The Gazprom Neft Board of Directors has reviewed information on the effectiveness of the company’s budget execution and the investment programme implementation in H1 2017.
Implementation of Gazprom Neft’s investment programme in 2017 is currently in line with planned performance targets, with the company on course to meet its medium- and long-term strategic objectives. H1 2017 results show the company to have retained its position as an industry leader in terms of efficiency, return on investment (ROI) and a strong net debt to operating profit ratio. Organic business growth and effective initiatives by company management have delivered double-digit growth across key financial indicators, as well as market-leading net-profit growth in H1 2017, up 23.1 percent year-on-year, to RUB111 billion. Adjusted EBITDA (earnings before interest, income tax and depreciation) increased by 20.8 percent, to RUB246 billion.
Total hydrocarbon production at Gazprom Neft reached 44.02 million tonnes of oil equivalent (mtoe) in H1 2017 — 5.3 percent up year-on-year — this growth having been achieved through improvements in drilling efficiency together with greater production at new fields — the Novoportovskoye, Prirazlomnoye and Vostochno-Messoyakhskoye — as well as higher production in Iraq. Total refining volumes were 18.73 million tonnes in H1 2017. Sales of premium oil products were up two percent year-on-year, to 12.1 million tonnes — again confirming the company’s status as an industry leader on the domestic (Russian) market in terms of average daily per-station sales across its filling-station network, with daily pumping volumes up 4.4 percent year on year.
The Board of Directors also reviewed the company’s Internal Audit Report for H1 2017.
The Internal Audit department completed 42 audits throughout 2017. An assessment of the effectiveness of internal controls was undertaken across various areas, including accounting processes for sales of oil and oil products, management of irrecoverable losses, business processes pertaining to the implementation of investment programmes, and procurement. In addition to this, in H1 2017 the Internal Audit department also implemented a project analysing the efficiency of individual elements of corporate management, including, in particular, the implementation of decisions taken by the General Meeting of Shareholders, and the protection of shareholders’ rights. The Gazprom Neft anti-fraud “hotline” remains in operation.
A number of initiatives, directed at improving the efficiency of internal controls over business processes, have been developed and are now being implemented on the basis of recommendations from the Internal Audit department.
The Gazprom Neft Board of Directors has adopted updated risk assessments and information on the key risks facing the company in H1 2017, and has developed a new concept for determining maximum permissible risk levels.