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Rosneft Profit Plunges 75%
Energy

Rosneft Profit Plunges 75%

Russian majority state-owned oil giant Rosneft posted a staggering 75% drop in first-quarter net profit, raising questions over how much money the Russian government will be able to glean from its crude producers as commodity prices continue to lag.
Rosneft missed analyst forecasts, reporting 14 billion rubles ($216.8 million) in net profit, against Reuters consensus polls predicting 33 billion rubles in net income, Oil Price reported.
The company said capital expenditures were up 20% in the first quarter compared with the same period in 2015 to 154 billion rubles. The expenditures were linked to preparation for starting operations in two fields, in line with previous plans for the year.
The drop did not seem to worry equity investors, with Rosneft's Moscow-listed stock jumping around 2.8% to 30-day highs.
However, the plunge is likely to disappoint Moscow, which is banking on state-owned companies like Rosneft to bolster revenues. The Russian government holds a 69.5% stake in Rosneft through state-owned firm Rosneftgaz.
In April, Russian Prime Minister Dmitry Medvedev announced he had signed a resolution requiring state-owned companies to distribute no less than 50% of their net profit in dividends.
He said the budget was likely to receive an additional 100 billion rubles ($1.6 billion) as a result.
Rosneft's disappointing report came shortly after Lukoil PJSC, Russia’s second-largest oil producer, said first-quarter profit dropped 59% as crude prices declined to a 12-year low.
Net income fell to 42.8 billion rubles ($651 million) from 104 billion rubles a year earlier, the Moscow-based company said in a statement on Monday.
That beat the 41.3-billion-ruble estimate of six analysts surveyed by Bloomberg. Free cash flow declined 43% to 36 billion rubles.
Russian producers have been partially buffered against the rout in crude by a weaker ruble, which has reduced costs and taxes that decline with lower prices.
While higher output helped smaller rivals Bashneft PJSC and Gazprom Neft PJSC boost profit in the first quarter, Lukoil’s production in Russia has dropped.

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