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. Last Updated: 07/27/2016

Rosneft Q1 Net Falls 25%

Rosneft said Monday that a plunge in first-quarter profitability was due to export taxes, and forecast that the current quarter would be its best ever.

The first-quarter results, including a 25 percent year on year drop in earnings, were the last before the company begins to show the muscle it has added by buying most of the assets of bankrupt rival Yukos in auctions this year.

Rosneft borrowed $22 billion to finance the spree but, as a major creditor to Yukos, it expects to recoup 263.7 billion rubles, or around $8.8 billion after tax, over this month.

The firm said it was too early to gauge the full impact of the addition of Yukos assets, which include five refineries, two oil producing firms and 9.44 percent in Rosneft itself, but finance vice president Peter O'Brien said they would be fully consolidated from June.

Rosneft plans to use the stake in its shares to gain assets elsewhere and intends to sell off "noncore" Yukos assets.

Even without the Yukos assets, the second quarter would the company's best quarter ever, O'Brien said. "Based on preliminary numbers, it's continued strong production, better prices, costs generally in line with business plan, and we don't have the same sort of lag export duty tax effect we had in the first quarter and the fourth quarter," he said.

Rosneft's first quarter was slightly worse than analysts had expected, as the firm's lack of refineries left it reliant on the export market and highly exposed to export duties.