Financial results for 4Q and 12M 2021
- Net income of RUB 883 bln was the highest on record in the Company’s history, having increased by more than six times as compared to 2020.
- EBITDA for 2021 of RUB 2,330 bln was at a historic maximum, having increased by almost two times y-o-y.
- In 12M 2021, unit upstream operating costs reduced by 3.6% y-o-y and amounted to 2.7 USD/boe, which is the lowest level in the past five years.
- In 2021, Free cash flow reached RUB 1,044 bln and was 2.5 times above the level of the previous year.
- Net debt/EBITDA amounted to 1.3x, a reduction of nearly two times since the beginning of the year.
- Net financial debt and trading liabilities fell by USD 5.5 bln since the beginning of the year.
Consolidated IFRS financial results for 4Q 2021 and 12M 2021:
| 4Q 2021 | 3Q 2021 | Change, % | 12M 2021 | 12M 2020 | Change, % | ||
|---|---|---|---|---|---|---|---|
| RUB bln (except %) | |||||||
| Revenues and equity share in profits of associates and joint ventures | 2,537 | 2,320 | 9.4% | 8,761 | 5,757 | 52.2% | |
| EBITDA | 676 | 638 | 6.0% | 2,330 | 1,209 | 92.7% | |
| EBITDA margin | 26.4% | 27.0% | (0.6) p.p. | 26.1% | 20.4% | 5.7 p.p. | |
| Net income attributable to Rosneft shareholders | 187 | 314 | (40.4)% | 883 | 1321 | >100% | |
| Net income margin | 7.4% | 13.5% | (6.1) p.p. | 10.1% | 2.3% | 7.8 p.p. | |
| Capital expenditures | 360 | 227 | 58.6% | 1,049 | 785 | 33.6% | |
| Free cash flow (RUB equivalent)2 | 164 | 375 | (56.3)% | 1,044 | 425 | >100% | |
| Upstream operating expenses RUB/boe | 202 | 195 | 3.6% | 196 | 200 | (2.0)% | |
| USD bln3 (except %) | |||||||
| Revenues and equity share in profits of associates and joint ventures | 35.2 | 32.2 | 9.3% | 121.1 | 83.1 | 45.7% | |
| EBITDA | 9.3 | 8.7 | 6.9% | 31.7 | 17.2 | 84.3% | |
| Net income attributable to Rosneft shareholders | 2.5 | 4.3 | (41.9)% | 11.9 | 2.0 | >100% | |
| Capital expenditures | 4.9 | 3.2 | 53.1% | 14.2 | 10.8 | 31.5% | |
| Free cash flow | 2.3 | 5.1 | (54.9)% | 14.3 | 6.2 | >100% | |
| Upstream operating expenses USD/boe | 2.8 | 2.7 | 3.7% | 2.7 | 2.8 | (3.6)% | |
| For reference | |||||||
| Average Urals price. USD per bbl | 77.7 | 70.5 | 10.2% | 68.6 | 41.7 | 64.4% | |
| Average Urals price. th. RUB per bbl | 5.64 | 5.18 | 8.9% | 5.05 | 3.01 | 67.9% | |
1Net income is restated to reflect the effects of finalized purchase price allocation of 2020 acquisitions.
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 12M 2021 financial results Rosneft’s Chairman of the Management Board and Chief Executive Officer Igor Sechin said:
“At the end of 2021, the Company's Board of Directors approved the strategy "Rosneft-2030”: Reliable Energy and Global Energy Transition", which takes into account the current trends related to the climate agenda. We expect that thanks to the implementation of the new Strategy, Rosneft will strengthen its position on the global hydrocarbons market as a reliable producer and supplier of energy resources and at the same time minimize the impact on the environment.
Against the background of the recovery of the global economy, the Company achieved new financial records in 2021. Thanks to the management’s efforts and favourable external conditions, Rosneft reached the maximum levels of EBITDA and Net income in the Company’s history. Consistently working towards one of the key goals of the Company's updated strategy – strengthening leadership in the unit upstream operating costs – the management already in 2021 achieved a reduction of this indicator to 2.7 USD/boe which is 3.6% below the level of 2020. This is the lowest level in the past five years.
In 2021, we continued to optimize our production portfolio. The diverstment of low-margin tail assets with a significant degree of depletion and watercut, as well as a relatively high carbon footprint allowed us to concentrate on the implementation of large-scale projects. Last year, a new partner joined our flagship project “Vostok Oil”. This is another confirmation of its relevance and high expected economic efficiency.
We expect that with its successful implementation, “Vostok Oil” project will be fully reflected in the Company's valuation. Together with the efforts to improve operational and financial efficiency, the delivery of major oil and gas projects, as well as the development of refinery projects, this will support the stable growth of the Rosneft share price for the coming years. Taking into account the Company's commitment to the dividend policy, the earnings of 2021 will provide a record level of dividends. This fully corresponds to the goals of the Company's Strategy to grow cash distribution to the shareholders and increase the share returns.”
Financial performance
Revenues and equity share in profits of associates and joint ventures
4Q 2021 revenues and equity share in profits of associates and joint ventures amounted to RUB 2,537 bln (USD 35.2 bln). The increase in revenues quarter-on-quarter was attributable to the higher volumes of crude oil exports (+11.5%) and rise of crude oil price (+ 8.9% in RUB terms).
In 12M 2021, revenues increased by 52.2% compared to 12M 2020.
EBITDA
4Q 2021 EBITDA amounted to RUB 676 bln (USD 9.3 bln).
EBITDA in 2021 amounted to RUB 2,330 bln and was the highest on record in the Company’s history. The increase in EBITDA (+92.7% in RUB terms) compared to 2020 was mainly due to higher prices and a positive effect of the reverse excise tax as well as the constant control over the costs. As a result of ongoing measures to improve the efficiency and optimize the portfolio of assets, in 2021 unit upstream operating costs stayed at a minimum level of 2.7 USD/boe, which is 3.6% lower than the level of 2020.
Net income attributable to Rosneft shareholders
In 4Q 2021, the Company’s net income attributable to the shareholders amounted to RUB 187 bln (USD 2.5 bln). In 2021, the net income attributable to the shareholders reached RUB 883 bln (USD 11.9 bln), which is a record amount in the Company’s history. The significant growth in the Net income compared to 2020 was driven by the higher operating income and the lower negative impact of non-monetary items.
Capital expenditures
In 4Q 2021, capital expenditures amounted to RUB 360 bln, an increase of 58.6% compared to 3Q 2021. In 2021, capital expenditures were RUB 1,049 bln, an increase of 33.6% y-o-y. The growth was mainly a result of implementation of the Vostok Oil project and execution of the development programme at the Company's assets.
Free cash flow
In 2021, Free cash flow amounted to RUB 1,044 bln (USD 14.3 bln), a nearly 2.5-fold increase y-o-y. The increase in the Free cash flow compared to 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 the Net financial debt and trading liabilities by USD 5.5 bln in 2021. Net debt/EBITDA reached 1.3x, which implies an almost two-fold reduction since the beginning of the year. The high level of financial stability was supported by the considerable liquid financial assets of the Company and the available amount of credit lines, which exceeded the short-term debt by several fold.
Rosneft Department of Advertising and Information
February 11, 2022
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.