On March 19, Rosneft published its IFRS report for 2017. The state company's revenue increased by 20% and for the first time exceeded 6 trillion rubles. EBITDA also updated the record - 1.4 trillion rubles. (+ 9.8%). The growth of the indicators resulted in the integration of new assets (the company completed the purchase of a stake in the Indian plant Essar Oil, as well as the Egyptian gas project Zohr), in addition, the price dynamics in the oil market positively affected, the company said. The average price of Brent crude in 2017 increased by 24% to $ 54.12 per barrel.
But the debt load of the state-owned company also became record high - it increased to 2.2 EBITDA, and net debt reached 3.1 trillion rubles. (without taking into account the prepayment of contracts for the supply of oil to China). Most of this amount - 2.2 trillion rubles. - Rosneft should return the creditors within this year, follows from the company's accounts. And this is also another record.
More than half of this debt (1.4 trillion rubles) relates to repo transactions, noted on February 8, 2018, the rating agency Moody's. This debt, in fact, is a funding from the CBRF and regularly refinanced, the report said. Thus, to repay or refinance in 2018, Rosneft needs only 800 billion rubles. This is almost 4 times more than the free cash flow received by the company last year - 245 billion rubles., Follows from the presentation of the state company.
The gradual increase in debt over the past year corresponds to the parameters laid down in Rosneft's business plan, and is primarily related to a number of strategic transactions to acquire new assets in international markets, the Rosneft representative says: "At the same time, the net debt / EBITDA ratio at the end of 2017 is at a comfortable level, and the overall level of debt load corresponds to the objectives of the company. " Successful work is being done to optimize and increase the maturity of debts, he added.
Rosneft is actively involved in the public market. In 2017, the company issued bonds for 1.1 trillion rubles. At the end of last year, Rosneft approved a program for the issuance of bonds for 1.3 trillion rubles. Now more than 50% of the company's debt portfolio is denominated in rubles, said Sergey Suverov, head of the analytical department of the UK Sberezhenie BC. The rate on short-term bonds is now lower, it's more profitable to occupy Rosneft on the public market, the expert says. After all, rates are constantly declining, so fixing them for a long time is unprofitable, Suverov points out.
Opportunities of Rosneft to raise borrowed funds abroad are limited due to sanctions. The main creditors of the company are Russian banks, reminds analyst of Raiffeisenbank Denis Poryvay. "Refinancing the ruble part of the debt, even in such a large amount, Rosneft is likely to be able to without problems. A big and important company, they will not even be overstated by the rate. In addition, in Russia now even long money is cheap enough, "says Poryvay. Part of the funds the company can attract by issuing new bonds, although, of course, not at all the necessary amount, the analyst clarifies.
To refinance and repay the debts of Rosneft, there will be enough free cash flow, the Aton analyst Alexander Kornilov is sure. He believes that in the event of the cancellation of the OPEC + deal, by which Russia cut production by 300,000 barrels per day, new Rosneft investment projects will already reach the shelf of production and will be able to generate additional profit and free cash flow. He believes that by the end of this year Rosneft's financial results will be better than last year, because the price of oil remains stable, supplies to China are reduced by prepayment at the old ruble exchange rate, and thirdly, the company received a MET tax exemption for the Samotlor field - 35 billion rubles. a year for the next 10 years. This will greatly change the company's economy, Kornilov sums up.