The world's largest public oil company, Rosneft, announced on May 1 its desire to conduct a buy-back of shares worth $ 2 billion. Based on the current capitalization of $ 64.4 billion, the repurchase program could affect 3.1% of the company's share capital.
Rosneft states that the buyout program will be implemented in the medium term (starting from the second quarter of 2018), and it is intended to finance it "due to organic free cash flow and the sale of non-core assets." With what specific assets Rosneft intends to part, the message is not specified, and the company representative declined to comment on this. Additional parameters (for example, who will be able to present the securities for redemption: only minority shareholders or owners of large packages) the representative of Rosneft also did not disclose.
The Rosneft plan is an analogue of the Novatek program, BCS analyst Kirill Tachennikov said. The intention to buy back paper for $ 2 billion does not mean that the entire amount will be spent. Most likely, the company will buy back shares from the market if they fall and thus maintain capitalization, says Tachennikov.
In addition, the company promised to reduce the total debt and debt to counterparties by 500 billion rubles. ($ 7.9 billion at the exchange rate as of May 1). At the end of 2017, the company had to pay 5.6 trillion rubles for loans and loans. ($ 97.2 billion), taking into account the prepayment of contracts for Chinese companies. Short-term debt, which the company must pay during this year - 2.4 trillion rubles.
As of the end of last year, Rosneft had only 322 billion rubles on its accounts, which was $ 5.59 billion at the January 1 exchange rate. What exactly will the company repay - a debt under Chinese contracts or arrears to banks - and in what proportion, a representative of " Rosneft does not specify.
"Rosneft, obviously, was concerned about the growth of its capitalization, says Aton analyst Alexander Kornilov. In his opinion, the company will have enough money to fulfill its obligations: Rosneft is planning to cut capital costs, in addition, it is considering selling non-core assets, as well as reducing its stake in a number of key businesses, for example, in retail and drilling. "For many years investors wanted to hear from Rosneft about reducing the appetite for purchases and acquisitions and capex, and, at last, they heard it," Kornilov said.
To sell Rosneft is that: in addition to shares in the drilling and retail business, the company can part with a 49% stake in the Rospan gas project and the Suzun oil field, Vedomosti sources said at the beginning of the year.