• 9M 2022 HYDROCARBON PRODUCTION INCREASED BY 2.2% YOY TO 4.97 MLN BOE PER DAY
• 9M 2022 CRUDE OIL SALES IN NON-CIS COUNTRIES INCREASED BY 4.8% YOY TO 77.3 MLN TONNES
• 9M 2022 EBITDA INCREASED BY 22% TO A RECORD NINE-MONTH HIGHOF RUB 2,014 BLN
• FINANCIAL DEBT AND PREPAYMENTS DECREASED BY 17% COMPARED TO THE BEGINNING OF THE YEAR

Rosneft Oil Company releases 9M 2022 results prepared in accordance with International Financial Reporting Standards (IFRS).

^* Calculations based on average monthly Central Bank of Russia exchange rates.

Commenting on the Company’s 9M 2022 results, Rosneft’s Chairman of the Management Board and Chief Executive Officer Igor Sechin said:

"In 3Q 2022, Rosneft continued to be negatively affected by external factors and illegal restrictions, including the transfer of the Company’s German assets to external management of the German Federal Network Agency in September.

However, thanks to the successful management efforts aimed at maintaining business efficiency, the Company made a number of notable improvements in its operating and financial performance in the reporting period.

As a result, in the first nine months of 2022 the Company increased hydrocarbon production and successfully optimized distribution channels: oil supplies to Asia grew by about a third and fully compensated for the decline in supplies to European buyers. Rosneft’s EBITDA reached a record nine-month high, exceeding RUB 2 trln, while debt and trade obligations decreased by 17% as compared to the beginning of the year.

Strong financial results supported higher capital expenditures. Projects implemented by the Company, including the flagship Vostok Oil project, will facilitate meeting the growing global energy demand. I would like to note that in September 2022, despite the lack of funding from our partner, we launched the major Kharampurneftegaz gas project right on time, which allowed for the increase in the Company's production by 11 bln cubic meters per year.

Concern for the shareholders’ interests is traditionally one of the key priorities for the Company. On November 11, Rosneft’s Board of Directors recommended that the General Shareholder Meeting should resolve to pay interim dividends in the amount of RUB 20.39 per share.¹"

Operating results

Exploration and production

9M 2022 hydrocarbon production reached 4.97 mln boe per day, up by 2.2% YoY². At the same time, 3Q 2022 average daily hydrocarbon production increased to 5.22 mln boe, which is the highest result for the last 10 quarters².

9M 2022 liquids production amounted to 3.81 mln bbl per day, remaining at the level of 9M 2021². During 9M 2022, the Company's share in total production of liquid hydrocarbons at major new projects launched since 2016 amounted to 546 th. bbl per day, which is 7.5% higher YoY. The share of these projects in the total production of liquid hydrocarbons reached 14.3%.

9M 2022 gas production reached 1.16 mln boe per day, up by 10.6% YoY². The growth was mainly due to an increase in natural gas production at the Rospan project, as well as the launch of the Senoman Kharampurneftegaz project in September 2022. In the reporting period, the share of gas in hydrocarbon production was 23%.

Vostok Oil project

The flagship Vostok Oil project has been executed on schedule. In 9M 2022, the Company completed 2.2 th. line km of 2D seismic surveys and 2.0 th. sq. km of 3D seismic surveys, drilled 5 exploration wells and completed construction of 2 wells, with 7 wells being tested. The results of exploratory wells testing at the Zapadno-Irkinsky area and the Payakhskoye field, in combination with the conducted seismic surveys, make it possible to increase the project resource base from 6.2 to 6.5 bln tonnes.

As part of the pilot work program, development drilling at the Payakhsky cluster, as well as construction and development of an oil loading terminal in the Sever Bay port, the main oil transportation system and expansion of the port infrastructure are underway.

In 3Q 2022, the Company completed the construction of the Suzun-Vankor interfield gas pipeline with a gas pumping capacity of 2.2 bln cubic meters per year and embarked upon a comprehensive testing of gas transportation system facilities. The implementation of the gas program at the Suzunskoye field is an important step towards reducing the carbon footprint of the Vostok Oil project.

Refining and marketing

In 9M 2022, the Company processed 71.0 mln tonnes of oil. 3Q 2022 refining volume grew to 25.2 mln tonnes, including 23.3 mln tonnes processed in Russia. At the end of 9M 2022, oil refining depth at Russian refining assets increased to 76.4%, while light oil product yield was up to 57.2%.

9M 2022 oil sales volume increased by 3.3% YoY to 86.9 mln tonnes. At the same time, thanks to the successful optimization of distribution channels, 77.3 mln tonnes were sold in non-CIS countries, up by 4.8% YoY. Oil deliveries to Asian buyers over the reporting period grew by about a third to 52.4 mln tonnes. In 3Q 2022, the share of Asian deliveries in the non-CIS oil sales  reached a record-high 77%.

In 9M 2022, domestic petroleum product sales amounted to 31.1 mln tonnes, a 6.5% increase YoY.

Financial results

The operating indicators dynamics as well as the prevailing price environment allowed the Company to increase its revenue³ by 15.7% to RUB 7,202 bln. At the same time, EBITDA increased by 21.8% YoY and reached a record nine-month high  of RUB 2,014 bln. EBITDA margin also rose to an all-time high of 28.0%.

9M 2022 net income attributable to shareholders amounted to RUB 591 bln. The net income dynamics was largely due to the influence of non-monetary factors. In 3Q 2022, the most significant negative impact on income came from the transfer of the Company’s assets in Germany to external management of the Federal Network Agency, which resulted in the recognition of an additional loss of RUB 56 bln. The transfer of assets also resulted in a RUB 76 bln reduction in cash. The total amount of the Company's investments in these assets exceeded $5 bln, which corresponds to the sum of historical cost and investments in their expansion and development. The Сompany traditionally takes a conservative approach to asset valuation, and made provisions for the most part of the German assets value in the previous periods.

9M 2022 capital expenditures amounted to RUB 822 bln, up by 19.3% YoY. The increase was mainly due to the planned growth in investments in the Vostok Oil project.

The implementation of measures aimed at maintaining financial stability allowed for the reduction of the Company’s prepayments and financial debt by 17% compared to the beginning of 2022. As of the end of the reporting period, the Net financial debt/EBITDA ratio amounted 1.1x compared to 1.3x at the beginning of the year.

ESG

The Company continues to implement measures to achieve sustainable development goals within the framework of the Rosneft 2030: Reliable Energy and Global Energy Transition strategy.

Rosneft consistently develops a system for managing the integrity of production facilities and equipment in order to achieve zero accidents by 2030 or earlier. During 9M 2022, the PSER-1 process safety event rate decreased by over 20% (compared to the 2021 baseline) due to effective containment loss risk management, as well as well-timed and prompt response to leaks, among other things.

The Company has developed the Program for the liquidation of the environmental “legacy”, aimed at achieving 100% of legacy remediation by 2035 or earlier. In 9M 2022, 107 hectares of the legacy polluted land were remediated.

¹ It is recommended to allocate at least 50% of 1H 2022 IFRS net profit for the payment of Rosneft’s interim dividends
² In a comparable perimeter (excluding assets disposed of in 2021)
³ Includes revenues and equity share in profits of associates and joint ventures

Information and Advertising Department
Rosneft
December 7, 2022

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.