Rosneft Profit Up On Record Output, Stronger Crude Prices

MOSCOW (Dow Jones Newswires), Oct. 26, 2011

Russian state oil producer Rosneft Wednesday posted a 10% increase in third-quarter net profit due to stronger crude prices and record production volumes, but said earnings were tempered by an increase in taxes, transportation and electricity costs.

Rosneft--which in August teamed up with U.S. oil major ExxonMobil to develop three offshore fields in Russia's Arctic waters--said output between July and September rose 3% from a year earlier to a new record of 2.59 million barrels of oil equivalent a day.

The increase reflects higher output at Rosneft's Vankor and Verkhnechonsk fields in East Siberia, as well as rising production at the company's main production unit Yuganskneftegaz and the Sakhalin-1 project on Russia's Pacific coast, the company said.

Rosneft, Russia's biggest oil producer, accounts for a quarter of the country's total crude volumes.

London-listed Rosneft said net profit under U.S. Generally Accepted Accounting Principles rose to $2.82 billion from $2.57 billion in the third quarter 2010, above an average forecast of $2.64 billion in a Dow Jones Newswires survey of five analysts.

Revenue increased 59% to $24.63 billion from $15.47 billion a year earlier, boosted by a surge in global crude prices as well as higher output. Analysts had expected revenue of $24.00 billion.

Earnings before interest, taxes, depreciation and amortization, or Ebitda, rose 14% to $5.28 billion from $4.64 billion.

"An increase in the tax burden, particularly due to annulment of a reduced export duty for Vankor crude and the end of Vankor mineral extraction tax holidays, put downward pressure on (Ebitda)," Rosneft said in a statement.

Rosneft also said earnings were hit by continued growth in transportation and electricity tariffs, which are set by the Russian government.

The company's net debt rose 12% in the three months to $14 billion.

Copyright (c) 2011 Dow Jones & Company, Inc.

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