Rusneftegaz can publish results for the fourth quarter of the year as of and for the three and twelve months ended 31 December. 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.
The quarterly profit for the fourth quarter was considerably impacted by a revaluation of oil and gas assets in congruence with lower commodity prices caused by the continuing coronavirus pandemic. Thus, Rusneftegaz can announce a pre-tax profit of $0.3m for the period, the lowest such figure reported since late 2014, and a reduction of 99.4% from the same quarter in 2019 when a $56.2m profit was reported, and 97.9% down on the $15.5m earned three months prior to the fourth quarter. There was similarly a considerable 29.0% fall in revenue year-on-year from $139.7m to $99.2m, or by 11.7% when compared to the $112.4m when compared to the third quarter. Such results are partially attributable to declines in oil production by 5.0% quarter-on-quarter from 1.46m barrels to 1.38m barrels and 4.8% when compared to the same quarter the year before when 1.45m barrels were extracted. Quite contrarily, electricity generation throughout the period rose 62.4% from 1.94 TWh to 3.15 TWh, but this was still 18.0% lower than the last quarter of 2019. Both such financial and production results are significantly below forecasts for both the period and the year, and Rusneftegaz is to undertake various measures to ensure to financial integrity of the Group as a result. Firstly, in November 2020 all office-based personnel were offered a reduction in their working hours to ensure the retention of staff in the future, and management has satisfied with uptake of this proposal. Consequently, this should yield a reduction in one of the Group’s largest costs in 2021, and in accordance with a $25.0m loan facility withdrawn in December should result in no job losses in the near term. Such borrowings were underwritten by management solely on a contingency basis and should not be considered a reflection of Rusneftegaz’s financial performance in the fourth quarter, as these loaned funds are to be isolated in their own, independent bank account and are only to be used if there are insufficient funds to otherwise make wage and payroll payments. Similarly, the Board of Directors also announced in the fourth quarter its intention to notably reduce investment under a revised spending plan, both in 2021 and beyond, in a measure to reduce capital expenditure and retain cash for the foreseeable future. However, in spite of this management considered the fact that the Group would have reported a major loss in the fourth quarter if it were not for the investments made in efficient infrastructure since 2015, and will endeavor to maintain a compromise between high-quality infrastructure and fiscal conservation. Overall, the outlook for Rusneftegaz’s financial results in coming periods is neutral, with the profit published for the fourth quarter being unique due to the unprecedented scale of the impairment charge recorded. The Group remains in a strong position with substantial cash reserves at the end of the 2020 and having previously overhauled much of Rusneftegaz’s production and generation infrastructure. However, a nominal annual profit is projected for 2021 if there is no reduction in commodity prices or demand, with management factoring in a potential sizable decline in electricity demand. In 2019, the electricity generation sector produced 3.8 TWh of energy in the fourth quarter compared to 3.2 TWh in 2020, with further fall forecasted in the coming year.
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.