ROSN.L Regulatory News (ROSN)

16 Oct 2007 14:30

OJSC OC Rosneft16 October 2007 ROSNEFT REPORTS US GAAP RESULTS FOR THE THREE AND SIX MONTHS ENDING JUNE 30, 2007 OJSC Rosneft (Rosneft or "the Company") today reported its consolidatedfinancial results in accordance with US GAAP for the three and six months endingJune 30, 2007. Rosneft achieved new record levels of profitability and operatingperformance in the second quarter, both on an organic (i.e. without the effectof acquisitions) and inorganic basis. Production growth for the quarter reached6.1% on an organic basis and 24.7% including the effect of acquisitions.Revenues and EBITDA rose in the second quarter of 2007 approximately 18.7% and38.5% respectively excluding the effects of 2007 acquisitions and 25.4% and54.8% on an unadjusted basis. Summary financial results (further details of which can be found atwww.rosneft.com) for the three and six months ended June 30, 2007 include thefollowing: Q2 2007 Q2 2006 Ch.yoy, Q1 2007 Ch.qoq, % 6M 2007 6M 2006 Ch.yoy, % %USDmillion Revenue 10,785 8,602 25.4% 8,220 31.2% 19,005 15,929 19.3%EBITDA 3,536 2,283 54.9% 1,444 144.9% 4,980 4,203 18.5%Net income 7,655 1,077 610.8% 358 2,038.3% 8,013 1,879 326.5% AdjustedEBITDA* Adjusted 3,581 2,314 54.8% 1,741 105.7% 5,322 4,265 24.8%Net income** 1,657 1,108 49.5% 690 140.2% 2,347 1,941 20.9% *Adjusted for the effect of non-operating accrual of fines and penalties relatedto pre-acquisition Yuganskneftegaz tax debt **Adjusted for the effect of non-operating accrual of fines and penaltiesrelated to pre-acquisition Yuganskneftegaz tax debt, income from consolidationof Yukos-Mamontovo as well the effect of proceeds from the Yukos bankruptcy In the second quarter of 2007, EBITDA, adjusted for the effect of accrual offines and penalties related to pre-acquisition Yuganskneftegaz tax debt in theamount of USD 45 million and USD 31 million in the second quarter of 2007 and2006, respectively, increased by 54.8% year-on-year and by 105.7%quarter-on-quarter. Adjusted EBITDA increased to USD 3,581 million from USD2,314 million in the second quarter of 2006 and from USD 1,741 million in thefirst quarter of 2007. Similarly, in the first half of 2007, EBITDA, adjustedfor the effect of accrual of fines and penalties related to pre-acquisitionYuganskneftegaz tax debt in the amount of USD 342 million and USD 62 million inthe first six months of 2007 and 2006, respectively, increased by 24.8% to USD5,322 million from USD 4,265 million for the same period in 2006. In the second quarter of 2007, net income, adjusted for the effect ofnon-operating accrual of fines and penalties related to pre-acquisitionYuganskneftegaz tax debt in the amount of USD 67 million and USD 31 million inthe second quarter of 2007 and 2006, respectively, income from consolidation ofYukos-Mamontovo in the second quarter of 2007 in the amount of USD 46 million,as well the effect of proceeds from the Yukos bankruptcy, increased by 49.5%year-on-year and by 140.2% quarter-on-quarter. Adjusted net income increased toUSD 1,657 million from USD 1,108 million in the second quarter of 2006 and USD690 million in the first quarter of 2007. In the first half of 2007, net income,adjusted for the effect of non-operating accrual of fines and penalties relatedto pre-acquisition Yuganskneftegaz tax debt proceeds in the amount of USD 399million and USD 62 million in the first half of 2007 and 2006, respectively,income from consolidation of Yukos-Mamontovo as well the effect of receipt ofthe Yukos bankruptcy receivables, increased by 20.9% to USD 2,347 million fromUSD 1,941 million in the first half of 2006. In the second quarter of 2007, Rosneft made substantial improvements in cashflow generation. Free cash flow (operating cash flow adjusted for capitalexpenditures and license acquisitions) for the second quarter of 2007 almosttripled to USD 1,123 million from USD 391 million for the same period in 2006.As result, free cash flow in the first half of 2007 increased by 2.9% to USD 984million compared to USD 956 for the same period of 2006. Capital expendituresincreased by 63.1% to USD 2,288 million in the first half 2007 compared to USD1,403 million in the first six months of 2006. The growth was primarily due tofurther field development at Yuganskneftegaz, where capital expenditures grew by51.8% to USD 1,050 million, and the commencement of full-scale development atthe Vankor field, where investments in the first half of 2007 totaled USD 590million, an increase of 129.3% versus USD 257 million in the first half of 2006. The improved financial performance in the second quarter of 2007 over the sameperiod in 2006 was largely due to strong improvements in organic performance,specifically accelerated production growth rates and improved domestic productsales, the new level of vertical integration at the Company following theacquisition of five new refineries in May 2007 and the purchase of new upstreamassets. Tomskneft, as well as the Achinsk and Angarsk refineries were fully consolidatedin Rosneft's financial statements starting from May 8, 2007, whileSamaraneftegaz and the Samara group of refineries were consolidated startingfrom May 15, 2007. In the second quarter of 2007, Rosneft further extended its track record ofindustry-leading crude oil production growth. Rosneft and its consolidatedsubsidiaries increased production of crude oil by 21.1% to 171.35 millionbarrels in the second quarter of 2007 from 141.52 million barrels in the secondquarter of 2006. This growth was largely due to an increase in production atYuganskneftegaz to 106.46 million barrels in the second quarter of 2007 from100.26 million barrels in the second quarter of 2006, or by 6.2%, as well as theacquisition of Tomskneft and Samaraneftegaz, which collectively contributed21.26 million barrels to Rosneft's crude oil production from the day of theiracquisition in May 2007 to June 30, 2007. As a result, in the first six monthsof 2007, Rosneft and its consolidated subsidiaries increased crude oilproduction by 15% to 319.27 million barrels (up from 277.63 million barrels inthe first half of 2006) while crude oil production, including equity share inaffiliates, increased by 18.7% to 332.33 million barrels (up from 279.96 millionbarrels in the first half of 2006). Organic crude oil production increased inthe first half of 2007 by 7.3% from 277.63 million barrels in the first half of2006 to 298.01 million barrels. Among the factors contributing to this increasewas a growth in average well flow rates, which increased from 107.16 barrels perday in the first half of 2006 to 109.58 barrels per day in the first half of2007, including higher flow rates at new wells (723.17 barrels per day in thefirst half of 2006 vs 736.62 barrels per day in the first half of 2007). In the second quarter of 2007, Rosneft and its consolidated subsidiariesproduced 3.73 billion cubic meters (bcm) of natural and associated gas, anincrease of 17.2% compared to the same period of 2006. In the first half of 2007Rosneft's production of natural and associated gas increased by 14.9% to 7.71bcm from 6.71 bcm in the same period last year. The growth was primarily due toincreased production at Krasnodarneftegaz and Purneftegaz. Including share inaffiliates, gas production increased by 15.0% to 7.73 bcm in the first half of2007. In the first half of 2007, the total output of petroleum products fromRosneft-produced crude oil, including output at mini-refineries and refineriescontrolled by third parties, increased by 28.4% to 14.39 million tonnes, up from11.21 million tonnes in the first half of 2006. In the second quarter petroleumproducts ouput increased by 18% quarter-on-quarter to 7.79 million tonnes from6.6 million tonnes in the first quarter of 2007. Sergey Bogdanchikov, president of Rosneft, said: "The results of the secondquarter of 2007 demonstrate strong organic performance both throughindustry-leading production growth and increased profitability. These financialresults include the recently acquired assets for approximately half the secondquarter and further improvements in profitability will be realized as wecontinue to integrate and optimize our portfolio. We will continue to work todemonstrate leading financial performance and earnings growth among Russian oilmajors." Rosneft's US GAAP financial statements and management discussion and analysis(MD&A) for the three and six months ending June 30, 2007 and previous periodswill be made available for download on the Company's website at www.rosneft.com. OJSC Rosneft Information Division Tel.: +7 (495) 221-31-07 Fax: +7 (495) 411-54-21 n_manvelov@rosneft.ru October 16, 2007 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. This information is provided by RNS The company news service from the London Stock Exchange