ROSN.L Regulatory News (ROSN)

Strong performance in Q3 2013:

daily hydrocarbon production has reached a record-high 4.9 mln boe, EBITDA has gone up by 41% to RUB 303 bln

October 29, 2013, Rosneft publishes consolidated IFRS financial statements for 9M 2013.

Key operating and financial highlights

1 Results in the previously published consolidated financial statements for the 6 months of 2013

2 Net income includes the effect of preliminary revaluation of TNK-BP assets in the amount of RUB 167 bln

3 Adjusted for prepayments under long-term oil supply contracts and transactions with trading securities

Q3 2013 hydrocarbon production (including production of subsidiaries and proportionately consolidated entities, and the share in production by affiliates) increased by 2.0% and reached 4,884 th. boepd. Crude oil and liquids production has reached 4,193 th. boepd, gas production increased up to 10.82 bcm.

Oil production growth is mainly due to a successful implementation of the drilling program at Uvat and Vankor fields. Vankor retains the position of a leading greenfield in the Company's portfolio by demonstrating successful results of failure-free drilling performance and confidently progressing towards the objective of 70 mln t of cumulative crude oil production by the end of 2013. Three major greenfields - Vankor, Verkhnechonskoe and Uvat group of fields - account for nearly 19% of the Company's Q3 production. Creating a basis for future growth, Rosneft is accelerating its effort in getting new fields in West Siberia, East Siberia and Yamal-Nenets Autonomus District ready to be put on stream.

The Company is stabilizing production in brownfields making a more extensive use of new reservoir management technologies in its key assets. Orenburg is demonstrating high post-frack flow rates, Samara is successful in upper horizon recompletions. Horizontal drilling technologies with multi-stage hydrofracking are getting more and more widely used. The past 9 months have seen 84 such wells brought on stream, including 12 wells in the Yuganskneftegaz fields showing the average initial oil rate of over 150 tpd.

Q3 2013 gas production growth by 16.2% is primarily the result of Itera's assets consolidation. Organic volume growth has resulted from the newly commissioned compressor stations in Yugansnkneftegaz' Priobskoe and Pravdinskoe fields now being operated at design capacity.

The Company is consistently progressing its offshore projects development program. Thus, in September it won auctions for exploration and development licenses for the Amur-Limanskiy and Vosochno-Pribrezhny Blocks in the Sea of Okhotsk with the total potential resource in excess of 100 mln toe.

In Q3 2013, Rosneft processed 26.02 mln tons of crude at Russian and foreign refineries. The 10.2% growth of refining volumes is, among other things, due to the largest CDU in Russia having been launched at the Tuapse Refinery, which will enable the Company to continue increasing refining volumes in the future. Higher refining volumes have led to increasing supplies of high-quality motor fuel to satisfy the growing domestic market demand.

Q3 2013 revenues (including equity share in profits of associates and joint ventures) have gone up by 15.3% reaching RUB 1,356 bln. The main driver behind revenue growth has been bigger gas and petroleum product sales accompanied by a favorable price environment in the global market.

Effective cost control and advantage taken of the new asset synergies have ensuredQ3 2013 EBITDA growth by 40.9% sending it to a record-high level of RUB 303 bln. The growth has also been assisted by a positive export-duty lag effect.

Rosneft's Q3 2013 net income totaled RUB 280 bln, including gain from TNK-BP net asset revaluation worth RUB 167 bln. Taken without the latter effect, the net income have more than tripled vs Q2, 2013. FOREX gain on ruble appreciation against US$ has also come into play.

All this has resulted in Rosneft generating a free cash flow worth RUB 84 bln and paying its shareholders record-high dividends of RUB 85 bln in Q3 2013.

When commenting on Rosneft's Q3 2013 performance, Rosneft President Igor Sechin said:

"In the third quarter we made significant progress in delivering our strategic goals. We have successfully consolidated Itera, reached agreement on a number of new long-term oil and gas supply contracts, and on acquiring Alrosa's gas assets. Jointly with ExxonMobil, we have selected a contractor for designing an LNG plant in the Far East.

 I would like to make a special mention of the positive changes in Russia's tax regime. We are thankful to President Putin and the Russian Government for their support of strategic tax incentives which will enable the Company to prepare and put on stream hydrocarbon resources totaling 42 bln toe. The laws signed in July and September, which encourage development of tight reserves and offshore fields and which the Company did its best to help develop, have made investment in the Russian oil and gas sector extremely more attractive and will serve as a good ground for Rosneft to successfully develop new resources."

Rosneft Information DivisionTel.: +7 (495) 411 54 20Fax: +7 (495) 411 54 21www.rosneft.com 

October 29, 2013

These materials contain statements about future events and expectations that are forward-looking in nature. Any statement in these materials that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements expressed or implied by such forward-looking statements to differ. We assume no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.