MOSCOW, August 14. /TASS/. Net loss of Rosneft attributable to shareholders under International Financial Reporting Standards (IFRS) amounted to 113 bln rubles ($1.5 bln) in January-June 2020 against profit of 325 bln rubles ($4.4 bln) in the previous year, according to the company's Q2 financial results released on Friday.
"If compared to 1H 2019 the reduction was due to negative price fluctuations because of the impact of COVID-19 and the new OPEC+ agreement as well as due to the negative effect of forex exchange differences," Rosneft said.
1H profit dropped by 33.4% year-on-year to 2.8 trillion rubles ($38.2 bln) mainly due to a reduction in world crude oil prices (-39.5%) and a decrease of crude oil sales volumes (-10.5%). Capital expenditures decreased by 15.8% in the period to 367 bln rubles ($5.3 bln).
Financial debt and trading obligations declined by $4.3 bln, or 5.3%, in the first half of 2020.
EBITDA went down by 54.9% in 1H to 479 bln rubles ($6.5 bln). "The decrease in EBITDA compared to 1H 2019 was due to a significant drop of world crude oil prices (-39.5%), reduction in delivery volumes of crude oil and a negative damper effect, which was partially offset by a positive effect from trading activity and decrease in administrative expenses of 7.2%," the company explained.
Free cash flow reached 206 bln rubles ($2.8 bln) in 1H 2020, down 41% year-on-year.
Q2 financial results
"As prices for crude oil and refined products had improved, our financial metrics demonstrated positive dynamics in the course of 2Q 2020. This provides us confidence that the company's financial results will stage a recovery in the upcoming periods," Rosneft Chief Executive Officer Igor Sechin was quoted as saying.
Q2 net income attributable to Rosneft shareholders amounted to 43 bln rubles ($0.7 bln) against 194 bln rubles worth of income in the previous year against the backdrop of the lower operating income due to the negative external factors.
2Q 2020 revenues and equity share in profits of associates and joint ventures amounted to 1,039 bln rubles ($14.9 bln). "The reduction in sales in ruble terms compared to 1Q 2020 (-41.1%) was driven by a crude oil price drop (-35.1%) as a result of lower demand in the reporting period due to COVID-19 virus pandemic as well as a reduction in delivery volumes of crude oil in accordance with a new OPEC+ agreement," the company said.
On July 14, 2020, Rosneft completed the payment of record-high dividends approved by the annual general shareholder meeting. Taking into account the payment of interim dividends total dividends for 2019 amounted to 354 bln rubles ($4.8 bln).
Rosneft liquids production dropped by 6.8% in the first half of 2020 year-on-year to 106.5 mln tonnes against 114.3 mln tonnes in the previous year.
Q2 liquids production went down by 12.6% to 49.56 mln tonnes amid the company's compliance with its quotas under the new OPEC+ agreement. 1H 2020 liquids production amounted to 4.34 mln barrels per day.
"To ensure the fulfillment of its obligations under the new OPEC+ agreement, the company uses tools that proved to be successful during the previous periods of production cuts. The key tools are efficient well stock management, including limitation of flow rates without shut-ins, recurring well operation, and optimization of wellworks programme on the existing well stock," Rosneft said, adding that "the management of well operation modes removes the need for well suspension and repair during prolonged down-time and subsequent start-up, which is important in terms of maintaining the potential for production recovery."
The company continues to develop its key assets under OPEC+ agreement constraints, concentrating on the development and implementation of new technologies, including digital ones, which increase field development efficiency along with a cost-saving effect.
Gas output fell by 4.9% year-on-year to 31.8 bln cubic meters.
Oil refining amounted to 47.4 mln tonnes in 1H 2020, which is in line with the level of 2019, while refining throughput at the company's refineries increased by 1.7% in the reporting period to 52.7 mln tonnes.