88/bbl, while the quoted Urals-Brent discount widened noticeably after the December 5 imposition of the EU embargo and price ceiling on Russian oil, decreasing revenues for Russian exporters even more. Gas production for the full year, however, hit a record 74.4bcm as two key projects ramped up (Kharampur and Rospan).
§ 4Q22 revenue of $30.2bn (cRb1.8trn) was -3% vs. BCS and was -9% vs. Consensus;
§ 4Q22 EBITDA was $8.5bn (cRb535bn), or +9% and +4% vs. BCS and Street, respectively;
§ 4Q22 net income of $3.5bn (cRb222bn) was +67% vs. BCS and +411% vs. Consensus.
§ 4Q22 CapEx of $4.6bn (cRb290bn) was 16% below our number (positive).
§ For the full year, Rosneft reported Rb813bn of net income, implying a full-year dividend of 38 Rb/sh (10.5% total DY) and a final dividend of 18 Rb/sh (4.9% DY) on top of the Rb20.39 already paid in the form of an interim dividend.
BCS raised its TP on oil producer Rosneft 31% to Rb470/sh and maintain its recommendation at HOLD. Our dividend forecasts for 2023e-2024e rise as higher output and weaker ruble outlooks boost our earnings forecasts. Cautiously optimistic on S-T outlook for Russian oil business. EU and G7 embargoes and price caps have not been as negative as feared, and tax changes, a production cut, and a growing shadow fleet may compress Urals discounts noticeably. BCS still expects output and the Urals discount to recover to November 2022 levels by end-2023, and regain near pre-crisis levels in the L-T.
L-T growth story remains in place. Rosneft’s flagship Vostok Oil should see first greenfield production in 2024, with crude sent directly to Asia via the Northern Sea Route, putting significant growth and export diversification on the medium-term horizon. Note robust Russian oil drilling in 2022, up 8% y/y to an all-time high, supports the notion this project will be realized in full.
180 RUSSIA Country Report Russia April 2023 www.intellinews.com