Financial results for 3Q and 9M 2021
- In 3Q 2021, Net income amounted to RUB 314 bln, an increase of 35% q-o-q.
- Net income for 9M 2021 of RUB 696 bln was the highest on record in the Company’s history.
- In the reporting quarter, EBITDA of RUB 638 bln hit the highest level in the last twelve quarters.
- In 9M 2021, unit upstream operating costs stayed at a minimum level of 2.6 USD/boe (194 RUB/boe).
- In 9M 2021, Free cash flow amounted to RUB 880 bln, which implies 2.5-fold increase compared to 9M 2020.
- Net debt/EBITDA amounted to 1.3x, a reduction of almost a quarter in 3Q 2021 and by 1.8 times since the beginning of the year.
- Net financial debt and trading liabilities fell by USD 8.4 bln since the beginning of the year.
Consolidated IFRS financial results for 3Q 2021 and 9M 2021:
| 3Q 2021 | 2Q 2021 | Change, % | 9M 2021 | 9M 2020 | Change, % | ||
|---|---|---|---|---|---|---|---|
| RUB bln (except %) | |||||||
| Revenues and equity share in profits of associates and joint ventures | 2,320 | 2,167 | 7.1% | 6,224 | 4,2361 | 46.9% | |
| EBITDA | 638 | 571 | 11.7% | 1,654 | 845 | 95.7% | |
| EBITDA margin | 27.0% | 25.9% | 1.1 pp. | 26.0% | 19.4% | 6.6 pp. | |
| Net income attributable to Rosneft shareholders | 314 | 233 | 34.8% | 696 | (177) | – | |
| Net income margin | 13.5% | 10.8% | 2.7 pp. | 11.2% | (4.2)% | 15.4 pp. | |
| Capital expenditures | 227 | 237 | (4.2)% | 689 | 569 | 21.1% | |
| Free cash flow (RUB equivalent)2 | 375 | 315 | 19.0% | 880 | 352 | >100% | |
| Upstream operating expenses RUB/boe | 195 | 194 | 0.5% | 194 | 201 | (3.5)% | |
| USD bln3 (except %) | |||||||
| Revenues and equity share in profits of associates and joint ventures | 32.2 | 29.8 | 8.1% | 85.9 | 62.6 | 37.2% | |
| EBITDA | 8.7 | 7.7 | 13.0% | 22.4 | 12.4 | 80.6% | |
| Net income attributable to Rosneft shareholders | 4.3 | 3.1 | 38.7% | 9.4 | (2.1) | – | |
| Capital expenditures | 3.2 | 3.1 | 3.2% | 9.3 | 8.0 | 16.3% | |
| Free cash flow | 5.1 | 4.4 | 15.9% | 12.0 | 5.4 | >100% | |
| Upstream operating expenses USD/boe | 2.7 | 2.6 | 3.8% | 2.6 | 2.8 | (7.1)% | |
| For reference | |||||||
| Average Urals price. USD per bbl | 70.5 | 66.7 | 5.8% | 65.6 | 40.8 | 60.7% | |
| Average Urals price. th. RUB per bbl | 5.18 | 4.95 | 4.7% | 4.85 | 2.89 | 68.0% | |
1Indicator is adjusted for changes in data in the comparable period.
2The calculation includes interest expense on the prepayments on the long-term oil and petroleum products supply agreements.
3Calculated using average monthly Central Bank of Russia exchange rates for the reporting period.
Commenting on 9M 2021 financial results Rosneft’s Chairman of the Management Board and Chief Executive Officer Igor Sechin said:
“In the third quarter of 2021 the Company demonstrated a strong financial performance. In the reporting period, we reached a new historic record in terms of EBITDA/boe, while the absolute levels of EBITDA and Free cash flow hit the highest level in the last twelve quarters. Net income in the first nine months of the current year exceeded its level for the entire 2020 by almost five-fold providing a significant potential for an increase in the shareholder distribution. Taking into account the current favorable macroeconomic environment, the growth of the Company's production and sales volumes, as well as the high level of operational and investment efficiency, Rosneft is in a position to demonstrate a further expansion in its profits and cash flow.
Despite the uncertainty in the global economy due to the difficult epidemiological situation, we observe a rapid growth in demand for traditional energy resources. As structural discrepancies between supply and demand on global energy markets are further revealed, we may witness a new super cycle on the oil and gas markets. Under these conditions, the Company holds responsible to the consumers of our energy products and increases investments into the new projects. At the same time, the structural growth of capex in the current macroeconomic environment, allows us to both increase the income of shareholders in accordance with the dividend policy and to continue the debt reduction. In November, the Company completed the payment of record interim dividends in its history. At the end of 3Q 2021 Net debt/EBITDA ratio stood at 1.3x compared to 2.3x at the end of 2020, while in the first nine months of 2021 the absolute amount of Net financial debt and trading liabilities decreased by USD 8.4 bln.”
Financial performance
Revenues and equity share in profits of associates and joint ventures
3Q 2021 revenues and equity share in profits of associates and joint ventures amounted to RUB 2,320 bln (USD 32.2 bln). The increase in revenues quarter-on-quarter was mainly attributable to the crude oil price increase (+4.7% in RUB terms), on the back of the oil production growth (+3.2%) following the easing of production limitations under the new OPEC+ Agreement and higher delivery volumes of petroleum products on the domestic market (+13.7%).
In 9M 2021, revenues increased by 46.9% compared to the same period of 9M 2020.
EBITDA
3Q 2021 EBITDA amounted to RUB 638 bln (USD 8.7 bln). The increase in EBITDA (+11.7%) q-o-q was driven by management efforts aimed at maintaining the low level of unit operating costs and at reduction of selling, general and administrative expenses on the back of higher crude oil price and a positive effect of damping component of the reverse excise tax.
Higher EBITDA relative to 9M 2020 was mainly a result of higher prices and a positive effect of reverse excise tax in 2021. Unit upstream operating costs stayed at a minimum level of 2.6 USD/boe (194 RUB/boe) in 9M 2021.
Net income attributable to Rosneft shareholders
In 3Q 2021, the Company’s Net income reached RUB 314 bln (USD 4.3 bln), an increase of 35% q-o-q. The significant growth in the Net income compared to 9M 2020 was driven by the higher operating income and the lower negative impact of non-monetary items.
Capital expenditures
In 3Q 2021, capital expenditures amounted to RUB 227 bln. In 9M 2021, capital expenditures were RUB 689 bln, an increase of 21.1% y-o-y. The growth was mainly a result of implementation of the Vostok Oil project and expansion of the development program at Yuganskneftegaz.
Free cash flow
In 9M 2021, Free cash flow amounted to RUB 880 bln (USD 12.0 bln), a 2.5-fold increase y-o-y. The increase in Free cash flow compared to 9M 2020 was driven by the material increase in the operating income.
Financial stability
The implementation of measures aimed at further improvement of the financial stability enabled the reduction of Net financial debt and trading liabilities by USD 8.4 bln in 9M 2021. Net debt/EBITDA ratio was 1.3x, a decrease by a quarter during 3Q 2021 and a 1.8-fold reduction since the beginning of the year. The high level of financial stability was supported by the consistently low short-term component of the financial debt and the considerable liquid financial assets, which significantly exceeded the short-term debt.
Information and Advertising Department
Rosneft
November 12, 2021
These materials contain statements regarding future events and expectations that are forward-looking estimates. Any statement in these materials that is not historical information is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by these forward-looking statements. We assume no obligation to adjust the data contained herein to reflect actual results, changes in underlying assumptions or factors affecting the forward-looking statements.