Review of key results of Gazprom Neft for 2021 year

Обзор ключевых результатов «Газпром-нефти» за 2021 год

Review of key results of Gazprom Neft for 2021 year

Gazprom Neft (MCX: SIBN) — a large vertically integrated holding, carrying out reconnaissance, development and production of oil and gas in Russia, Iraq and Serbia. Company on 95,68% owned by Gazprom, that is, in free circulation is less than 5% issuer's shares.

17 February 2022 года компания опубликовала операционные и финансовые результаты за 2021 year, which was truly a breakthrough.. Key indicators updated all-time highs: годовая добыча углеводородов впервые превысила 100 million tonnes of oil equivalent, а чистая прибыль выросла более чем в четыре раза по отношению к уровню 2020 of the year, to record 503,45 billion rubles, amid high hydrocarbon prices.

Consider the general situation in the hydrocarbon market, evaluate the dynamics of the main operating and financial indicators of the company, and also try to calculate, what can be the final dividend payments to shareholders.

Disclaimer: if we write, that something has risen or fallen by X% or X times, then by default we mean a comparison with the report data for the same period last year, unless otherwise stated.

Market position

For the sale of oil, gas and oil products accounts for more than 96% of all Gazprom Neft's revenue, therefore, the company is very dependent on the general situation in the global hydrocarbon market.

IN 2021 году на нефтегазовом рынке быстро восстановились спрос и цены после тяжелого кризиса 2020 of the year, when the pandemic and restrictive measures led to a collapse in oil prices and forced the largest oil producers to impose restrictions on oil production under the OPEC + agreement.

Despite recovery in demand and prices, начиная со второй половины 2020 года ограничения на добычу все еще действуют, although gradually weakening. С августа прошлого года добыча нефти увеличивается ежемесячно на 400 тысяч баррелей в сутки на фоне благоприятной рыночной конъюнктуры. В марте лимиты на добычу снова увеличат еще на 400 thousand.

Recovery of the oil industry against the backdrop of the energy crisis, the easing of production restrictions and steadily growing demand allowed Gazprom Neft to increase production volumes and make good money on this thanks to a favorable price environment. 17 February 2022 года цены на нефть марки Brent с отгрузкой в конкретную дату впервые с сентября 2014 года поднялись выше 100 $ per barrel.

Operational results

Hydrocarbons. Based on the results of 2021 года с учетом доли в совместных предприятиях уровень добычи углеводородов вырос на 6% and reached a record 749,27 million boe. The company increased production at its own and joint fields in the KhMAO and YNAO regions, as well as in the Tomsk and Orenburg regions.

In June 2021 года «Газпром-нефть» совместно с «Лукойлом» запустила Тазовское месторождение. Геологические запасы месторождения оцениваются в 419 млн тонн нефти и 225 млрд кубометров газа.

Oil and gas condensate. The level of production increased by 2,4%, to 459,79 million barrels, however, so far the volumes have not returned to the levels of pre-crisis years.

Gas. Production increased by 11% и достигла исторического максимума по итогам года — 289,48 million boe. The share of gas in total hydrocarbon production increased from 30 to 39%, and if this trend continues in the next five years, then the volumes of production of liquid hydrocarbons and gas will almost equal. For contrast: in 2010 году нефть занимала 94% from the total production of the company.

Processing. Raw material processing volumes increased by 8%, to 43,53 million tons, which was also a record result for the business. Moscow Refinery showed the largest increase in refining, adding 21% год к году на фоне запуска нового производственного комплекса «Евро+» в середине 2020 of the year.

Production dynamics of Gazprom Neft, including joint ventures, million boe

HydrocarbonsOil and condensateGas
2017665,38465,16200,22
2018688,40469,38219,02
2019709,67469,25240,42
2020709,74449,20260,54
2021749,27459,79289,48

Oil refining dynamics, million tons

201740,11
201842,91
201941,47
202040,39
202143,53

40,11

Revenue and profit

Выручка «Газпром-нефти» по итогам 2021 года выросла на 53% и достигла рекордных 3,07 trillion rubles, out of which 2,97 трлн рублей пришлись на продажу нефти, gas and oil products. Сильная динамика стала следствием низкой базы 2020 of the year, when average hydrocarbon prices were at local lows. For comparison: средневзвешенная цена за тонну нефтяного эквивалента для компании выросла по итогам 2021 years on 93%, with 5,05 thousands to 9,72 тысячи рублей.

More 95% sales revenue is generated by oil products and oil. At the same time, Gazprom Neft mainly sells oil products on the Russian market, where the average selling price for the company was at 17% higher than export, and exports the main volumes of crude oil abroad, where the average price was 31% above, than in Russia.

I will note, what, despite record production, доля продаж газа в 2021 году составила лишь 1,7% of total revenue. The fact, that external sales account for only about a third of the holding's total gas production, and the rest goes to domestic consumption. Besides, almost all gas produced is sold in Russia, where prices are regulated by the tariff policy of the state and therefore did not show that growth, observed in foreign markets.

Weighted average selling price per tonne of oil equivalent

20176139 R14,19 $
20188608 R18,52 $
20198274 R17,31 $
20205051 R9,48 $
20219721 R17,87 $

14,19 $ (6139 R) 2018 18,52 $ (8608 R) 2019 17,31 $ (8274 R) 2020 9,48 $ (5051 R) 2021 17,87 $ (9721 R)

Структура выручки от продаж в 2021 year

Petroleum products64,8%
Oil30,4%
Gas1,7%
Other revenue3,1%

64,80%

Operating expenses of Gazprom Neft increased by 35%, to 2,5 trillion rubles, which is mainly due to the increase in the cost of acquiring oil, gas and oil products for 77%, to 883,7 billion rubles, against the backdrop of rising purchase prices.

The fact, that the company purchases significant volumes of hydrocarbons from joint ventures and associates for processing and subsequent sale. Besides, business more than doubled tax payments on mining, to 687,8 billion rubles, due to an increase in the MET tax rate in Russia. And against the backdrop of inflation and an increase in production indicators, commercial, general business, administrative, transport and production costs.

В результате превышения доходов от продаж над операционными расходами операционная прибыль «Газпром-нефти» выросла почти в четыре раза от низкой базы 2020 года и достигла рекордных 561,34 billion rubles. Share of income of associates and joint ventures more than doubled, to 102,4 billion rubles.

Компания получила прибыль от переоценки курсовых разниц в размере 4,8 млрд рублей по сравнению с убытком 23,7 млрд рублей в 2020 year. The column is non-monetary in nature and is associated with the revaluation of foreign currency debt due to currency fluctuations.

On the back of rising revenues, the company recorded a five-fold increase in current and deferred income taxes, to 113,6 billion rubles.

Gazprom Neft's net profit grew by 4,3 Times, to 503,45 billion rubles, and for the first time in its history exceeded half a trillion rubles.

Свободный денежный поток на фоне улучшения рыночной конъюнктуры и финансовых показателей также достиг рекордного для бизнеса уровня — 500,09 billion rubles.

Financial performance of the company, billion rubles

RevenueOperating profitNet profitfree cash flow
20171857,93302,52253,2764,61
20182489,29456,74376,67162,33
20192485,31446,57400,2173,83
20201999,62145,18117,7103,53
20213068,44561,34503,45500,09

Investments

Based on the results of 2021 года сумма капитальных вложений «Газпром-нефти» выросла на 7% и достигла 441,83 млрд рублей — очередной рекорд. The main growth was provided by the exploration and production segment against the backdrop of the easing of OPEC + restrictions. Только в четвертом квартале 2021 года капитальные вложения в разведку и добычу выросли на 72%, to 104,7 billion rubles, which creates a serious reserve for increasing production in the future.

Dynamics of capital investments, billion rubles

2017357,09
2018375,2
2019435,24
2020413,53
2021441,83

357,09

Debts

Despite the record amount of capital investments, holding's net debt 12 months has been reduced to 3,4 Times, to 160,6 billion rubles, thanks to the growth of cash and cash equivalents for the year in 2,4 Times, to 573,42 billion rubles. Besides, more than doubling annual EBITDA, to 891,8 billion rubles, the level of debt burden by the ratio "net debt / EBITDA collapsed from 1,32 to 0,18. Today the company has one of the lowest leverage levels and a high level of financial stability.

Dynamics of the debt burden at the end of the period, billion rubles

net debtnet debt / 12B EBITDA
2017584,031,19
2018527,870,73
2019497,750,70
2020547,081,32
2021160,60,18

Dividends

In December 2020 года руководство «Газпром-нефти» закрепило в дивидендной политике целевой уровень выплат в объеме не менее 50% from IFRS net profit.

However, when calculating the payout basis, management uses a large number of net income adjustments., such as the effect of currency fluctuations, effect of asset revaluation, non-monetary revaluation from financial investments and participation in joint ventures, required funds for the implementation of the investment program, as well as other adjustments as decided by the board of directors. All these factors make it difficult to correctly calculate future dividends and force investors to rely on the goodwill of management when calculating.

Without adjustments, annual dividends could be around 53,1 P per share, however, the company has already paid 40 Р на акцию по итогам первых девяти месяцев 2021 of the year, which means, the final dividend could be 13,1 P per share.

History of Gazprom Neft dividend payments

201710,7 R
201830 R
201937,96 R
202015 R
9м202140 R

10,7 R

What's the bottom line?

«Газпром-нефть» быстро восстановилась от последствий кризиса 2020 of the year. The improvement in external market conditions and the rise in hydrocarbon prices not only made it possible to reach sub-standard levels, but also to update historical highs for most operating and financial indicators.

Besides, резкий рост инвестиций в геологоразведку и разработку месторождений в четвертом квартале 2021 года говорит о том, that management expects favorable conditions to continue to increase production. So far, reality confirms these assumptions.: OPEC+ continues to ease restrictions on oil production, and liquid fuel prices are in the region of local maxima.

Growth in income from the sale of hydrocarbons allowed the company to multiply its net profit, free cash flow and reduce leverage to a multi-year low — on the back of record investment volumes.