2nd UPDATE: Rosneft 4Q Net Profit Down 64% On Prices, Taxes
March 04 2009 - 2:23PM
Dow Jones News
Russia's biggest oil producer OAO Rosneft (ROSN.RS) Wednesday
said net profit for the fourth quarter fell 64% as crude oil prices
plunged and export duties rose to a record high, while the
company's net debt rose by almost $2 billion during the period.
The company said cash flow will stay positive this year at a $41
a barrel oil price, revised down from $47 a barrel. The company
reiterated its target to grow output by 2% this year to 2.26
million barrels a day.
Rosneft reported net profit of $775 million for the quarter
ended Dec. 31, down from $2.18 billion in the fourth quarter of
2007, but above analysts' estimates mostly due to one-off
items.
"(Fourth quarter was) the most challenging in the Russian oil
industry's history due to the sharp decline in prices coupled with
unprecedentedly high tax rates," Chief Executive Sergei
Bogdanchikov said in a statement.
The company's shares gained more than 12% to close at $3.7 each
in Moscow, after Rosneft's net profit exceeded analysts' forecasts
and in line with a stronger European oil and gas sector. They
remain around 70% below their highs from June of last year,
following a decline in oil prices and a selloff in Russian
equities.
State-controlled Rosneft, which borrowed $22 billion in 2007,
when it bought up assets from country's former top oil firm OAO
Yukos, said its net debt fell by $5 billion throughout the whole
year. However, heavy taxation and high transportation tariffs
forced the company to obtain additional loans during the fourth
quarter.
"The cost burden grew to 99% of the oil price, and there simply
wasn't any money left to pay for interest rates, costs and capex,"
the company's Chief Financial Officer Peter O'Brien told Dow Jones
Newswires.
The company's net debt increased by $1.9 billion during the
quarter to total $21.3 billion by the end of the year.
"We plan to have a positive cash flow after dividend payments
this year, while at the same time materially reduce our net debt,"
said O'Brien. Rosneft must repay $7 billion of its total net debt
by the end of this year, he added.
O'Brien said Rosneft plans this summer to receive the first
tranche of a new $15 billion loan from China Development Bank.
Last month, China and Russia signed a deal under which China
will get 15 million tons of Russian crude oil a year for the next
20 years, while Rosneft and pipeline operator OAO Transneft
(TRNFP.RS) will get a credit of $15 billion and $10 billion,
respectively.
"We anticipate to be in a position to draw the first tranche
before the end of the summer," O'Brien said.
O'Brien didn't give details on the loan, but said financial
costs are "attractive" and that the interest rate will be based on
international floating rates.
The company's fourth-quarter revenue was down 35% on the year to
$10.80 billion from $16.49 billion, largely due to lower prices for
the period and a 4.7% fall in production due to the sale of a 50%
stake in Tomskneft.
Rumors of a merger between Rosneft and OAO Surgutneftegas
(SNGS.RS) were revived this week after Vladimir Bogdanov, CEO of
Surgutneftegas was nominated for Rosneft's board of directors.
Local media said the Kremlin is considering to merge Rosneft
with Surgutneftegas to create a company that pumps more oil than
Royal Dutch Shell PLC (RDSA).
Company Web site: www.rosneft.com
-By Jacob Gronholt-Pedersen, Dow Jones Newswires; +7 495 937
8445; jacob.pedersen@dowjones.com