Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Rosneft Posts 20% Fall in Q1 Profit

VedomostiRosneft has ramped up output, producing in the second half of May a historical high of 2.14 million barrels per day.
Rosneft beat forecasts with a 20 percent decline in first-quarter net profit and repaid $2 billion of its debt as oil markets started to recover, boosting shares more than 4 percent.

Rosneft, which is aiming for a 2 percent increase in output this year, said Thursday that lower oil prices reduced first quarter profit to $2.06 billion.

Russia's most indebted oil firm cut its net debt to $19.24 billion and has the right to draw on the first $10 billion of a Chinese loan to ensure that debt repayments are met this year and next, chief financial officer Peter O'Brien said.

Rosneft's first-quarter revenue fell 50 percent to $8.26 billion, while earnings before interest, taxation, depreciation and amortization dropped 51 percent to $2.32 billion, above the average forecast of $2.14 billion.

Rosneft, which acquired billions of dollars in debt while taking over the former assets of Yukos, reduced its borrowings thanks to strong cash-flow generation and a fall in the dollar value of its ruble-denominated debt.

While many Russian firms are struggling to restructure their debts, O'Brien said Rosneft was comfortable, having already repaid about a third of the $9.5 billion that matures this year. Rosneft cut operating expenses to $820 million in the first quarter from $1.02 billion a year earlier.

"The cost management was even better than we'd expected on the back of ruble depreciation," said Alex Fak, oil analyst at Troika Dialog brokerage.

In the second half of May, production reached a historical high of 2.14 million barrels per day. O'Brien said output would keep rising as a result of growth at the company's Yugansk unit and the launch of the huge Vankor field in the second half of the year.