Key Operating and Financial Results

Key Operating Results
Metric 2017 2016 Change 2015
Proved reserves of hydrocarbons under SEC standards (mmboe) 39,907 37,772 6% 34,465
Proved reserves of hydrocarbons under PRMS standards (mmboe) 46,520 46,075 1% 42,917
Proved marketable gas reserves under SEC standards (bcm)Including fuel gas. 1,949 1,714 14% 1,609
Proved marketable gas reserves under PRMS standards (bcm)Including fuel gas. 2,309 2,273 2% 2,161
Hydrocarbon reserve life under PRMS standards (years) 23 24 23
LH production (mmt) 225.5 210.0 7% 202.8
Gas production (bcm) 68.4 67.1 2% 62.5
Oil sales abroad (mmt) 121.8 114.9 6% 109.1
Oil refining (mmt) 112.8 100.3 12% 96.9
Petroleum product and petrochemical output (mmt) 109.1 98.2 11% 95.4
Petroleum product sales abroad (mmt)Including fuel gas. 71.9 67.4 7% 65.8
Retail sales of petroleum products in Russia (mmt) 11.7 10.9 7% 10.9
Key Financial Results
Metric 2017 2016 Change 2015
Sales revenue and income from associates and joint ventures (RUB bln) 6,014 4,988 21% 5,150
EBITDA (RUB bln) 1,403 1,278 10% 1,245
EBITDA margin 22.6% 25.0% –2.4 p.p. 23.8%
Taxes (RUB trln) 2.6 2.0 30% 2.3
Net profit (RUB bln) 297 192 55% 356
Net profit margin 4.9% 3.8% 1.1 p.p. 6.9%
ROACE 11.6% 13.9% –2.3 p.p. 13.4%
ROAE 5.6% 5.2% 0.4 p.p. 12.2%
CAPEX (RUB bln) 922 709 30% 595
Unit upstream CAPEX (USD/boe)Calculated using the average monthly exchange rate of the Bank of Russia. 7.1 5.0 42% 4.3
Unit production OPEX (USD/boe)Calculated using the average monthly exchange rate of the Bank of Russia. 3.2 2.5 28% 2.6
Free cash flow (RUB bln) 245 439 –44% 802
Dividend per share (RUB) 10.48Including the dividend for 1H 2017 and the dividend recommended by the Board of Directors for approval at the General Shareholders Meeting in June 2018. 5.98 75% 11.75
Total accrued dividends (RUB bln) 111.1Including the dividend for 1H 2017 and the dividend recommended by the Board of Directors for approval at the General Shareholders Meeting in June 2018. 63.4 75% 124.5
Proved Reserves of Liquid Hydrocarbons, mmb
Proved Reserves of Marketable Gas, bcm
Hydrocarbon Reserve Replacement Ratio, SECHydrocarbon reserve replacement ratio is calculated in metric units.
LH Production, mmt
Gas Production, bcm
Upstream OPEX,Unit opex per boe, excluding expenses on the acquired Bashneft assets, amounted to RUB 177 per boe (USD 3.0 per boe) in 2017 and RUB 163 per boe (USD 2.5 per boe) in 2016. RUB per boe

The Company’s liquid hydrocarbons production increased by 7.3% year-on-year in 2017. The growth was mainly due to the Bashneft assets acquired in Q4 2016, enhancing recovery at mature fields, active development of new projects, and Rosneft raising its stake in Petromonagas JV, Venezuela, in May 2016. Key drivers of organic oil and liquid hydrocarbons production growth were accelerated production growth at RN-Yuganskneftegaz driven by ramped-up production drilling using advanced well survey and completion technologies, development of new major projects – the Suzunskoye, Yurubcheno-Tokhomskoye, and East Messoyakha fields, as well as enhanced production at a number of mature fields.

The Company is in full compliance with the overall oil output cuts agreed earlier by OPEC and non-OPEC major oil producers.

In 2017, gas production amounted to 68.41 bcm, up 2.0% year-on-year. The growth was driven by the Bashneft assets acquired in Q4 2016, new well start-ups by Varyoganneftegaz in 2017, and higher gas deliveries through the Tyumen compressor station following its renovation, as well as new well start-ups and optimization of the existing well operations at Sibneftegaz.

Organic growth of expenses was mainly due to increased costs of electricity, infrastructure facilities, and oilfield equipment maintenance services, with relevant increase in materials and transportation service costs.

OPEX of Russian Refineries per Tonne of Refined Oil, RUB per tonne
EBITDA and Net Profit, RUB bln
EBITDA and Net Profit, USD bln

In 2017, unit OPEX per tonne of refined oil at the Company’s Russian refineries was up 26.2% year-on-year due to growing tariffs of natural monopolies and salary indexation, as well as the acquisition of Bashneft’s assets, which were characterized by more complex technological refining processes such as the production of oils and aromatic hydrocarbons, therefore generating higher unit costs.

EBITDA increased 9.8% in RUB terms for full year 2017 to RUB 1,403 bln (USD 24.0 bln, up 24.4%). The considerable improvement in full-year EBITDA was achieved through the successful realization of synergies from new asset integration and involvement in international projects, as well as close control of current operating costs.

The growth in net profit was partly due to the recognition of an income of RUB 100 bln following the out-of-court settlement with Sistema. Under the out-of-court agreement reached by the parties to the dispute in late 2017, the defendants (PJSFC Sistema and JSC Sistema-Invest) undertook to indemnify Bashneft for RUB 100 bln of losses. The net impact on net profit for 2017 was RUB 80 bln, including RUB 48 bln attributable to the Company’s shareholders.

Refining Throughput, mmt
Dividend per Share, RUB per share
Revenue, RUB bln

Refinery utilization within Russia has been optimized to meet the current demand. During 2017, the Company’s oil refining volumes increased 12.5% year-on-year due mostly to the Bashneft assets acquired in Q4 2016. The Ufa group of refineries started supplies of high-octane components to Rosneft’s refineries as part of the ongoing process to integrate Bashneft’s refining assets into the Company’s unified plant production chain.

On 25 April 2018, the Board of Directors recommended for payment of the final dividend of 6.65 RUB per share for 2017. After being approved at the Annual Shareholders’ Meeting and including semi-year dividends of 2017 the final dividend amounts to 10.48 RUB per share which constitutes 50% of the net income under IFRS.

The increase in sales volumes in 2017 was driven by expansions in trade operations, positive changes in the market price trend (oil price growth in rubles by 9.9%), and integration of new assets.