April 30, 2014 Rosneft publishes consolidated IFRS financial statements for Q1 2014.

¹ Net of prepayment under long-term oil supply contracts
² Net of retrospective revaluation of acquired TNK-BP assets and liabilities

In Q1 2014, crude oil and liquids production (including production of subsidiaries and proportionately consolidated entities, and the share in production by affiliates) reached 4,189 th. bpd (0.5% growth year-on-year), gas production reached a record-high level of 13.18 bcm (i.e. more than doubled).

In Q1 2014 the Company was preparing to put on stream new fields in producing regions which will allow maintaining production while minimizing costs. The Osoveyskoye field in Timano-Pechora (with 36 mln t of geological C1+ C2 reserves) is being prepared to be commissioned this year as is the North Chaivo field offshore the Sakhalin Island. On greenfields side, active development of the first priority area of the Yurubcheno-Tokhomskoye field in Krasnoyarsk Territory with an annual production potential of over 100 th. bpd one of the most notable tasks.

Uvat project has gained additional momentum with the discovery of a new field Tavricheskoe within Bolsheparfenovskaya zone. Reserve estimation and entering of the reserves on the State balance sheet are planned for 2014.

In the reporting period the Company continued stabilizing production in brownfields, first and foremost, by efficiently managing waterflooding and drilling wells with multi-stage hydraulic fracturing. OJSC Varyoganneftegaz and the Samotlor field showed the most prominent successes in slowing down natural production decline. The Company reduced annual slowdown rates of the named assets by 2.5 times in Q1 2014 versus the same period in last year.

In Q1 2014 Rosneft produced a record-high 13.18 bcm of gas more than doubling its gas production versus Q1 2013. The Company continues its programs to increase associated petroleum gas utilization and intends to reach 95% of APG utilization at Vankor by the end of 2014. Under its assets optimization program, the Company closed a deal to sell a 49% stake in LLC Yugragazpererabotka to SIBUR in March 2014 and signed long-term associated petroleum gas supply and dry gas purchase contracts with SIBUR. These contracts, among others, will help maintain APG utilization in the Company’s assets in the Khanty-Mansi Autonomous Area in the long term (through 2032).

In Q1 2014, Rosneft processed 24.87 mln t of crude at Russian and foreign refineries. Euro 5 and Euro 4 fuels now account for circa 57% of the Company’s motor fuel output. Fuel oil supplies to premium destinations were increased, an additional premium was obtained by fuel oil marketing from the Samara refineries (with a financial effect of RUB 0.6 bn); premium jet fuel sales grew to 69%.

The Company carried on with successful implementation of Russian refineries large-scale upgrade program in 1Q 2014. Сonstruction of 4 units at the Ryazan, Novokuybyshevsk and Kuybyshev refineries is scheduled to be completed this year.

Rosneft revenues (including equity share in profits of associates and joint ventures) reached RUB 1,375 bn exceeding Q1 2013 level by 69.3%. The revenues growth is mostly due to ramp up in crude oil and oil products sales and sales channels optimization which in total compensated for the negative effects of oil and oil products market prices fall.

Earnings before interest, taxes, depreciation and amortization (EBITDA) more than doubled and reached RUB 289 bn driven by the growing sales volumes and by the Company’s actions to manage operational and administrative expenses.

Rosneft net income reached RUB 88 bn in Q1 2014, mostly due to the negative effect of non-cash forex losses in the amount of RUB 84bn. The forex losses were primarily generated by revaluating foreign currency loans and borrowings and were partially compensated for by revaluating the forex position in cash, financial assets and accounts receivable.

The Company’s free cash flow more than tripled to reach RUB 121 bn.

In Q1 2014 Rosneft early repaid some of its loans it raised to buy TNK-BP assets to a total amount of RUB 193 bn which was one of the drivers of the Company’s net debt decrease. The Company also bought back the shares of RN-Holding in amount of RUB 149 bn.

Commenting on Q1 2014 performance, Igor Sechin, President, Rosneft said:

“This year our focus remains on implementing strategic priorities.

Particularly, we continue to focus on the acceleration of our efficiency improvement program that targets cost reduction and improvement to our contractor management. Under this initiative, we revised our drilling business strategy to develop our in-house services and using them to replace contractors who fail to meet Company standards of efficiency increase.

The Company continued debt reduction against a backdrop of substantial increase in cash-flow generation.

We continue to develop our gas business by ramping up activities at Kharampur gas deposits with an annual production potential of 24 bcm. Key infrastructure facilities are being built in Rospan.

Preparation for drilling the first well in the Kara Sea is unquestionably one of our key projects. Monetization of Russia’s enormous resource potential in the offshore Arctic is the key priority for the Company.”

Rosneft Information Policy Division
phone: +7 (495) 411 54 20
fax: +7 (495) 411-54-21
April 30, 2014

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