Rosneft Posts EBITDA of USD 13.6 bln, Reduces Net Debt by USD 2.8 bln in 2009

On February 1, 2010, Rosneft (the Company) was the first among its global peer group to publish audited consolidated financial results under US GAAP for 2009. Key financial and operating indicators for full year and Q4 2009 included:

Net income for 2008 is adjusted for the effect from the income tax rate change.

In Q4 2009 Rosneft’s revenues increased by 11.6% quarter-on-quarter, to USD 14,567 mln. The increase was due to higher crude oil and petroleum product prices and growth of crude oil production volumes, partially offset by a decrease in petroleum product output and sales volumes. In 2009 revenues amounted to USD 46,826 mln, a decrease of 32.1% year-on-year. The decrease was primarily attributable to lower crude oil and product prices.

Rosneft’s EBITDA amounted to USD 4,014 mln in Q4 2009, a 9.7% increase quarter-on-quarter. The increase was tempered by strengthening of the ruble against the USD and growth of export duties and mineral extraction tax. EBITDA for 2009 amounted to USD 13,565 mln, 20.7% lower than USD 17,108 mln in 2008. The decrease was mainly driven by a fall in the Company’s revenues due to lower crude oil and product prices.

In Q4 2009 net income increased to USD 1,674 mln, up 43.3% from USD 1,168 mln in Q3 2009. Net income for 2009 totaled USD 6,514 mln, 35.9% lower year-on-year, partially due to a higher effective income tax rate (24% in 2009 compared to 15% in 2008).

In 2009 Rosneft reduced its net debt by USD 2,794 mln, to USD 18,489 mln, and paid USD 622 mln of dividends. The decrease in net debt reflects strong free cash flow generation of USD 3.4 bln, of which USD 1.2 bln were generated in Q4. Rosneft’s credit profile strengthened substantially in 2009, as short-term debt decreased by USD 6.2 bln, the share of long-term debt in total debt increased from 42% to 67%, and net debt to EBITDA equaled 1.36.

In Q4 2009 Rosneft’s daily crude oil output (including production by subsidiaries and share in production by affiliates) increased by 2.8%, to 2,275 th. barrels per day (bpd), from 2,214 th. bpd in Q3 2009. Daily crude oil output averaged 2,182 th. bpd in 2009 which is 2.9% higher than in 2008. The growth was driven by the production ramp up at the Company’s Vankor field: the field was officially launched in August 2009, and its production averaged 205 th. bpd in December 2009 and reached 220 th. bpd by the end of January 2010.

In Q4 2009 Rosneft produced 11.8 mln tonnes of petroleum products, down 1.7% quarter-on-quarter. The decrease was due to scheduled turnarounds at the Company’s refineries. Output of petroleum products rose by 1.3% year-on-year to 47.1 mln tonnes.

In Q4 2009 Rosneft continued its successful implementation of cost optimization measures. Upstream operating expenses were USD 2.75 per bbl, or 5% higher quarter-on-quarter, which is below the nominal appreciation of the RUB against the USD. In 2009 these expenses averaged USD 2.57 per bbl, which is 24.6% lower than in 2008 in USD terms and 3.8% lower in RUB terms despite annual RUB inflation in 2009 of 8.8%. Operating expenses of the Company’s refineries were USD 13.3 per tonne in Q4 2009, a decrease of 6.4% quarter-on-quarter, which resulted from cost cutting measures and increase in intra-group petroleum product inventories.

Commenting on the results, Rosneft’s President Sergey Bogdanchikov said: «Despite the challenging macroeconomic situation in early 2009, Rosneft delivered excellent results for the year across all key metrics: cost control, profitability, free cash flow generation and resulting net debt reduction and volume growth. We will continue to focus on these performance metrics in 2010 as emphasized in our approved business plan».

Rosneft’s US GAAP financial statements and Management’s Discussion and Analysis (MD&A) for Q4 and 12M 2009 and a related investor presentation are available on the Company’s website at www.rosneft.com.  

Rosneft Information Division
Tel.: +7 (495) 221-31-07
Fax: +7 (495) 411-54-21
n_manvelov@rosneft.ru
February 1, 2010

These materials contain statements about future events and expectations that are forward-looking in nature. Any statement in these materials that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements expressed or implied by such forward-looking statements to differ. We assume no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.