Rosneft

Earnings Release • May 14, 2021

National Storage Mechanism | Additional information

ROSNEFT OIL COMPANY (ROSN)

ROSNEFT OIL COMPANY: Financial Results for Q1 2021

14-May-2021 / 10:01 MSK

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.

The issuer is solely responsible for the content of this announcement.

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Financial results for Q1 2021

• 1Q 2021 Net Income reached RUB 149 bln.
• EBITDA amounted to RUB 445 bln in 1Q 2021, or 44% higher than in 1Q 2020.
• Revenues increased by app.15% compared to 4Q2020.
• Reduction of unit upstream operating costs to a minimum level of 2.6 USD/boe (194 RUB/boe).
• FCF increased 2.6-fold to the level of 4Q 2020 - to RUB 190 bln.
• Reduction of financial debt by USD 2.9 bln.

Consolidated IFRS financial results for 1Q 2021:

	1Q 2021	4Q 2020	Change, %	1Q 2021		1Q 2020
	RUB bln (except %)
Revenues and equity share in profits of associates and joint ventures	1,737	1,521	14.2%	1,737	1.7581
EBITDA	445	364	22.3%	445	309
EBITDA margin	25.0%	23.2%	1.8 pp.	25.0%	17.3%
Net income/(loss) attributable to Rosneft shareholders	149	324	(54.0)%	149	(156)
Net income margin	8.6%	21.3%	(12.7) pp.	8.6%	(8.9)%
Capital expenditures	225	216	4.2%	225	185
Free cash flow (RUB equivalent)2	190	73	>100%	190	219
Upstream operating expenses RUB/boe	194	197	(1.5)%	194	191
	USD bln3 (except %)
Revenues and equity share in profits of associates and joint ventures	23.9	20.6	16.0%	23.9		27.6
EBITDA	6.0	4.8	25.0%	6.0		4.9
Net income attributable to Rosneft shareholders	2.0	4.3	(53.5)%	2.0		(2.0)
Capital expenditures	3.0	2.8	7.1%	3.0		2.8
Free cash flow	2.5	0.8	>100%	2.5		3.5
Upstream operating expenses USD/boe	2.6	2.6	-	2.6		2.9
For reference
Average Urals price.  USD per bbl	59.3	44.5	33.2%	59.3		48.1
Average Urals price. th. RUB per bbl	4.41	3.39	29.9%	4.41		3.19

1Indicator is adjusted for changes in data in the comparable period.

2The calculation includes interest expense on the prepayments on the long-term oil and petroleum products supply agreements.

3Calculated using average monthly Central Bank of Russia exchange rates for the reporting period.

Commenting on financial results of 1Q 2021 Rosneft's Chairman of the Management Board and Chief Executive Officer Igor Sechin said:

"During the reporting period, we managed to ensure the stability and continuity of our work. All employees of the "Rosneft" Group have been provided with the necessary medical support, and employees of the subsidiaries and the central office are being vaccinated to protect them from coronavirus infection. The preservation of life and health, as well as the safety of employees, is one of the key priorities for the Company.

Despite all the difficulties caused by the COVID-19 pandemic, "Rosneft" demonstrated strong financial results: Shareholder's net income amounted to RUB 149 billion, EBITDA was the highest since the beginning of the pandemic, financial debt decreased by USD 2.9 billion and free cash flow was close to the quarterly average of pre-crisis 2019.

High performance was possible thanks to the systematic work of all the Company's divisions aimed at improving efficiency. Being the leader in the production of hydrocarbons in Russia, the Company makes the greatest contribution to the fulfillment of the obligation of our country to balance the global market demand and supply and to stabilize the price.

"Rosneft" continued to work on the implementation of strategically important projects, including "Vostok Oil" project, which guarantees the Company the stability of production and profit levels in the long term and provides a significant competitive advantage. "Rosneft" also demonstrates its determination in the energy transition, consistently increasing the share of gas in the production of hydrocarbons.

In accordance with the dividend policy, the Company's Board of Directors recommended paying

RUB 73.55 bln in form of dividends for 2020. As the macroeconomic environment recovers, production volumes and profits grow, we will strive to increase our shareholder distributions".

Financial performance

Revenues and equity share in profits of associates and joint ventures

1Q 2021 revenues and equity share in profits of associates and joint ventures amounted to RUB 1,737 bln (USD 23.9 bln). The increase in revenues quarter-on-quarter was mainly a result of higher crude oil prices.

Revenues fell by 1.2% compared to 1Q 2020. The drop was due to a reduction of sales volume of crude oil (-32.9% to the level of 1Q 2020) and petroleum products (-14.5% to the level of 1Q 2020), driven by a decrease in global demand due to the COVID-19 pandemic and a reduction in crude oil output under the terms of the new OPEC+ Agreement which is in effect since May 2020. The decrease in sales volumes was offset by an increase in prices in 2021 (+23.3% compared to the level of 1Q 2020).

EBITDA

1Q 2020 EBITDA amounted to RUB 445 bln (USD 6.0 bln). The increase in EBITDA (+22.3% compared to the level of 4Q 2020) was driven by higher crude oil prices, positive effect of damping component of the reverse excise tax, which were partially offset by an increase in taxes: the tax on additional income and mineral extraction tax.

The positive dynamics of EBITDA was facilitated by a reduction of operating, general and administrative expenses. In 1Q 2021 unit upstream operating costs decreased by 1.5% compared to the level of 4Q 2020 and amounted to 194 RUB/boe (2.6 USD/boe). In USD terms, the unit operating costs remained at the level of 4Q 2020.

Higher EBITDA relative to 4Q 2020 was mainly a result of higher prices and a positive effect of reverse excise tax.

Net income attributable to Rosneft shareholders

1Q 2021 Net income reached RUB 149 bln (USD 2.0 bln). Lower Net Income compared to 4Q 2020 is mainly due to the effect of recognition of one-off income from the acquisition of assets in 4Q 2020.

The significant increase in Net Income y-o-y was driven by higher operating income, reduction of financial expenses and lower negative impact from non-monetary factors.

Capital expenditures 

In 1Q 2021 total capital expenditures amounted to RUB 225 bln, which is in line with the level of 4Q 2020 and is 22% higher compared to 1Q 2020. The growth is mainly due to the start of the Vostok Oil active development phase.

Free cash flow

Free cash flow amounted to RUB 190 bln (USD 2.5 bln) in 1Q 2021. The increase in free cash flow compared to 4Q 2020 was driven by the growth of operating income.

Financial stability

In 1Q 2021 financial debt and trade liabilities decreased by USD 4.6 bln, incl. financial debt - by

USD 2.9 bln compared to 4Q 2020. Net debt/EBITDA in USD terms was 2.2x. High level of financial stability is supported by a falling short-term component of the financial debt. Liquid financial assets exceeded the short-term debt by almost 2.3 times as of the reporting date.

Rosneft Information Division

Tel.: +7 (495) 411 54 20

Fax: +7 (495) 411 54 21

May 14, 2021

These materials contain statements about future events and expectations that are forward-looking in nature. Any statement in these materials that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements expressed or implied by such forward-looking statements to differ. We assume no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.

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ISIN:	US67812M2070, RU000A0J2Q06
Category Code:	QRF
TIDM:	ROSN
LEI Code:	253400JT3MQWNDKMJE44
Sequence No.:	105020
EQS News ID:	1196494

End of Announcement	EQS News Service

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