Gazprom Neft 1H 2018 net profit up 1.5-fold

Press-release Efficiency
  • Net profit of RUB166.4 billion, a 49.6% increase on 1H 2017
  • Adjusted EBITDA* of RUB368.2 billion, a 49.8% increase on 1H 2017
  • Free cash flow (FCF) of RUB47.5 billion, a 77% increase on 1H 2017

For the first six months of 2018 Gazprom Neft achieved revenue** growth of 24.4% year-on-year, at one trillion, 137.7 billion rubles (RUB1,137,700,000,000). The Company achieved a 49.8% year-on-year increase in adjusted EBITDA, to RUB368.2 billion. This performance reflected positive market conditions for oil and oil products, production growth at the Company’s new projects, and effective management initiatives. Net profit attributable to Gazprom Neft PJSC shareholders grew 49.6% year on year, to RUB166.4 billion. Growth in the Company’s operating cash flow, as well as the completion of key infrastructure investments at new upstream projects, delivered positive free cash flow of RUB47.5 billion for 1H 2018.

Total hydrocarbon production (including Gazprom Neft’s share in production at joint enterprises) in the first six months of 2018 amounted to 44.9 million tonnes of oil equivalent (mtoe), an increase of 2% year-on-year. This was driven by higher production at new fields (Novoportovskoye and Vostochno-Messoyakhskoye) and an increase in Gazprom Neft’s interest in Arktikgaz, from 46.6% to 50% in March 2018.

Novy Port

First-half refining volumes increased by 9,8%, having been restored following the completion of a planned refinery maintenance in 1H 2017. Light petroleum product output also outperformed as a result of improved refining efficiency. The Company also increased its sales of oil products through premium sales channels, by 6.4% year-on-year, to 12.8 million tonnes.

Omsk Oil Refinery

Alexander Dyukov, Chairman of the Gazprom Neft Management Board, commented: “Gazprom Neft has seen a 1.5-fold increase in its operating profit in the first half of 2018, once again confirming its market-leading position in terms of financial growth. In an environment of curtailed oil production, the company has focused on increasing operating efficiency: industry trends and inflationary factors notwithstanding, Gazprom Neft reduced the unit costs of crude production at mature fields by eight percent year-on-year, as well as ensuring optimum refining volumes in current marketing conditions, and increasing sales of oil products.”

Key financial data

2Q

1Q

∆, %

6 months

∆, %

2018

2018

2018

2017

617,103

520,633

18.5

Sales (RUB millions)

1,137,736

914,332

24.4

639,592

541,202

18.2

Sales (revenue) including excise duties (RUB millions)***

1,180,794

944,274

25.0

193,130

137,449

40.5

EBITDA (RUB millions)

330,579

218,216

51.5

212,403

155,797

36.3

Adjusted EBITDA (RUB millions)

368,200

245,807

49.8

20.40

16.65

22.5

USD/boe

18.63

12.99

43.4

96,810

69,665

39.0

Profit attributable to shareholders in Gazprom Neft PJSC (RUB millions)

166,475

111,269

49.6

127,180

83,109

53.0

Cash flow from operations

210,289

181,128

16.1

35,949

11,585

210.3

Free cash flow

47,534

26,893

76.8

1.01

1.17

(13.9)

Net debt / EBITDA

1.01

1.37

(26.3)

Key operational data

2Q

1Q

∆, %

6 months

∆, %

2018

2018

2018

2017

168.51

164.55

2.4

Hydrocarbon production including the company’s share in joint ventures (mboe)

333.06

326.37

2.0

22.72

22.20

2.3

Hydrocarbon production including the company’s share in joint ventures (mtoe)

44.92

44.02

2.0

10.44

10.13

3.1

Refining volumes at the company’s own and jointly-owned facilities (million tonnes)

20.57

18.73

9.8

6.74

6.10

10.5

Sales volumes through premium channels (million tonnes)

12.84

12.07

6.4

2.81

2.67

5.4

Sales volumes through the Gazprom Neft filling station network (million tonnes)

5.48

5.23

4.8

* Adjusted EBITDA includes that proportion of EBITDA arising from associated or jointly controlled companies, calculated in terms of equity participation.

** With effect from 1 January 2018 the Group moved over to the new IFRS 15 definition of “Revenue from Contracts with Customers”, leading to changes in accounting policies and adjustments to certain sums recognised in the company’s financial accounts. Export duties are reflected in revenue totals, and the excise duty on sales levied in Serbia in the form of a sales tax is excluded.

*** For reference — “Sales (revenue) including excise duties” include excise duties on sales in international markets (Sales), applied until Q4 2017.