Rosneft reported strong results in Q1
Rosneft reported on its results in Q1 this year. According to the press release, average daily hydrocarbon production increased by 1.3% qoq to 5.6 mmboe.
"In the first quarter of 2023, despite the deterioration of the external environment, Rosneft was able to demonstrate an increase in production volumes, both liquid hydrocarbons and gas, «- said the results of the chief executive officer of the company Igor Sechin.
Production of liquid hydrocarbons in January-March increased by 0.8% and amounted to 4.0 million barrels. per day. According to Sechin, the key role in the growth of this indicator was played by the Sakhalin-1 project, where the average daily production increased by 1.8 times quarter on quarter.
The gas business of the oil company demonstrates active growth. Rosneft's average daily gas production in the first quarter increased by 2.7% and reached 1.5 million boe. per day. At the same time, the share of gas in hydrocarbon production increased to 27.6% in the reporting period. Thus, the company completed ahead of schedule the Rosneft-2030 strategy the target is 25% in terms of the share of gas in total hydrocarbon production.
Drilling in development drilling in January-March increased to 2.8 million m, or by 2.2% qoq. 700 new wells were put into operation, and 71% of them are horizontal. The share of new horizontal wells with multi-stage hydraulic fracturing was 45%.
Separately, we note that the active implementation of the flagship Vostok Oil project continues, where all work continues in full accordance with the schedule.
In early April, Rosneft started the pilot development of the Ichemminskoye field. The drilling of the first wells will allow additional study of the geological properties of the reservoir, which will help determine the most effective way to develop the field.
The construction of the main oil pipeline «Vankor-Payakha — Bay Sever» continues, the construction of the oil terminal «Port Bay Sever» is underway, the construction of storage facilities for the Yenisei basin is underway, and the expansion of coastal and berthing infrastructure.
The volume of oil refining in RF in the first quarter amounted to 22.6 million tons. The depth of oil refining increased to 76.0%, the yield of light oil products — up to 57.1%.
The company carries out systematic work on the development of domestic technologies and import substitution. In the reporting period, based on the results of a pilot run, the possibility of industrial production of winter and arctic diesel fuel using isodewaxing and hydrofinishing catalysts of our own production was confirmed.
The domestic market of the Russian Federation is a priority for the company's motor fuel supplies. The dynamics of prices at the company's gas stations on the domestic market remains at a level below the inflation rate.
The financial performance of Rosneft deserves special attention, which in a good way surprised the investment community.
Net income attributable to shareholders increased by almost 46% in the first quarter to RUB 323 billion. This is 37% higher than the consensus forecast of investment bank analysts. Moreover, the net profit of Rosneft shareholders exceeded the forecasts of all banks participating in the formation of the consensus forecast.
In dollar terms, analysts say, the growth of Rosneft's net profit (approximately +25%) exceeded those of a number of the world's largest oil and gas companies, including: Equinor (-37.2%) bp (-23.9%), Shell (-16.4%), Petrobras (-11%) , ExxonMobil (-10.4%), Saudi Aramco (-6%), Chevron (+3.5%).
As a number of media have already reported, the company's revenue reached 1.823 trillion rubles. The indicator was 1% higher than the consensus forecast of analysts of investment banks.
EBITDA increased by 25.1%, reaching 672 billion rubles, which is 18% higher than market expectations. It is also reported that Rosneft in the reporting quarter showed one of the highest EBITDA growth dynamics (about 8% in dollars) in the industry. According to media reports, according to this indicator, the Russian company overtakes such majors as bp (-33.6%), Equinor (-16.6%), TotalEnergies (-11%), Chevron (-10.9%), Shell ( -10.3%), Saudi Aramco (-9%), ExxonMobil (-7.6%), Petrobras (-0.7%) and PetroChina (-0.6%).
Margin EBITDA reached a record 36.7%, up 5 p.p. above consensus.
«Pressure on Rosneft's performance» in the first quarter of 2023, there were changes to the Tax Code of the Russian Federation, which came into force in January, an embargo on oil and oil products by a number of unfriendly countries, as well as a restriction on oil production in the country, introduced in March. The influence of the last factor is not so significant in the reporting quarter, but it will significantly affect the indicators of the next one,” Sechin noted.
According to him, Rosneft carries out systematic work to reduce operating costs to a minimum level, despite the growth of tariffs of natural monopolies. “Thanks to strict cost control in the first quarter, unit operating costs for hydrocarbon production and oil refining in Russia decreased by 5% and by 12.7%, respectively, quarter-on-quarter,” said Igor Sechin. According to the company's press release, the unit cost of production in January-March was below $3 per boe.
"Strong financial results "Rosneft" at the end of the 1st quarter are a direct result of systematic work to reduce operating costs to a minimum level (which happened despite the increase in tariffs of natural monopolies), as well as growth in production volumes, including through the Sakhalin-1 project. I want to remind you that the unit operating costs of Rosneft are among the lowest in the world,” commented investment strategist Arikapital Sergey Suverov.
Renaissance Capital analysts expect that if Rosneft maintain the level of costs achieved in the first quarter in the remaining periods of 2023, this could lead to a 10% increase in EBITDA forecast in 2023.
«Furthermore, even in the first quarter of 2023, if If the company declared dividends (recall that it pays semi-annually), then the implied dividend yield under the dividend policy would be 3.5% per quarter or 14% per annum — higher than 10% for 2022,» the report says. Renaissance Capital».