Rusneftegaz has resumed full working operations following the end of the annual shutdown, with the Group and its affiliates striving to respond to all communications within one working day. We appreciate your understanding and cooperation throughout this time.
Earlier this month, Rusneftegaz celebrated the achievements of our staff throughout the last year by bestowing awards upon worthy winners. In lieu of the annual ceremony that is normally held every year at the beginning of December, prizes were distributed by their contemporaries instead of executives, all whilst adhering to the appropriate coronavirus mitigation procedures. All of the 2020 winners were nominated by their managers in recognition of their hard work and or outstanding contribution to company development, with Georgy Alekseyev and Martin Kozlov being named as employee and young employee of the year respectively. As a result of the ongoing pandemic, senior officials also elected to present an additional seventeen members of staff with special commendations for their exceptional work to keep Rusneftegaz functioning over the past twelve months. The Group will continue to endeavor to acknowledge the efforts of our workers, and is grateful to all of them for another year of success. We wish all of them a Merry Christmas and a Happy New Year.
The Group will be unable to respond to any nonessential communications, including electronic and telephone messages, between 24 December 2020 and 11 January 2021 due to an administrative shutdown during the Christmas period. It is imperative that messages be sent earlier to guarantee a response, although all communications received during the period will be monitored and replied to if necessary. We necessitate your cooperation and understanding with this matter.
Rusneftegaz can publish results for the third quarter of the year as of and for the three and nine months ended 30 September. 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.
Rusneftegaz earned a pre-tax profit during the quarter totaling $36.6m, in spite of continuing, significant difficulties in the current trading environment as a result of the ongoing coronavirus pandemic. This figure is derived from revenues of $123.5m earned throughout the last three months, an uplift of 32.4% from the second quarter where management reported turnover of $92.7m and a loss of $32.7m. Year-on-year quarterly financial performance is, however, notably down on 2019, from which revenues and pre-tax profits have receded by 12.1% from $140.4m and by 39.2% from $60.3m in the third quarter of 2019 respectively. The improvement in these results can be largely attributed to a decline in exceptional costs associated with the pandemic, but also the stabilization in commodity prices during the last quarter. Whilst these value are lower than projected at the beginning of the year, still ensue that Rusneftegaz’s oil production sites can remain economically viable if these figures do not abate any further. As such, the Board of Directors elected to change strategy during the first two weeks of September, when it appeared that the oil price was contracting upon speculation of additional measures to contain coronavirus globally. As a result, extraction volumes were limited throughout the third quarter, with average daily production falling from 18 039 bpd in the second quarter to 15 837 in the third. Nonetheless, the Group’s energy generation program continues to be lucrative area of operations, where there were increases in electricity production over the course of the last three months from 1.70 TWh to 1.97 TWh, although the total is markedly lower than the 2.06 TWh generated during the same quarter last year. Accordingly, the unexpectedly substandard financial performance in the current financial year as consequence of the corornavirus pandemic has led to the Board of Directors outlining plans to expand and maintain Rusneftegaz’s cash flows in the near future. As per previous announcements, all administrative staff are to be offered the opportunity to reduce their working hours and the Group has curtail all existing investment plans for the next two years. Notwithstanding, the Board still is increasingly ambitious in regards to future capital spending, and it is notable that economic results in 2020 would have been incontrovertibly lower if it were not for the investments made since 2015. Resultantly, the Board perceives the outlook for the remainder of the year as neutral, with a nominal annual profit forecasted if there are no significant changes in the current circumstances, including both commodity prices and demand.
The financial details in this article are current at the date of this report, and believed by Rusneftegaz 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.
As a direct consequence of the ongoing pandemic, Rusneftegaz is to offer all administrative personnel the opportunity to reduce their working hours in 2021, with the Board of Directors viewing this as a reasonable compromise to preserve all existing jobs. The new arrangement should also continue to maintain company efficiency whilst increasing the productivity of those employees that are currently working from their homes. It should also be noted that Rusneftegaz intends to hire any new administrative personnel during this period on these newly updated contractual terms. Any operational and production personnel employed on temporary or permanent contract are unaffected by this resolution, although may notice the decreasing number of external contractors working on site over the next few months. Management are to consult all relevant parties, including staff, in regards to this decision immediately and necessitate the cooperation and understanding of those involved.