ROSN.L Regulatory News (ROSN)

27 Dec 2006 15:10

OJSC OC Rosneft27 December 2006 ROSNEFT'S US GAAP RESULTS FOR THE THREE AND NINE MONTHS ENDING SEPTEMBER 30, 2006 OJSC Rosneft (Rosneft or "the Company") today reported its consolidatedfinancial results in accordance with US GAAP for the third quarter and firstnine months of 2006, both periods ending September 30, 2006. Financial review USD million 3Q 2006 3Q 2005 9M 2006 9M 2005 Revenue 9,165 7,080 25,521 16,944EBITDA 2,217 2,325 6,395 5,627Net income 1,051 1,208 2,930 3,594Net income before minority interestadjusted for the sale of CJSCSevmorneftegaz 1,074 1,268 3,027 2,978 Net cash provided by operatingactivity 3,560 1,985 In the first nine months of 2006, Rosneft's total revenues increased by 50.6% toUSD 25,521 million from USD 16,944 million in the first nine months of 2005. Inthe third quarter of 2006 Rosneft's total revenues increased by 29.4% to USD9,165 million from USD 7,080 million in the third quarter of 2005. In the firstnine months of 2006 EBITDA grew by 13.6% to USD 6,395 million from USD 5,627million in the first nine months of 2005. In the third quarter of 2006 EBITDAdecreased by 4.6% to USD 2,217 million from USD 2,325 million in the thirdquarter of 2005. Net income adjusted for the sale of CJSC Sevmorneftegaz andminority interest in the income of subsidiaries increased by 1,6% to USD 3,027million in the first nine months of 2006 from USD 2,978 million in the firstnine months of 2005. At the same time net income for the third quarter of 2006,adjusted for the sale of CJSC Sevmorneftegaz and minority interest in the incomeof subsidiaries, decreased by 15.3% to USD 1,074 million from USD 1,268 millionin the third quarter of 2005. The decrease in both EBITDA and Net income in thethird quarter of 2006 was largely due to higher levels of taxation, as taxesother than income tax increased by 22.4% while export duties increased by 66.2%. In the first nine months of 2006, the Company continued to grow cash flowgeneration. In particular, net cash provided by operating activities increasedby 79.3% to USD 3,560 million compared to USD 1,985 million in the first ninemonths of 2005. Capital expenditures increased by 64.9% to USD 2,131 millionfrom USD 1,292 million. This increase is primarily attributed to the expansionof operations at Yuganskneftegaz and commencement of full-scale development atthe Vankor field. Adjusted free cash flow before interest increased by 62.6% toUSD 1,961 million from USD 1,206 million. In the first nine months of 2006 Rosneft continued to deliver industry leadingorganic crude oil production growth. In the first nine months of 2006 crude oilproduction of the consolidated subsidiaries, including equity share inSakhalin-1 project, increased by 8.6% to 58.464 million tonnes (1,567 kbpd) from53.850 million tonnes (1,443 kbpd) in the same period of 2005. Primary growthdrivers were Yuganksneftegaz and Severnaya Neft as well as Sakhalin-1 projectwhich commenced production at Chaivo field in the fourth quarter of 2005.Yuganksneftegaz increased its production by 9.8% to 41.443 million tons (1,110kbpd) from 37.734 million tons (1,011 kbpd), while Severnaya Neft grew itsproduction 19.5% to 4.177 million tons (112 kbpd) from 3.496 million tons (94kbpd). Rosneft's share of Sakhalin-1 production in the first nine months of 2006amounted to 207 thousand tons (6 kbpd). Crude oil production including Rosneft'sequity share in affiliates (Polar Lights Company and Adai Petroleum) increasedby 8.5% to 58.952 million tons (1,580 kbpd) from 54.352 million tons (1,456kbpd). In the third quarter of 2006 crude oil production of the consolidatedsubsidiaries increased by 9.3% to 20.353 million tonnes (1,618 kbpd) from 18.623million tonnes (1,481 kbpd) in the third quarter of 2005. Crude oil productionincluding Rosneft's equity share in affiliates increased by 9.1% to 20.523million tonnes (1,632 kbpd) from 18.803 million tonnes (1,495 kbpd) in the thirdquarter of 2005. Natural and associated gas production by consolidated companies increased by7.5% to 10.12 bcm in the first nine months of 2006 from 9.41 bcm in the firstnine months of 2005. Sales of gas amounted to 6.99 bcm, an increase of 4.6%compared to 6.68 bcm in the first nine months of 2005. In the third quarter of 2006 natural and associated gas production byconsolidated companies grew 1.8% to 3.35 bcm from 3.29 bcm in the third quarterof 2005. These increases were mainly attributed to the fields ofKrasnodarneftegaz and Selkupneftegaz. Sales of gas increased by 6.6% to 2.41 bcmfrom 2.26 bcm. In the first nine months of 2006 production of refined products, includingthird-party refineries, amounted to 16.89 million tons, an increase of 10.6%over the level of the first nine months of 2005 of 15.27 million tons. Oilproducts output at proprietary refineries increased by 4.2% to 7.92 million tonsfrom 7.60 million tons. In the third quarter of 2006 production of refinedproducts decreased by 1.7% to 5.68 million tons with share of proprietaryrefining growing 4.2% to 2.72 million tons. In the third quarter of 2006 the Company made a number of acquisitions. Inparticular, Rosneft acquired licenses for exploration and development ofSevero-Charsky block at the border of Taimyr and Yamalo-Nenetsky regions in July2006, Kulyndinsky block in Evenkia in August 2006 and Osoveysky block inNenetsky autonomous region in September 2006. In July 2006 the Company repaid USD 1.34 billion to ONGC, retiring in full thecarry financing provided previously by ONGC to cover the Company's share ofdevelopment costs of Sakhalin 1. Upon retiring the carry financing, Rosneftbegan to account for its 20% share of Sakhalin 1 via the proportionalconsolidation method. In July 2006, Rosneft completed the initial public offering of its shares andglobal depositary receipts. The total amount of funds raised during theplacement was USD 10.6 billion making Rosneft's IPO the fifth largest in theworld at that time. Rosneft's shares have been listed and are traded on Russia'sRTS and MICEX exchanges, and the GDRs are traded on the London Stock Exchangeunder ticker ROSN. In October 2006 the Company completed the consolidation of 12 core subsidiaries,thereby. creating a vertically-integrated company with a single profit centerand simplified operating structure allowing the Company to increaseeffectiveness. Following conversion of their shares in the subsidiaries intoRosneft shares, minority shareholders are now owners of the second largest oilcompany in Russia and will share the success of the united, integrated Company. In December 2006, Rosneft finalized its acquisition of an interest in OJSCUdmurtneft. Previously, in April 2006, Rosneft and China PetrochemicalCorporation (Sinopec) signed an option agreement entitling Rosneft to buy aninterest in OJSC Udmurtneft if Sinopec were to win a tender for the purchase ofUdmurtneft from TNK-BP. In June 2006, TNK-BP announced the sale of 96.86% ofUdmurtneft to Sinopec. To manage the activity of Udmurtneft a joint venture hasbeen established with 51% and 49% ownership by the Company and Sinopec,respectively. The financing of the acquisition of the interest in Udmurtneft bythe Company has been arranged by Sinopec as per the option agreement and thisfinancing will be repaid from the cash flows of Udmurtneft directly, withoutrecourse to Rosneft. Rosneft's US GAAP financial statements and management discussion and analysisfor the first nine months of 2006 and previous periods are available fordownload at www.rosneft.com. Rosneft Information Division 221-31-07 phone 411-54-21 fax n_manvelov@rosneft.ru December 27, 2006 These materials contain statements about future events and expectations that areforward-looking in nature. Any statement in these materials that is not astatement of historical fact is a forward-looking statement that involves knownand unknown risks, uncertainties and other factors which may cause actualresults, performance or achievements expressed or implied by suchforward-looking statements to differ. We assume no obligations to update theforward-looking statements contained herein to reflect actual results, changesin assumptions or changes in factors affecting these statements. Paste the following links into your web browser to download the PDF documents relating to this announcement: Interim Consolidated Financial Statementshttp://www.rns-pdf.londonstockexchange.com/rns/6799o_1-2006-12-27.pdf Management's Discussion and Analysis of Financial Position and Results of Operations for the Nine Months and Third Quarter Ended September 30, 2006 and 2005http://www.rns-pdf.londonstockexchange.com/rns/6799o_2-2006-12-27.pdf This information is provided by RNS The company news service from the London Stock Exchange