Russia's energy giant Rosneft did not, after all, go through the oil price crash unscathed, with its latest quarterly financial report revealing a 71-percent annual drop in net profits to US$400 million (26 bln rubles).
The net figure for the January-September period was also lower, by 57.3 percent to US$1.96 billion (129 bln rubles).
Free cash flow, however - the money that pays the bills, as Bloomberg put it once - was US$730 million (48 bln rubles) in the third quarter, down by a more modest rate of 21.3 percent. Free cash flow for the nine-month reporting period was down 63.4 percent to US$2.88 billion (189 bln rubles).
Unlike most other large oil players, Rosneft also reported an increase in capital expenditure-their increase reaching 8.4 percent for the third quarter, and 16.1 percent for January-September. Upstream capex, in particular, jumped by 33.9 percent in the first nine months of the year thanks to more drilling and "intensive development of new projects".
Rosneft has been instrumental in Russia's consistently growing crude oil production. Average daily output since January reached 5.21 million barrels of oil equivalent, up by 1.4 percent. During the same period, drilling for production purposes went up by 42 percent, indicating that expansion plans have not been dropped, despite international price trends.
According to Reuters, Rosneft was also looking for further acquisition opportunities and had the money, thanks to its cash flow. In October, the giant bought a majority stake in smaller local rival Bashneft, beating out Lukoil.
The company itself is on a short list for privatization, and a 19.5-percent stake in it has already attracted a suitor, which for now remains unnamed. There is a possibility for Rosneft to pay for the stake itself, as the state needs the money to plug a gap in the budget, and then get a disbursement from the buyers when they come to light.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More