MOSCOW, March 4 - Rosneft Russia's largest oil firm, expects the rouble devaluation and lower export duties to help profits recover from a 64 percent slump in last year's fourth quarter, one of the toughest on record.
Rosneft said on Wednesday fourth-quarter net profit fell to $775 million as price-related taxes had yet to adjust to a sharp fall in the value of oil, although record prices earlier in 2008 helped book a 71.5 percent gain in full-year profit.
Rosneft Chief Financial Officer Peter O'Brien told Reuters the cumulative cost of export duties, production tax and transport costs in the fourth quarter equalled about 99 percent of the oil price, leaving little for expenses or investment.
"That number in the first quarter looks like it will be down to more normal levels of 60 to 65 percent," O'Brien said in a telephone interview prior to the release of Rosneft's results.
Oil majors, including BP and Royal Dutch Shell have reported sharp drops in fourth-quarter profits after oil prices tumbled to below $40 a barrel -- little over a quarter of the record prices above $147 seen in July 2008. In Russia, where Rosneft is the first oil major to report, profits were further damaged by a two-month lag in export duties which meant suppliers were paying taxes aligned with much higher prices. The export duties are now revised on a monthly basis. Nevertheless, Rosneft's profit beat the $270 million loss forecast by analysts, as it included $956 million in deferred income tax benefits and $946 million in foreign exchange gains from the revaluation of rouble-denominated net liabilities.
State-controlled Rosneft said in a statement full-year net profit rose to $11.12 billion from $6.48 billion in 2007.
The 2007 figure, presented on an underlying basis, was adjusted for the accrual of penalties related to tax liabilities from Yugansk, the largest asset of bankrupt oil firm YUKOS, and bankruptcy proceeds from the firm, much of which was acquired by Rosneft.
Without taking these factors into account, 2007 net profit was $12.86 billion.
Rosneft, Russia's most indebted oil producer after the acquisition of YUKOS assets, said it reduced its net debt by $4.99 billion last year to $21.28 billion. Of this, about $7 billion must be repaid in 2009.
"We have a number of options which cover the refinancing amount several times. During the course of the year, we will choose between them depending on relative terms," O'Brien said.
Rosneft will this year begin drawing down a $15 billion loan from China Development Bank, part of a $25 billion Chinese package to the Russian oil sector in exchange for oil supplies over the next 20 years.
"We expect by this summer to be able to draw on the first tranche," O'Brien said.
"It makes sense to use it for refinancing as existing debts come due over the next few years. In addition to that, we will consider potential investment opportunities."
Rosneft would launch its major new Vankor field in East Siberia in the second half of 2009, he said. Capital expenditure this year will be about the same in rouble terms as in 2008.
"We have planned for a $47 (per barrel) Urals price. It's been $42 to $43 for the first couple of months. Together with the benefit of rouble depreciation, we don't see any need to revise our investment plan."
Russian oil firms book their costs in roubles but earn the majority of their revenues in dollars, meaning a weaker rouble is an advantage.
Rosneft said revenues fell 34.5 percent to $10.80 billion in the fourth quarter, beating the analyst forecast of $10.50 billion. Full-year 2008 revenues rose 40.2 percent to $68.99 billion, slightly above the forecast $68.70 billion.
The company's Moscow-traded shares were up 4.9 percent at 130.8 roubles at 1627 GMT, slightly outperforming a 4.6 percent gain on the MICEX exchange's oil and gas index .
Rosneft said on Wednesday fourth-quarter net profit fell to $775 million as price-related taxes had yet to adjust to a sharp fall in the value of oil, although record prices earlier in 2008 helped book a 71.5 percent gain in full-year profit.
Rosneft Chief Financial Officer Peter O'Brien told Reuters the cumulative cost of export duties, production tax and transport costs in the fourth quarter equalled about 99 percent of the oil price, leaving little for expenses or investment.
"That number in the first quarter looks like it will be down to more normal levels of 60 to 65 percent," O'Brien said in a telephone interview prior to the release of Rosneft's results.
Oil majors, including BP and Royal Dutch Shell have reported sharp drops in fourth-quarter profits after oil prices tumbled to below $40 a barrel -- little over a quarter of the record prices above $147 seen in July 2008. In Russia, where Rosneft is the first oil major to report, profits were further damaged by a two-month lag in export duties which meant suppliers were paying taxes aligned with much higher prices. The export duties are now revised on a monthly basis. Nevertheless, Rosneft's profit beat the $270 million loss forecast by analysts, as it included $956 million in deferred income tax benefits and $946 million in foreign exchange gains from the revaluation of rouble-denominated net liabilities.
State-controlled Rosneft said in a statement full-year net profit rose to $11.12 billion from $6.48 billion in 2007.
The 2007 figure, presented on an underlying basis, was adjusted for the accrual of penalties related to tax liabilities from Yugansk, the largest asset of bankrupt oil firm YUKOS, and bankruptcy proceeds from the firm, much of which was acquired by Rosneft.
Without taking these factors into account, 2007 net profit was $12.86 billion.
Rosneft, Russia's most indebted oil producer after the acquisition of YUKOS assets, said it reduced its net debt by $4.99 billion last year to $21.28 billion. Of this, about $7 billion must be repaid in 2009.
"We have a number of options which cover the refinancing amount several times. During the course of the year, we will choose between them depending on relative terms," O'Brien said.
Rosneft will this year begin drawing down a $15 billion loan from China Development Bank, part of a $25 billion Chinese package to the Russian oil sector in exchange for oil supplies over the next 20 years.
"We expect by this summer to be able to draw on the first tranche," O'Brien said.
"It makes sense to use it for refinancing as existing debts come due over the next few years. In addition to that, we will consider potential investment opportunities."
Rosneft would launch its major new Vankor field in East Siberia in the second half of 2009, he said. Capital expenditure this year will be about the same in rouble terms as in 2008.
"We have planned for a $47 (per barrel) Urals price. It's been $42 to $43 for the first couple of months. Together with the benefit of rouble depreciation, we don't see any need to revise our investment plan."
Russian oil firms book their costs in roubles but earn the majority of their revenues in dollars, meaning a weaker rouble is an advantage.
Rosneft said revenues fell 34.5 percent to $10.80 billion in the fourth quarter, beating the analyst forecast of $10.50 billion. Full-year 2008 revenues rose 40.2 percent to $68.99 billion, slightly above the forecast $68.70 billion.
The company's Moscow-traded shares were up 4.9 percent at 130.8 roubles at 1627 GMT, slightly outperforming a 4.6 percent gain on the MICEX exchange's oil and gas index .
