On 1 February 2013 Rosneft published its full audited consolidated IFRS financial statements for Q4 2012 and FY 2012.

Key operating and financial highlights

Rosneft posted excellent operating and financial results in 2012. Hydrocarbon production (including production by subsidiaries and share in production by affiliated companies) increased 4.5% to 2,702 th. boepd, reaching a record of 2,823 th. boepd in Q4 2012.

Daily crude oil production increased by 2.5% in 2012 to 2,439 th. bpd, thanks to higher output at Vankor and Verkhnechonsk fields in Eastern Siberia as well as Samaraneftegaz. Gas production totalled 16.39 bcm (263 th. boepd), a 28.1% growth year-on-year. The increase is primarily thanks to the establishment of a JV with Itera.

Throughput at Rosneft’s Russian and international refineries was 61.6 mln tonnes in 2012. This 6.4% increase in throughput compared to 2011 reflects the acquisition of a 50% share in Ruhr Oel GmbH in May 2011 and the Company’s refinery modernisation programme.

Revenues for 2012 (including equity share in profits of associates and joint ventures) increased 13.2% to RUB 3,078 bln on the back of increased sales volumes and higher prices. The 2.3% quarter-on-quarter revenue drop to RUB 790 bln was due to deterioration in the global oil and petroleum product markets and lower petroleum product sales in Q4 2012.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) for 2012 fell 8.0% to RUB 609 bln. This indicator was negatively impacted as the Company began to pay standard rate MET and export duties for oil produced at the Vankor field in H1 2011 and also by the higher base MET rate and transport tariffs introduced throughout 2012. The Company’s exploration expenses also increased in 2012 as seismic and geological exploration work was stepped up, including offshore in the Arctic. 
The negative impact of external factors was partly compensated by the Company’s efforts to cut lifting costs and boost sales efficiency on the domestic and international markets.

Q4 EBITDA decreased 27.3% quarter-on-quarter to RUB 144 bln. The decline is primarily attributable to lower oil and petroleum products prices and the negative export duty time lag. EBITDA was also negatively impacted by the increase in spending on audit and consulting services, including services related to TNK-BP acquisition.

Rosneft’s 2012 net income grew 7.2% to reach a record RUB 342 bln. The figure includes the Q3 2012 gain recognition of RUB 65 bln from the acquisition of 51% in Itera. Net income slipped quarter-to-quarter by 50.9% (excluding the Itera gain recognition) as a result of impairment of unproved reserves and foreign exchange gain decrease quarter-on-quarter.

Free cash flow for 2012 was RUB 45 bln, which was 54.5% lower than 2011 due to increased investment in refining. Taking into account record dividend payments, share buyback and loans raised to finance M&A deals, net debt rose from RUB 432 bln to RUB 581 bln in 2012.

Commenting on the results for 2012, Rosneft President Igor Sechin said:

“Over the last year Rosneft has achieved significant strategic successes while also boosting operational efficiency. The acquisition of TNK-BP makes Rosneft the undisputed global oil production leader. In 2012 the Company became a leading player on the gas market by setting up a joint venture with Itera and through long-term supply contracts. We also pushed ahead with our strategy of securing long-term contracts with oil off-takers.

Our efforts have made projects offshore on the Russian shelf a reality underpinned by investments by Rosneft and its strategic partners. We have worked hard to expand the Company's resource base. I am delighted to announce that the Government has issued directive No103-r granting Rosneft 12 offshore licences. Auditors DeGolyer & MacNaughton are currently evaluating the resources covered by these licences to international standards.

We plan to maintain this pace moving forward with our strategy to further grow shareholder value reflecting the Company’s true potential."

Rosneft Information Division
Tel.: +7 (495) 411 54 20
Fax: +7 (495) 411 54 21
www.rosneft.com 
February 1, 2013

These materials contain statements about future events and expectations that are forward-looking in nature. Any statement in these materials that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements expressed or implied by such forward-looking statements to differ. We assume no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.