TNK-BP Increases Net Income by 71% in 1Q
Commenting on the company's first-quarter results, Mikhail Fridman, interim Chief Executive Officer of TNK-BP, said, "In the first three months of 2010, TNK-BP maintained the strong performance delivered in the previous year. The application of effective technologies continued to ensure investment efficiency and strong operating performance. The company has now sustained production growth for ten consecutive quarters based on incremental output from new production centres in West and East Siberia and continued to successfully explore and develop its new Greenfield licences in the Yamal region in Russia's Extreme North. In Downstream TNK-BP improved the operational availability of its refineries to international levels and expanded its retail presence in premium market segments in Russia and Ukraine.
"Finally we took the decision to increase our technology resource by adding over 60 new sub-surface and exploration experts to our team. This will significantly enhance our ability to successfully deliver the many new and prospective opportunities we have in our portfolio."
1Q 2010 Operational Highlights
Oil and gas volumes for 1Q 2010 increased by 4.1% to 1.737 million barrels of oil equivalent per day as compared to 1Q 2009 (excl. Slavneft) with no significant setbacks in operations despite severe weather conditions. Incremental production was delivered by major greenfields in Uvat in West Siberia and the Verkhnechonskoye oil field in East Siberia as well as improved wellwork efficiency in the Orenburg region. In February 2010, the Board of Directors supported two major Upstream investment projects amounting to US $1.7 billion. These relate to full field development and creation of regional infrastructure in the Eastern part of the Uvat group of fields, and further development of the Verkhnechonskoye oil field. In January 2010, TNK-BP completed an issuance of Eurobonds in the aggregate amount of US $1 billion. The transaction was the first CIS Eurobond placement in 2010. It generated high investor demand and was substantially oversubscribed achieving a broad global distribution.TNK-BP was one of the first companies to sell East Siberian crude via the East Siberia - Pacific Ocean (ESPO) pipeline, one of the major new oil export routes of Russia. In 1Q the company exported 500 thousand tonnes of crude via ESPO.The company maintained a leading position in exchange trading with more than 12% of light product domestic sales in 1Q made through the St Petersburg exchange.During the quarter, 9 new BP-branded retail stations were launched in Moscow, bringing the total number of BP-branded stations in the Moscow region to 65.In 1Q, new Pulsar 95 branded premium fuel, compliant with Euro-4 quality specifications, increased to account for 40% of the sales volumes of 95 octane gasoline in Moscow and the Moscow region.
Jonathan Muir, Chief Financial Officer of TNK-BP, said, "This is a solid set of results. In the first quarter, our net income increased by over 70% to US $1.3 billion as compared to the first quarter of 2009. The company benefited from a stronger and more stable trading environment relative to the same period last year with revenues climbing by 62% to $10.2 bln and EBITDA by more then 50% to $2.3 bln. Despite the pressure on costs from a stronger rouble and increases in transportation and electricity tariffs, we benefited from a higher margin contribution by additional greenfield production. Finally we maintained our financial discipline with gearing at 26% and a strong cash position of $1.7 bln at the end of the quarter."
1Q 2010 Financial Highlights
Revenues increased by 62% relative to 1Q 2009 due to stronger market conditionsExport duties and other taxes increased by 97% relative to 1Q 2009 largely due to the effect of the Urals price increase on export duty and mineral extraction tax rates. EBITDA amounted to $2.3 bn which is 54% higher compared to 1Q 2009 primarily due to the Urals price increase and operational efficiencies, partly offset by the negative effect on costs of a stronger ruble and tariff increases. Net Income amounted to $1.3 bn which is 71% higher than 1Q 2009 due to the increase in EBITDA and the effect of fixed costs. Cash from operations in 1Q 2010 was $2.0 bln representing an increase of 67% compared to 1Q 2009.Net debt was reduced by $0.4 bn in 1Q 2010 resulting in gearing falling from 29% to 26%. Organic CAPEX amounted to $0.7 bn. The financial information shown in the press release relates to TNK-BP International Ltd. This information does not constitute Interim Condensed Consolidated Financial Statements. The Interim Condensed Consolidated Financial Statements will be published in early May 2010.
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