RussNeft: Issues ISFR Financial Results for 2018
PJSC “RussNeft” (hereinafter referred to as RussNeft or the Company) (MOEX: RNFT), issues an audited consolidated financial report for the year ending December 31, 2018, prepared in compliance with International Standards of Financial Reporting (ISFR).
Highlights:
- EBITDA grew by 62% in 2018 to 48.6 bn Rub.
- Adjusted profit[1] made up 16.8 bn Rub., 52% growth.
- Oil production amounted to 7.6[2] mln tons.
- The Program of Operations Improvement was performed with 2.26 bn Rub effect.
- Sustainable level of capital investments, the amount of investments in 2018 made up 24.9 bn Rub[3].
- Net debt/EBITDA is 2.
Key performance indicators
Financials
| bn Rub. | 2017 | 2018 | Variation |
| Revenue | 129.2 | 177.8 | 38% |
| EBITDA[4] | 29.9 | 48.6 | 62% |
| Profit attributable to the shareholders of the Head Company | 8.1 | 15.0 | 85% |
| Adjusted profit[5] | 11.1 | 16.8 | 52% |
| Net debt | 79.5 | 95.97 | 20.6% |
RussNeft showed significant increase in financials in 2018 with 1.3% production growth. The revenue increased by 38% to 177.8 bn Rub. EBITDA amounted to 48.6 bn Rub., being by 62% higher against the last year. The revenue growth was mainly driven by positive energy market conditions, changes in production structure as well as by involving new technologies in the development.
EBITDA increase was provided due to the fact that the revenue growth rate excessed the operational expenses growth rate, incl. by means of Program of Operations Improvements.
The profit made up 15 bn Rub., which is by 85% higher against last year. Increase of profit was conditioned mainly by the positive change of macroeconomic environment and determination of the management to diminish the operational expenses. This indicator includes “paper loss” from the revaluation of the fair value of the derivative financial instruments, as well as the effect of exchange differences. The adjusted profit made up 16.8 bn Rub., which is by 52% higher against 2017. This growth was driven by EBITDA increase.
Operations results
| Operations results | 2017 | 2018 | Variation |
| Oil production | 7 516 | 7 613 | +1,3% |
| Oil production in the Russian Federation, mln. tons | 7 015 | 7 111 | +1,3% |
| Oil production under PSAs thous. tons | 501 | 502 | 0% |
| Gas production,m3 | 2 448 | 2 620 | +7% |
Implementation of the number of projects in West Siberia allowed to make a small increment in production (+1.3%) or 97 thous. tons of oil.
Growth of gas production output against 2017 amounted to 7% or 172 mln cbm.
Capital Investments [6]
| Capital Investments (application), mln Rub. | 2017 | 2018 | Variation |
| PRODUCTION DRILLING | 18.6 | 19.3 | +3.7% |
| BASE PRODUCTION | 2.2 | 2.4 | 9% |
| WELL INTERVENTIONS | 1.9 | 2.7 | 42% |
| GAS PROGRAM | 2.3 | 0.28 | (87%) |
| GEOLOGICAL AND EXPLORATION WORKS | 0.7 | 2.7 | 285% |
| Total | 25.7 | 24.9 | (3%) |
The Company’s strategy involves active investment activity, targeted at the growth of volume of geological and exploration works, drilling and start-up of the new wells, establishing of a new infrastructure and upgrade of the existing infrastructure to maintain the existing production rates as well as achieving a balanced midterm growth. The amount of investments in 2018 made up 24.9 bn Rub. which decreased by 3% against 2017 due to reducing investments into the gas program in line with gas production growth.
Debt portfolio
The net debt of the Company made up 95.9 bn Rub in the reporting year. The major lender is Bank VTB (PJSC). Variation (20%) is related mainly to depreciation of the Ruble in 2018. The proper cooperation of the management and shareholders let the Company achieve its target indicators for compliance with financial and production covenants, the loan is serviced within the schedule and in full volume.
Presentation of results
The Company will hold presentation of ISFR results for 2018 on March 28, 2019 at 4 pm.
It will be streamed on the Company’s official Youtube channel and by the telephone conference call (+7(495)982-55-38, PIN 66794).
[1] Excl. exchange differences and revaluation of fair value of the financial instruments
[2] Incl. production from international projects
[3] Acc. to management accounting information
[4] EBITDA excl. exchange differences and non-monetary items
[5] Excl. exchange differences and revaluation of financial instruments’ fair value
[6] Acc.to the management accounting
