Russia's leading privately held oil producer Surgutneftegaz saw revenues increase in this year's first quarter despite a sizeable drop in production.
Revenues hit 397 billion roubles ($5.3 billion) in the three months to the end of March as against 295 billion roubles in the same period last year, when the full effects on global demand from the coronavirus pandemic had not yet been felt.
However, net profit declined by 75% year-on-year to 180 billion roubles.
Oil and condensate production declined by 13% to 1.07 million barrels per day as against the first quarter of last year.
In percentage terms, this decline was higher than that reported by other major Russia producers, such as Rosneft, Lukoil and Gazprom Neft.
Last year, authorities in Moscow asked all oil producers to cut output to comply with the country’s commitments to the Opec+ alliance.
Opec+ is an alliance of Opec and other major producers, led by Russia, that has used production curbs in an effort to rebalance oil markets amid the pandemic-related demand drop.
Despite its major place in the Russian industry, Surgutneftegaz remains one of most nontransparent corporations, with its long-term boss Vladimir Bogdanov rubberstamping only a few new assets acquisitions in the past 30 years.
Surgutneftegaz is traditionally slow in releasing its consolidated financials under international financial reporting standards, as most of its stock is held via a complex web of Russian pension funds, with less than 25% of shares held by minority investors.
Notwithstanding the decline in production, Surgutneftegaz continued to add cash to its huge pile of reserves in the first quarter.
By 31 March this year, cash and cash equivalents rose to 3.79 trillion roubles, up 218 billion roubles from 31 December
The lack of any coherent plan to use this enormous cash reserve for expansion purposes or acquisition has long applied downward pressure on Surgutneftegaz’ stock, which often moves on rumours and unconfirmed suggestions, rather than following any action by the company’s management team, according to industry observers in Moscow.
Investors’ disappointment in such a lack of action has also led to the stagnation of its stock, with Surgutneftegaz’ current market capitalisation standing at just over 1.3 trillion roubles, or three times below the amount of cash at its bank accounts.