Rosneft Posts Profit as Accounting Change Mutes Ruble ImpactStephen Bierman
OAO Rosneft reported a fourth-quarter profit after the world’s largest traded oil company by output changed accounting methods, helping avert the losses recorded by other Russian producers.
Net income rose to 89 billion rubles ($1.43 billion) from 1 billion rubles in the third quarter of last year, the Moscow-based company said in a statement on Wednesday. Sales fell 5.1 percent to 1.31 trillion rubles.
OAO Lukoil, Russia’s second-largest producer, and OAO Gazprom Neft reported losses in the fourth quarter after crude prices fell and the ruble weakened. Rosneft, almost 70 percent owned by the Russian government, has adopted accounting rules that strip out foreign-currency risk.
“Net income appeared relatively strong after Rosneft adopted a new accounting policy at the beginning of this year, allowing it to smooth out the adverse impact of the ruble devaluation,” Alexander Kornilov, senior oil and gas analyst at Alfa-Bank, said in a note.
Rosneft kept its policy of paying out 25 percent of net income as dividends and recommended a payout of 8.2 rubles a share on 2014 profit.
“This implies a modest 3 percent dividend yield, and is considerably below the 12.85 rubles a share that Rosneft paid last year,” according to Kornilov.
Capital spending will increase slightly in ruble terms while falling about 30 percent in dollar terms, Rosneft executives said on a conference call. Capital expenditures totaled $13.9 billion in 2014, according to the presentation.
Investments in refinery modernization will remain unchanged from last year at 150 billion rubles, it said.
Net debt fell to $43.8 billion as of Dec. 31 from $57.4 billion a year earlier, the company said. Rosneft will repay $23.5 billion of debt this year, $9.3 billion in 2016 and $11.3 billion in 2017, according to the presentation. Rosneft can satisfy its financial obligations in 2015 with operating cash flows, the presentation showed.
Cash and short-term financial assets totaled $16.7 billion at the end of 2014, the company said.
Oil and gas production rose 4.8 percent to 5.11 million barrels a day in the fourth quarter and the company will seek to maintain that output level this year. Drilling footage will grow by 7 percent to 10 percent annually over the next five years, the Rosneft presentation showed.
BP Plc holds almost 20 percent of Rosneft.