The company’s net profit for the first nine months of 2010 was USD 989 million, about USD 10 million below the expected figure.

Open Joint Stock Company Bashneft that holds together a number of oil, gas, and energy assets in the Russian republic of Bashkortostan experienced a significant decline in net profits under international financial reporting standards. The company, which is controlled by AFK Sistema, suffered a 15.7-percent decrease in quarter 3 profits in relation to the results for quarter 2. As such, the revenue figure in quarter 3 was USD 317 million. Industry analysts were disappointed with such performance, as economic models earlier predicted that the company’s profit would be USD 328 million. Bashneft started releasing its financial data in compliance with international financial reporting standards in the first quarter of 2010. The company’s financial data was not published independently prior to 2010, as it was included in Sistema’s reports. 

The company’s net profit for the first nine months of 2010 was USD 989 million. Previous models put the figure at USD 999 million. The net profit attributable to the shareholders of the parent company increased 17.7 percent in the third quarter in relation to the figure for the second quarter. Thus, the figure went up to USD 278 million. The OIBDA figure declined by 2.3 percent on a quarter-on-quarter basis, leveling off at USD 680 million. Past forecasts projected the figure at USD 696 million.  

According to Bashneft, a number of emergency and one-time expenses are to blame for the sharp decline in the OIBDA and the net profit. Bashneft made provisions for a claim that was filed by Probusinessbank, paid higher interest, and absorbed considerable exchange-rate-variation losses at the level of net profits after payments were made to minority interest stockholders.      

On the positive side, the company’s sales revenues increased by 5.3 percent, reaching USD 3.506 billion in the third quarter. In the nine months of the year, revenues from sales totaled USD 9.746 billion. Earlier projections put the revenue figure for the first three quarters at USD 9.643 billion; quarter 3 revenue was estimated at USD 3.403 billion.   

The increase in revenues occurred against the backdrop of higher oil prices and intensified exports of petroleum products in the third quarter of the year. Domestic fuel sales networks also showed steady performance. 

Exports of crude oil increased by 5.3 percent on a quarter-on-quarter basis, reaching 790 000 tons. The value of cash receipts from these sales rose by 4.4 percent to 424 million. Bashneft’s volume of crude oil sold in Russia increased to

276 000 tons in the third quarter, compared to 223 000 tons in the second quarter. The revenue generated by domestic sales increased from USD 65 million to USD 44 million. 

The debt load that Bashneft carried at the end of the third quarter was comprised of USD 3.748 billion in short-term and long term debt. The amount of debt the company was carrying increased by USD 1.570 billion over the course of the quarter. At the same time, the net debt figure for Bashneft did not see dramatic changes. The figure rose from USD 1.619 billion at the end of the second quarter to USD 1.835 billion at the end of quarter 3. 

Rouble-denominated and non-convertible liabilities accounted for nearly half of Bashneft’s total debt. Bashneft used Gazprom bank financing during the third quarter for the company’s internal needs.

Capex increased by 69.3 percent from the figure of the second quarter, rising to USD 117 million. Capital expenditures in the nine months of the year rose by 46.5 percent on a year-on-year basis. Thus, the capex figure for the first nine months was USD 283 million. Investments earmarked for extraction rose to USD 147 million by a whole 29 percent. Investments in refining activities rose by 71.5 percent to USD 59 million.

Exports of petroleum products increased by 5.5 percent in the third quarter in relation to the results for quarter 2. Export totals were 2.345 million metric tons. Of the commodities exported, diesel fuel accounted for 57 percent, vacuum gasoil for 21 percent, and gasoline for 7 percent. The exports of vacuum gasoil were boosted in large measure by a hydro-fining upgrade at Ufaneftechim. The combined revenue from sales of petroleum products increased by 3.7 percent quarter-on-quarter, ending at USD 1.228 billion.

The sales of petroleum products in Russia decreased slightly from 2.84 million tons in the second quarter to 2.788 million tons. About 2.677 million tons of petroleum products were sold on the wholesale market. The revenue from wholesale customers increased by 1.1 percent to USD 1.203 billion. The increase in retail sales was 2.7 percent, and the retail receipts figure was USD 130 million.