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Rosneft Dividend to Jump as 2013 Profit Rises 50% on TNK-BP

OAO Rosneft (ROSN) will raise dividends after 2013 earnings jumped 50 percent as the acquisition of TNK-BP made it the world’s largest traded oil producer by volume.

Net income rose to 545 billion rubles ($15.5 billion) from 363 billion rubles a year earlier, the Moscow-based company said in a statement. Rosneft, which pays out 25 percent of net income in dividends, will recommend raising payouts to 12.86 rubles a share from 8.05 rubles a year earlier, producing a 5.1 percent yield on today’s share prices, according to a presentation.

Rosneft rose 2 percent to 243.35 rubles a share in Moscow.

To counter soaring debt following the $55 billion acquisition of TNK-BP in March, the state-controlled company signed oil-supply agreements involving prepayments with customers including China National Petroleum Corp.

“Rosneft managed to be very cost-efficient in the past year,” Vice President for Finance Svyatoslav Slavinskiy said today in an interview in Moscow. The company saved 23 billion rubles in synergies as a result of its TNK-BP purchase, he said on a conference call with investors.

Earnings before interest, taxes, depreciation and amortization rose 53 percent to 947 billion rubles, missing the 978 billion-ruble average estimate of 13 analysts surveyed by Bloomberg.

The company plans capital spending of more than 700 billion rubles this year, Slavinskiy said.

Debt Grows

Net debt grew to 1.86 trillion rubles in 2013 against 591 billion rubles at the end of the previous year, according to the financial statement. The company plans to repay 728 billion rubles in debt this year, 597 billion rubles next year and 274 billion rubles in 2016, according to the presentation.

Rosneft hasn’t ruled out further ruble borrowing amid “high” rates for dollar bonds, according to Slavinskiy. “We can borrow in the capital markets and we actually did so in the ruble market a few times last year,” he said. “We will continue this program this year.”

Rosneft plans to start its first well in the Arctic Kara Sea with Exxon Mobil Corp. (XOM) this August, Zeljko Runje, Rosneft vice president for offshore projects, said on the conference call. Rosneft expects its partners, which include Statoil ASA and Eni SpA (ENI), to spend $14.4 billion through 2018 on offshore exploration, according to the presentation. The Russian company expects two wells to be drilled this year, six next year, nine in 2016, 11 in 2017 and 12 in 2018, it said.

Rosneft Chief Executive Officer Igor Sechin proposed that the Russian government wait before selling any Rosneft shares until the company makes progress drilling in the offshore Arctic.

“If the goal is to get the maximum sales price then it’s necessary to wait for drilling results from the Kara Sea,” Sechin told reporters in Moscow today.

Full-year revenue leapt 52 percent to 4.69 trillion rubles, according to the statement. Oil and gas output rose to 4.87 million barrels a day in 2013 from 2.7 million barrels a day in 2012.

To contact the reporter on this story: Stephen Bierman in Moscow at sbierman1@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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