Rosneft First-Quarter Profit Falls 35% After Oil Prices Drop
(Bloomberg) -- OAO Rosneft, Russia’s largest oil producer, said first-quarter profit fell 35 percent, hurt by last year’s decline in crude prices.
Net income dropped to 56 billion rubles ($1 billion) from 86 billion rubles a year earlier, the Moscow-based company said in a statement on its website. That topped the 36.5 billion- ruble average estimate of nine analysts surveyed by Bloomberg.
The state-owned company has sought to cut costs while keeping output as it repays debt from the $55 billion 2013 acquisition of Russia’s third-largest oil producer, TNK-BP. U.S. and European sanctions in response to Russia’s support for separatists in Ukraine have complicated Rosneft’s task by curbing its access to debt and equipment.
The difficulty compounded by a more than 50 percent slump in the average oil price in the first three months of 2015 compared with the year-earlier period, Rosneft said.
Free cash flow, adjusted for supply prepayments, fell to 130 billion rubles from three months earlier, Rosneft said. That drop was smaller than expected as the company successfully cut spending, according to Ildar Davletshin, an oil and gas analyst at Renaissance Capital.
“Free cash flow is stronger on lower capex, which is positive,” Davletshin said.
Net debt fell to $43.3 billion in the quarter, it said. The company made 21 billion rubles of prepayments for oil supplies in the first quarter, it said. That reduced the Rosneft’s advance payment total to 855 billion rubles. The producer accounts for these payments separately from net debt.
Rosneft’s hydrocarbons output rose to 5.2 million barrels a day from 5.09 million a year earlier. Oil output fell 1.6 percent to 4.13 million barrels a day, while natural gas output climbed 20 percent to 1.07 million barrels of oil equivalent a day.
Earnings before interest, taxes, depreciation and amortization decreased 8.3 percent to 265 billion rubles, higher than the 241 billion-ruble estimate of nine analysts. Sales declined 6.3 percent to 1.29 trillion rubles.
Changes in tax rates on Russia’s oil industry, which started this year, produced a 20 billion-ruble negative effect in the first quarter, Rosneft said.
BP Plc holds almost 20 percent of Rosneft’s shares. Rosneft, about 70 percent owned by the Russian government, announced changes to its accounting method for foreign-currency risk earlier this year.
--With assistance from Jake Rudnitsky in Moscow.
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