Rosneft Profit Exceeds Estimates as Ruble Offsets Oil Price

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OAO Rosneft, Russia’s largest oil producer, said second-quarter profit fell less than analysts expected as a weaker ruble helped counter a slump in crude prices.

Net income declined to 134 billion rubles ($2 billion) from 171 billion rubles a year earlier, the Moscow-based company said Monday in a statement on its website. That beat the 95.5 billion-ruble estimate of five analysts surveyed by Bloomberg. Revenue dropped 8.6 percent to 1.31 trillion rubles.

Brent crude has fallen more than 50 percent in the past year after the Organization of Petroleum Exporting Countries chose to defend market share over supporting prices amid a production glut. Russian oil producers have benefited from lower service costs as crude, the country’s biggest export, weakens the ruble.

“Strong results,” Kirill Tachennikov, an oil analyst at BCS Financial Group, said by e-mail from Moscow. Spending cuts in dollar terms and a weaker ruble helped Rosneft to produce $3.6 billion in free cash flow, he said.

Capital spending in rubles rose almost 14 percent to 269 billion rubles in the first half, Rosneft said.

Rosneft increased drilling in the first half of the year as crude output fell 1.1 percent. Production at its largest unit, Yuganskneftegas, rebounded in the second quarter, but was still down 3.4 percent in the first half.

Natural gas output climbed 16 percent to 1.05 million barrels of oil equivalent a day, pushing total oil and gas production to an average 5.175 million barrels a day in the first half.

Net debt fell 7.9 percent in the second quarter to $39.9 billion, according to the statement. Rosneft reimbursed $1.3 billion worth of advance payments for supplies, which it accounts for separately from debt, in the first six months of the year.

Rosneft, about 70 percent owned by the Russian government, announced changes to its accounting method for foreign-currency risk earlier this year. BP Plc holds a stake of almost 20 percent in the producer.

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