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Rosneft, the world’s largest listed oil producer, missed analyst estimates as profit rose 81 per cent in the third quarter of 2017 against the same period last year, as free cash flow slumped despite a significant jump in global crude prices.
The Russian state-owned company said profit for the quarter stood at Rbs47bn, well below analyst estimates of Rbs66bn, according to a Reuters poll. Earnings before interest, taxation, depreciation and amortization rose 27 per cent to Rbs371bn, coming in above forecasts.
Rosneft pumped 5.67m barrels of oil-equivalent in the three months ended September, up 8.8 per cent year on year, despite curbs on increasing its production agreed by Moscow and OPEC members last winter. At the same time, oil prices were around $5 a barrel higher than a year previously during the quarter.
However the company’s free cash flow tumbled to Rbs8bn in the quarter, from Rbs48bn a year ago.
The company’s financial health has become an increasingly close-watched issue by investors, after it began ramping up spending on international projects and overseas acquisitions this year in a bid to grow into a major global heavyweight.
The company, in which the Kremlin controls a majority stake, took a 49 per cent stake in India’s Essar Oil this year in a $12.9bn deal, has pledged $3bn to Kurdistan for drilling rights and pipeline infrastructure, and has leant cash-strapped Venezuela and its state-owned oil company PdVSA $6bn.
Igor Sechin, the company’s chief executive, said:
The company successfully and timely completed the acquisition of a number of the key strategic assets. The focus on expanding the presence in the key energy consuming regions and on entering new first-class upstream projects will strengthen the Company’s position as a leader on the global commodity markets.
With intense business development the liquidity profile is maintained at the level that ensures high Company’s stability. Furthermore, the deals which were completed recently with the participation of the global partners in the upstream projects proved the quality and the opportunity of additional capitalization of our resource base that provides supporting evidence of fundamental investment prospects of the Company.
BP, Glencore and Qatar’s sovereign wealth fund all hold minority stakes in Rosneft, while CEFC China Energy’s September deal to acquire 14.16 per cent of the company is being finalised.