You’d hardly know there was a war going on..Russian oil producer Rosneft’s first quarter results read like almost any other oil major’s with top shelf earnings, dividend hikes, production increases and even statements of environmental performance..With the big difference that it’s under embargo for Vladimir Putin’s invasion of Ukraine in February of last year.. Rosneft pipelinesRosneft’s European pipeline network. .According to the company’s financial statements net earnings were up 46% to 323 billion rubles — roughly $4 billion US dollars — while gross profits rose 35.9%. In addition, the company paid out 219 billion rubles in dividends for the quarter on the strength of a 1.1% production increase — despite the fact it promised its OPEC+ cohorts a 500,000 barrel per day cut. .Russia is alternately the world’s second or third largest oil producer after the US and Saudi Arabia. During the quarter, Rosneft produced an impressive 5.6 million barrels of oil equivalent per day, which makes it the second-largest oil company by output after Saudi Aramco. . RosneftRosneft’s Moscow headquarters. .In all it was an impressive performance for a company struggling under the weight of imposed price caps and import bans in its largest EU markets. There was also no mention of reduced gas volumes from the attack on the Nord Stream pipeline last fall..”Despite the deteriorating external environment, Rosneft was able to achieve production growth of both liquid hydrocarbons and gas,” CEO Igor Sechin said in a statement..Despite sanctions, revenues were only down 1.1% to 1.8 trillion — that’s with a ‘T’ — rubles equivalent to about $22.2 billion from the prior quarter..In its MD&A statement — prepared in accordance with International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) — the company said it continues to optimize its debt structure and completed a record placement of Chinese yuan-denominated bonds in the quarter after it was shut out of the SWIFT international banking system..In dollar terms, net debt to earnings at the end of the quarter in US dollar terms was a relatively healthy 1.3X, roughly the same as last year. Operating costs came in at $3US per barrel of oil equivalent, a number that would make any C-Suite oil exec in Calgary envious..“Significant amount of liquid financial assets on the books as well as available credit lines also support the high level of financial stability of the company,” it said. .Rosneft also touted its ESG accomplishments: in the first quarter it didn’t register a single lost time accident at any of its facilities and — in contrast to the Red Army — is targeting zero fatalities by 2030..Its environmental performance is even more notable, if it can be believed..Rosneft said it implemented a number of “socially important initiatives” aimed at minimizing its environmental footprint and preserving biodiversity at company production sites. .Its Angarsk Petrochemical subsidiary increased its air monitoring efficiency by 35% due to the use of new methods. The company said it applied a cutting-edge process system for reservoir pressure maintenance at the Samotlor oil field as part of a corporate effort to improve water management, and discontinuing withdrawals from surface water sources. .Rosneft subsidiary Samaraneftegaz completely stopped water withdrawal for reservoir pressure maintenance as well as water disposal into water bodies. The share of recycling and reused water in company's operations exceeded 90% in the past nine years, it added..In its forward looking statements, the company cautioned that future headwinds are on the way due to the policies of “unfriendly countries.”.The company faced the following challenges in the reporting period: amendments to the Tax Code enacted in January, an embargo on petroleum products from a number of unfriendly countries coming into force in February in addition to the oil embargo, and Russia introducing crude oil production cut in March. While the cut did not have much influence on the Q1 2023 results, it will have a strong impact on the results of the following quarter.”
