Rusneftegaz can publish results for the second quarter of the year as of and for the three and six months ended 30 June. These statements were prepared in accordance with International Financial Reporting Standards, otherwise known as IFRS, and have not been audited. The full results are disclosed in the financial section of the Group's website.
Over the course of the last three months and the first half of 2020, Rusneftegaz has faced unprecedented challenges as a result of the ongoing coronavirus pandemic. Such exceptional circumstances have yielded a quarterly loss of $32.7m for the period from the beginning of April through to the end of June, an increase of 9.7% from the loss of $29.8m recorded in the first quarter. This is largely a consequence of a multitude of factors, with the Group amassing significant costs arising from mitigating the probability of viral infection. Moreover, a notable fall in demand for electricity, in conjunction with a growth in sui generis expenses, led to profits in company’s power sector falling to a mere $2.4m. Similarly, the current global conditions catalyzed an unparalleled collapse in global petroleum demand, causing commodity prices to fall to record lows, including certain futures prices to briefly turn negative. Whilst Urals oil prices, which are crucial to the Group’s profitability, have since partially recovered, Rusneftegaz’s quarterly revenues totalled $92.0m, a decline of 23.7% from the first period of the year. In spite of this, petroleum extraction levels during the second quarter attained the highest rate since 2017 due to a pre-planned surge in production over the last three months that was unrelated to the pandemic. Whilst the Board of Directors is dissatisfied with the financial losses incurred as a result, it has elected to continue to maintain current extraction levels when it became apparent that commodity prices were restabilising. Likewise, Rusneftegaz’s long-term investment strategy has been reviewed and altered accordingly by the Board of Directors upon consideration of the results reported for the first six months of 2020, with the likelihood of further alterations later if necessary. However, despite the poor financial report disclosed, management maintains a degree of optimism for second half of the year, with a significant improvement in results highly probable for the third quarter. The Board believes that it currently cannot provide a reliable projection for the fourth quarter due to the number of material uncertainties, but remains bullish nonetheless. However, Rusneftegaz maintains such significant resources that management believe that the Group is capable of bearing any further financial burdens arising in the near term, with this period demonstrating the strength, resilience and tenacity of entire organization.
The financial details in this article are current at the date of this report, and believed by the Group to be accurate and true. All information is disclosed as a summary and does not purport to be complete. The data that this commentary is dependent on is obtained from sources believed to be reliable, but the Group, nor any of the directors, officers, employees, agents, subsidiaries or affiliates, can wholly guarantee the accuracy or completeness of such information.
The Board of Directors has opted to cancel a proposed Extraordinary General Meeting later this year after consultations held with stakeholders. The planned summit, which had originally been discussed at the virtual Annual General Meeting held in May, was to offer invited delegates an occasion to meet in-person after the original event was postponed in April. However, after extensive deliberations it is now believed that the continued restrictions on international travel yield significant logistical and operational challenges to coordinating such a conference. However, it has been mutually agreed that an Extraordinary General Meeting should be held at the first opportunity if the proposed 2021 Annual General Meeting has to take place via video conference.
For the second quarter, the company can declare operational data in the following divisions:
Oil and Gas:
All production data is unaudited and derived from internal operations reports.
Rusneftegaz can announce that our office in New York shall partially reopen to a skeleton staff on the 22 June, although the vast majority of employees shall continue to work remotely. All returning personnel will be required to adhere to distancing measures and receive comprehensive training in regards to the new procedures. Those who are functioning from their workstations shall be issued with an adequate provision of face masks, hand sanitizer and any other protective equipment as required by state law, with all staff working on a rotating schedule primarily focusing on maintaining communications by mail and by telephone. Any visitors wishing to speak personally with a member of staff being required to make an appointment in advance, either via telephone or email, and to also wear a face covering whilst on site. Management is welcome to any queries regarding this reopening plan, and also wishes to inform all employees and visitors that it is maintaining the highest standards of safety and hygiene, with routine cleaning conducted daily by dedicated cleaning staff.
Rusneftegaz can announce that from Monday 15 June all of our offices in Russia shall fully reopen, including our headquarters in Moscow, with our international office in New York reopening at a later date. As a result, the majority of administrative capacity will have been fully restored, and there will no longer be any delays to telephone or electronic enquiries or communications. Whilst certain staff shall continue to work remotely, Management has made further alterations to the layout of said workplaces in order to accommodate distancing measures and maintain the highest standards of hygiene. All employees arriving for work on Monday shall receive a comprehensive briefing in regards to the new guidelines, including the regular use of sanitizer, how to clean workstations effectively, the deployment of personal protection equipment and how to prevent contagion. All employees should also be reassured that offices will continue to be deep cleaned regularly by external contractors, and any workers with queries should contact their manager at their earliest convenience.