Rosneft beats forecasts with $2.8 bn quarter

26th October 2011, Comments 0 comments

Russia's top oil producer Rosneft on Wednesday posted a surprise 9.7-percent rise in third quarter profits to $2.8 billion on record production volumes that offset new duties at its biggest field.

Crude oil production was up 2.9 percent to 2.4 million barrels per day while EBITDA -- the closely watched figure for earnings before interest and taxes along with other business costs -- rose 13.9 percent to $5.3 billion.

Analysts had forecast a net profit of up to $2.8 billion and the positive news propelled Rosneft shares near the top of MICEX exchange leader board with a gain of 3.5 percent on the day.

Company chief Eduard Khudainatov called the quarter of "fundamental importance" because it included the signature of an Arctic oil exploration alliance with the US super-major ExxonMobil.

"Our partners not only confirmed their commitment to invest in joint projects but are also ready to share and exchange the latest technologies and experience from international projects," Khudainatov said.

"This will give Rosneft the competitive edge in offshore operations and at deposits with unconventional reserves."

The company approached the reporting period with caution and watched its privately-owned rival TNK-BP post stellar results on Tuesday in which record output led to a net profit of $2.3 billion.

Rosneft delayed its own report by a day while investors worried about the impact of export duty breaks the state ended in August from the firm's largest Siberian field.

The impending change in state policy made the diversification of Rosneft's production base -- still largely comprised of fields discovered and developed in the Soviet era -- the centrepiece of its last annual meeting.

Pieces of Rosneft's global expansion strategy are only now starting to fit into place while the company deals with the immediate burden of stagnating global oil prices and worries about shifting state duty policies.

Khudainatov conceded on Wednesday "that this is only the beginning of our journey" while insisting that the ExxonMobil deal had given Rosneft a "competitive edge."

The tie-up will see Rosneft gain access to advanced production technology and the US firm help the Russian giant develop its fields in both the Arctic and the Black Sea.

Rosneft is also set to join at least six project ExxonMobil has in North American -- Russian state oil's first such venture oversees.

The repercussions of BP's loss of the Rosneft deal to ExxonMobil continued on Wednesday with the announcement that the British firm had also lost its Moscow-based vice president in charge of Russian offshore project work.

Rosneft said its was naming US-born Larry Bates a vice president and adviser to the president on new foreign projects.

Analysts have a generally positive outlook on Rosneft in light of its ability to tie its fortunes to one of the world's most powerful energy firms.

Rosneft's joint venture "with ExxonMobil creates a model for unlocking the value of its huge undeveloped resource asset base while carrying minimal exploration and development risk," Renaissance Capital said in a research note.

Some economists said Wednesday's strong results could also be attributed to the consolidation of the Ruhr Oel refineries in Germany acquired last year.

© 2011 AFP

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