Rosneft profit booms in Q2

Rosneft piled on the profit in the second quarter as production grew and upstream unit costs were slashed.

The Russian oil behemoth also said it is "working on a plan" to minimise the effect of sanctions recently imposed upon it by the US over Russia's annexation of Crimea from Ukraine.

Net profit for the three months to the end of June was 172 billion Russian rubles ($4.9 billion) as compared with 35 billion rubles a year earlier.

For the half year, net profit shot from 137 billion rubles to 260 billion rubles.

Revenues for the second quarter were up 22% from 1.18 trillion rubles to 1.44 trillion rubles. For the half year they went up 41% from 1.99 trillion rubles to 2.81 trillion rubles.

The reason behind the stronger top and bottom lines in the second quarter was a 4.6% jump in total production from 4.79 million barrels of oil equivalent per day to 5.01 million boepd.

Of this, 4.16 million barrels per day was oil and natural gas liquids, while Rosneft also produced 13.5 billion cubic metres of gas per day in the quarter - a 45% year-on-year increase.

Total production was also up 4.6% for the whole of the first half.

Higher upstream operational efficiencies meant the capital expenditure unit cost per barrel of oil equivalent slipped in the first half from $5.5 to $4.

Despite the strong results, shares in Rosneft were down around 1% at 10am in London on Friday.

As the US and European Union continue to increase sanctions on Russian companies and individuals over the destabilisation of Ukraine, Rosneft said its free cash flow was 112 billion rubles in the second quarter - three times higher than a year earlier.

Company chairman Igor Sechin has not only been himself sanctioned by the US, but has in the past fortnight seen Rosneft itself added to the list of companies barred from receiving fresh access to US capital, as the West looks to put the squeeze on President Vladimir Putin.

Sechin remained defiant on Friday, however, stressing in the results statement: "Together with our partners - the world's leading oil companies - we are working on a plan to minimise the consequences of including Rosneft on the sanction lists."

However, credit ratings agency Moody's said this week that Rosneft and fellow Russian energy giant Gazprom are set to face significant debt refinancing challenges next year, with new sanctions making it even more difficult for them to tap Western financial markets.

The pair are among Russian companies with debts totalling $112 billion due to mature over the next four years, with a peak maturity wall in 2015, Moody’s Investor Service stated in a report cited by Reuters.

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