Rosneft net profit almost quadruples in second quarter and shares hit all-time high

Increase in production and higher prices pushes revenue up 48 per cent and ebitda by 85 per cent to 565bn roubles

Vladimir Putin and Rosneft CEO Igor Sechin. The Russian oil major has reported record results. Reuters

Russia's largest oil producer Rosneft said on Tuesday its second-quarter net profit more than tripled to 228 billion roubles (Dh13.22bn) on higher production and prices, pushing its shares to an all-time peak, Reuters reported.

That exceeded Rosneft’s profit for the whole 2017 and beat analysts’ estimates. Free cash flow rose to 221bn roubles, while dollar-denominated net debt shrank 12 per cent, according to Bloomberg.

Rosneft, which counts among major shareholders the Russian state and BP, said its profit was also supported by a one-off gain from a share acquisition in an upstream joint venture and the revaluation of a stake in another joint venture, Reuters said.

Rosneft, headed by Igor Sechin, a close ally of Russian President Vladimir Putin, said its revenue in the second quarter was 2.07 trillion roubles, up 48 per cent year-on-year.

Earnings before interest, tax, depreciation and amortisation (ebitda) were 565bn roubles, up 85 per cent.

"The second quarter was mainly a reflection of the management's efforts to improve the efficiency of the company," Mr Sechin said.

Between January and June, the state-controlled group reported a net profit of 309bn roubles, AFP said.

Operating profit rose by nearly 50 per cent to 950bn roubles.

After starting the year at just over $66.50 per barrel, the price of the main international crude has risen to fluctuate around $75 per barrel in recent weeks on worries about supplies as the United States moves to reimpose sanctions on Iranian oil exports.

The average price for Urals crude in the first six months was up by 35 per cent compared to the same period last year, according the company.

Under Mr Sechin, who took over the company in 2012, Rosneft has made huge acquisitions in Russia and abroad, including the $55bn takeover of local peer TNK-BP in 2013. That deal made Rosneft the world's biggest listed oil firm by output, according to Reuters.

"The key strategic acquisitions made in the period of low oil prices have been completed. The company focuses on organic growth and monetisation of synergies from the acquisitions," Mr Sechin said.

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On Monday, Rosneft said its daily liquids production in the second quarter rose 0.8 per cent year-on-year to 4.6 million barrels and that it had the capacity to raise third-quarter oil production by 200,000 barrels per day.

Rosneft also said on Monday that its board of directors had approved the structure and parameters of a share buyback programme worth up to $2bn.

The programme would run until the end of 2020 and Rosneft said it may partially cancel its treasury shares if needed. The maximum amount of shares and depositary receipts to be repurchased would not exceed 340 million shares, it said.

Rosneft added on Tuesday that its first-half dividend may be higher than its 2017 full-year payout, which together with strong results and the earlier approved buyback pushed its shares to an all-time high of 425.5 roubles apiece.

The firm may deliver record results for the full year and average dividend growth of 15 per cent through 2020, Goldman Sachs said, according to Bloomberg.