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.
For the third 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 has updated its preliminary financial calendar for the next fiscal year, with production reports continuing to be published four weeks following the cessation of the quarter and financial results then presented nine weeks thereafter. Similarly, the Group expects to promulgate consolidated financial statements on 6 April 2021 and hold an Annual General Meeting in some capacity three days later on 9 April, although it is yet to be announced whether it will take place at a venue or virtually. Rusneftegaz additionally anticipates a prognosticated shutdown in administrative operations over the Christmas period from 24 December 2021 until 11 January 2022, albeit due to the ongoing pandemic all information published is subject to change at the discretion of the management. All the dates can be viewed in full on Rusneftegaz's website and we invite questions from any interested parties to contact us at their earliest convenience.
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.