TIDMLKOD
RNS Number : 4283T
PJSC LukOil
24 November 2021
Press release
November 24, 2021
LUKOIL ANNOUNCES IFRS FINANCIAL RESULTS FOR THE THIRD QUARTER
AND NINE MONTHS OF 2021
PJSC LUKOIL today released its condensed interim consolidated
financial statements for the three and nine month periods ended 30
September 2021, prepared in accordance with International Financial
Reporting Standards (IFRS).
Financial highlights
3Q 2Q 9M 9M
2021 2021 2021 2020
-------- -------- ------------------------------------------ -------- --------
(RUB bln)
2,588.7 2,201.9 Sales 6,667.1 4,109.1
355.2 339.8 EBITDA 1,009.4 497.5
Profit (loss) for the period attributable
192.5 189.8 to LUKOIL shareholders 539.7 (14.3)
94.3 104.2 Capital expenditures 305.8 360.3
227.7 112.2 Free cash flow 503.5 195.6
Free cash flow before changes in
233.5 212.0 working capital 633.2 131.1
-------- -------- ------------------------------------------ -------- --------
COVID-19
Since the start of COVID-19 pandemic, LUKOIL has been
undertaking necessary measures to rule out the direct impact of the
pandemic on the Group's operating activity, prioritizing proper
protection of its employees, contractors personnel and clients, as
well as continuity of production processes.
Weaker global economic activity amid the pandemic followed by an
unprecedented slump in hydrocarbon demand and prices had a
significant negative impact on operational and financial
performance of the Group in 2020 with persisting negative effect in
2021.
The consequences of the pandemic for the Company's operating
results in 2020 include: crude oil production cut at the Company's
fields in Russia and certain international projects due to the
OPEC+ agreement; gas production cut in Uzbekistan due to
temporarily lower demand for Uzbek gas from China; reduction of
refinery throughput volumes due to lower refining margins and lower
demand for some refined products; and lower sales volumes of motor
fuels through filling stations because of lower demand.
The main impact of the pandemic on the Company's financial
performance is attributed to volatility in prices for crude oil and
refined products as well as lower production volumes in 2020.
OPEC+ agreement
In April 2020, a number of oil-producing countries, including
OPEC members and Russia, entered into an agreement to reduce their
collective crude oil output starting from May 1, 2020 with
subsequent gradual recovery. Due to the agreement, in May 2020 the
Company cut its crude oil production in Russia by approximately 310
thousand barrels per day as compared to the average daily
production in the first quarter of 2020. After the cut the Company
has been gradually increasing crude oil production in Russia. As a
result, in the third quarter of 2021 the Group's crude oil
production in Russia was approximately 210 thousand barrels per day
higher as compared to the level of May 2020.
Crude oil production was also reduced at certain international
projects. In particular, production at the West Qurna-2 project in
Iraq in the third quarter of 2021 was approximately 50 thousand
barrels per day lower than the project capacity.
Sales
In the third quarter of 2021, our sales amounted to RUB 2,588.7
bln, up 17.6% quarter-on-quarter. The growth was attributable to
higher prices for crude oil and refined products, higher
hydrocarbon production and refinery throughput volumes, higher oil
and refined products trading volumes, as well as higher refined
products retail sales volumes.
As compared to the nine months of 2020, our sales increased by
62.3% mainly due to higher hydrocarbon prices, ruble devaluation,
higher gas production volumes, as well as higher refinery
throughput and oil and refined products trading volumes.
EBITDA
3Q 2Q 9M 9M
2021 2021 2021 2020
------ ------ --------------------------------------- -------- ------
(RUB bln)
339 .
355.2 8 EBITDA 1,009.4 497.5
245.0 220.9 Exploration and production 689.7 333.5
206.9 193.4 Russia 587.3 273.6
38.1 27.5 Outside Russia 102.4 59.9
125.8 126.9 Refining, marketing and distribution 372.9 196.7
107.9 85.0 Russia 259.5 137.2
17.9 41.9 Outside Russia 113.4 59.5
------ ------ --------------------------------------- -------- ------
In the third quarter of 2021, EBITDA increased by 4.5%
quarter-on-quarter to RUB 355.2 bln.
Besides higher oil prices, EBITDA of the Exploration and
production segment in Russia was positively affected by higher oil
production volumes due to the changes in external limitations under
the OPEC+ agreement. The growth was constrained by lower positive
time lag effect of export duty and MET. Outside Russia, EBITDA
dynamics was mainly attributable to higher gas prices and recovery
of gas production in Uzbekistan.
The main growth factors for the EBITDA of the Refining,
Marketing and Distribution segment in Russia were higher refining
margins and refinery throughput volumes. The growth was constrained
by lower positive inventory effect at the refineries, as well as
weaker results of petrochemicals and retail businesses. Outside
Russia EBITDA was lower mainly due to weaker results in
international trading and lower positive inventory effect at the
refineries. The negative impact of these factors was partially
offset by the accounting specifics of hedging operations in
international trading, higher refinery throughput volumes and
margins, as well as better results of retail business.
As compared to the nine months of 2020, EBITDA more than doubled
mainly as a result of higher hydrocarbon prices, ruble devaluation,
positive inventory effect at the refineries, higher refining margin
in Russia, positive time lag effect of export duty and MET, as well
as higher gas production volumes outside Russia. EBITDA growth was
constrained by elimination of tax incentives for high-viscous crude
oil and weaker results of retail business in Russia.
Profit for the period
In the third quarter of 2021, profit attributable to PJSC LUKOIL
shareholders amounted to RUB 192.5 bln, which is 1.4% higher
quarter-on-quarter. As a result, for the first nine months of 2021
profit was up to RUB 539.7 bln as compared to a loss of RUB 14.3
bln for the same period of 2020. Besides higher EBITDA, profit
dynamics is attributable to non-cash losses from assets impairment
and foreign exchange loss in 2020.
Free cash flow
In the third quarter of 2021, free cash flow more than doubled
quarter-on-quarter and amounted to RUB 227.7 bln. The growth was
mainly attributable to working capital build-up in the second
quarter of 2021.
For the first nine months of 2021, free cash flow increased to
RUB 503.5 bln as compared to RUB 195.6 bln for the same period of
2020. The growth is attributable to higher operating margins and
lower capital expenditures.
Operating highlights
3Q 2Q 9 M 9 M
2021 2021 2021 2020
------- ------ ------------------------------------- ------ ------
Hydrocarbon production, K boe
2,152 2,100 pd 2,150 2,124
2,132 2,065 excluding West Qurna-2 2,116 2,065
Liquid hydrocarbon production,
1,66 2 1,643 Kbpd 1,643 1,678
1,642 1,608 excluding West Qurna-2 1,609 1,619
7.7 7.1 Gas production, billion cubic meters 23.5 20.8
Production of refined products
16.5 15.1 at own refineries, million tonnes 45.2 42.6
------- ------ ------------------------------------- ------ ------
For the nine months of 2021 LUKOIL Group's average hydrocarbon
production excluding the West Qurna-2 project was 2,116 thousand
boe per day, which is 2.5% higher year-on-year, while in the third
quarter of 2021 hydrocarbon production increased by 3.2%
quarter-on-quarter. The production growth was attributable to the
dynamics of the external limitations on oil production due to the
OPEC+ agreement, as well as higher gas production volumes.
Liquid hydrocarbons
For the nine months of 2021, liquid hydrocarbons production
excluding the West Qurna-2 project was 1,609 thousand barrels per
day, which remained unchanged year-on-year. In the third quarter of
2021, liquid hydrocarbons production was 1,642 thousand barrels per
day, up by 2.1% quarter-on-quarter. Liquid hydrocarbons production
dynamics was driven by the OPEC+ agreement concluded in April 2020,
which led to limitations on oil production by the Group in Russia
and at certain international projects.
Despite the external limitations on crude oil production
volumes, development of the priority projects continued. In
particular, in West Siberia total oil and gas condensate production
for the nine months of 2021 at the V. Vinogradov, Imilorskoye,
Sredne-Nazymskoye and Pyakyakhinskoye fields increased by 6.8%
year-on-year, to 3.3 million tonnes.
Implementation of drilling programs at the V. Filanovsky and Yu.
Korchagin fields in the Caspian Sea allowed to increase total oil
and gas condensate production for the nine months of 2021 by 0.6%
year-on-year, to 5.6 million tonnes. The V. Grayfer field
development continues: cable lines construction is complete, subsea
pipelines are being laid, shipyards are finishing construction of
topsides of the platforms.
Gas
For the nine months of 2021, gas production increased in average
daily terms by 13.7% year-on-year, to 23.5 billion cubic meters.
The growth was driven by recovery of gas production in Uzbekistan
after temporary decline in 2020 due to lower demand from China for
gas produced in Uzbekistan amid the COVID-19 pandemic.
In the third quarter of 2021, gas production increased in
average daily terms by 7.2% quarter-on-quarter and amounted to 7.7
billion cubic meters. The increase was mainly attributable to
completion of scheduled maintenance works at the projects in
Uzbekistan.
Refined products
For the nine months of 2021, production of refined products at
LUKOIL Group's refineries was 45.2 million tonnes, which is 6.2%
higher year-on-year.
In the third quarter of 2021, production of refined products was
16.5 million tonnes, which is 8.7% higher quarter-on-quarter. The
increase in production of refined products both in and outside
Russia was attributable to the recovery of refineries utilization
rates after maintenance works, as well as throughput optimization
at the refineries driven by the changes in macro environment.
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Information:
Full set of PJSC "LUKOIL" condensed interim consolidated
financial statements prepared in accordance with IFRS for the third
quarter and nine months of 2021 is available on the Company's web
site: www.lukoil.com. These condensed interim consolidated
financial statements have been prepared by the Company in
accordance with IFRS and have not been audited by our independent
auditor. If these financial statements are audited in the future,
the audit could reveal discrepancies, and we cannot give any
assurance that any such discrepancies would not be material.
PJSC LUKOIL is one of the largest publicly traded, vertically
integrated oil and gas companies in the world in terms of proved
hydrocarbon reserves and production; and the second largest
producer of crude oil in Russia. Established in 1991, the Company
currently operates in more than 30 countries with core upstream
assets located in Russia. The full production cycle includes oil
and gas exploration, production and refining; production of
petrochemicals and lubricants; power generation, marketing and
distribution. The Company's shares are listed in Russia on Moscow
Exchange under the ticker "LKOH" and depositary receipts are listed
on the London Stock Exchange under the ticker "LKOD".
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END
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