TIDMLKOD
RNS Number : 7849R
PJSC LukOil
10 March 2021
Press Release
March 10, 2021
LUKOIL RELEASES FINANCIAL RESULTS UNDER IFRS FOR 2020
PJSC LUKOIL today released its audited consolidated financial
statements for 2020 prepared in accordance with the International
Financial Reporting Standards (IFRS).
Financial highlights
4 Q 3 Q 12 M 12 M
2020 2020 2020 2019
------ -------- ----------------------------------- ------ --------
(RUB bln)
1,530 5,639
. 3 1,456.7 Sales . 4 7,841.2
189.6 202.2 EBITDA 687.1 1,236.2
Profit for the period attributable
29.4 50.4 to shareholders 15.2 640.2
135.2 112.8 Capital expenditures 495.4 450.0
85.5 114.6 Free cash flow 281.1 701.9
Free cash flow before changes in
61.3 88.3 working capital 198.0 708.7
------ -------- ----------------------------------- ------ --------
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 negative
impact on operational and financial performance of the Group in the
fourth quarter and the twelve months of 2020 with persisting
negative effect in the first quarter of 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 new
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 owing to
lower demand for 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 in 2020 is attributed to decline in prices for oil and
refined products as well as lower production volumes.
OPEC+ agreement
On April 12, 2020 a number of oil-producing countries, including
OPEC members and Russia, entered into an agreement valid until the
end of April, 2022 that aims to reduce their collective crude oil
output by 9.7 million barrels per day starting from May 1, 2020
with subsequent gradual increase. Due to the agreement, starting
from May 1, 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. By the end
of 2020, the Company has gradually increased crude oil production
in Russia by approximately 100 thousand barrels per day 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 as at the end of 2020 was 90 thousand barrels per day lower
than the project capacity.
Revenue
In the fourth quarter of 2020, our sales amounted to RUB 1,530.3
bln, up by 5.1% quarter-on-quarter. The growth was mainly
attributable to higher hydrocarbon prices and production, as well
as ruble devaluation.
In 2020 our sales amounted to RUB 5,639.4 bln, down 28.1%
year-on-year. Sales dynamics was negatively affected by lower
hydrocarbon prices, lower hydrocarbon production volumes, lower
production and trading volumes of refined products as well as lower
retail sales of refined products. These factors were partially
offset by ruble devaluation to US dollar.
EBITDA
EBITDA structure
4 Q 3 Q 12 M 12 M
2020 2020 2020 2019
------ ------ --------------------------------------- ------ --------
(RUB bln)
189 .
6 202.2 EBITDA 687.1 1 236.2
166.6 152.0 Exploration and production 500.1 894.0
148.0 136.1 Russia 421.6 729.1
18.6 15.9 Outside Russia 78.5 164.9
46.6 77.6 Refining, marketing and distribution 243.3 371.6
43.5 42.3 Russia 180.7 301.1
3.1 35.3 Outside Russia 62.6 70.5
------ ------ --------------------------------------- ------ --------
In the fourth quarter of 2020 EBITDA decreased by 6.2%
quarter-on-quarter to RUB 189.6 bln. The decrease was due to weaker
results of the Refining, marketing and distribution segment, which
was partially offset by higher EBITDA of the Exploration and
production segment.
The decrease in EBITDA of the Refining, Marketing and
Distribution segment was mainly driven by the specifics of
accounting for hedging operations in international trading and
lower refining margins. At the same time, in Russia EBITDA
increased mainly due to better results in petrochemical, retail and
power businesses. The segment results were also positively
influenced by the inventory effect at refineries in Russia and
abroad.
In the Exploration and Production segment in Russia EBITDA
dynamics was positively affected by partial recovery of oil
production, ruble devaluation, and higher positive time lag effect
of mineral extraction tax and export duty. Outside Russia, better
results were primarily driven by recovery of production at gas
projects in Uzbekistan.
In 2020, EBITDA amounted to RUB 687.1 bln, down by 44.4%
year-on-year. The decrease was mainly driven by negative impact of
the COVID-19 pandemic consequences on hydrocarbon prices, refining
margins, and hydrocarbon production and refinery throughput
volumes. Lower oil prices also led to negative time lag effect of
mineral extraction tax and export duty and negative inventory
effect at the refineries. At the same time, EBITDA was supported by
higher trading margins and the specifics of accounting for hedging
operations, as well as better oil production structure in Russia
and ruble devaluation.
Profit
In the fourth quarter of 2020, profit attributable to
shareholders amounted to RUB 29.4 bln, which is 41.6% lower
quarter-on-quarter.
As a result, in 2020, the Company booked a profit in the amount
of RUB 15.2 bln compared to RUB 640.2 bln profit in 2019. Besides
lower EBITDA, the profit was negatively influenced by non-cash
assets impairment and foreign exchange losses.
Capital expenditures
In the fourth quarter of 2020, capital expenditures amounted to
RUB 135.2 bln, up by 19.8% quarter-on-quarter due to active
development stage of V. Grayfer field in the Caspian region, as
well as construction of a delayed coker complex at the Nizhny
Novgorod refinery. As a result, in 2020, capital expenditures
totaled RUB 495.4 bln, up by 10.1% year-on-year.
Free cash flow
Free cash flow amounted to RUB 85.5 bln in the fourth quarter of
2020, while for the twelve months of 2020 it was RUB 281.1 bln,
which is 59.9% lower year-on-year. The decrease was mainly driven
by lower operating cash flow.
Operating highlights
4 Q 3 Q 12 M 12 M
2020 2020 2020 2019
-------- -------- ------------------------------- -------- -------
2 , 099 1 , 927 Hydrocarbon production, Kboepd 2 , 117 2,380
2,065 1,885 ex. West Qurna-2 2,064 2,350
Liquid hydrocarbon production,
1,573 1,545 Kbpd 1,651 1,815
1,539 1,503 ex. West Qurna-2 1,598 1,785
8 . 2 6 . 0 Gas production, bcm 29 . 0 35 . 0
Production of refined products
12.4 14.0 at own refineries, mln tonnes 55.0 65.1
-------- -------- ------------------------------- -------- -------
In the fourth quarter of 2020 LUKOIL Group's average hydrocarbon
production excluding the West Qurna-2 project was 2,065 kboe per
day, which is 9.5% higher quarter-on-quarter. The growth was
attributable to the dynamics of the external limitations on oil
production due to the OPEC+ agreement, as well as recovery of gas
production in Uzbekistan. In 2020 average hydrocarbon production
was 2,064 kboe per day, which is 12.2% lower year-on-year.
Production was reduced due to the OPEC+ agreement and a temporary
decrease in gas supply from Uzbekistan to China, that were driven
by the negative impact of the COVID-19 pandemic on hydrocarbon
demand.
Liquid hydrocarbons
Liquid hydrocarbons production excluding the West Qurna-2
project was 1,539 thousand barrels per day in the fourth quarter of
2020, which is 2.3% higher quarter-on-quarter. As a result, in 2020
liquid hydrocarbons production totaled 1,598 thousand barrels per
day, which is 10.5% lower year-on-year. Liquid hydrocarbons
production dynamics was driven by the OPEC+ agreement concluded in
April 2020, which led to limitations on production by the Group in
Russia and at certain international projects. In particular, due to
the agreement crude oil production by the Group in Russia was cut
in May 2020 by approximately 310 thousand barrels per day, or by
19%, as compared to the level of the first quarter of 2020. By the
end of 2020 production was gradually increased by approximately 100
thousand barrels per day as compared to the May level.
Despite a sharp decrease in oil prices and external limitations
on production volumes, development of the priority projects
continued. In particular, in West Siberia total oil and gas
condensate production in 2020 at the V. Vinogradov, Imilorskoye,
Sredne-Nazymskoye and Pyakyakhinskoye fields increased by 20.4%
year-on-year, to 4.2 million tonnes.
High viscosity oil production at the Yaregskoye field and
Permian reservoir of the Usinskoye field in 2020 increased by 6.2%
year-on-year, to 5.2 million tonnes.
Implementation of drilling programs at the V. Filanovsky and Yu.
Korchagin fields in the Caspian Sea allowed to maintain production
at project levels. Total oil and gas condensate production in 2020
totaled 7.4 million tonnes. The V. Grayfer field development
continues: jackets have been installed in the Caspian Sea for the
fixed ice-resistant platform and accommodation platform, topsides
of both platforms are being built at the shipyards.
The share of the abovementioned projects in the LUKOIL Group's
oil production excluding the West Qurna-2 project amounted to 22%
in 2020 as compared to 18% in 2019.
Gas
In the fourth quarter of 2020, gas production increased by 37.8%
quarter-on-quarter, to 8.2 billion cubic meters. The growth was
driven by recovery of gas production in Uzbekistan. As a result, in
2020 gas production was 29.0 billion cubic meters, which is 17.2%
lower year-on-year. Production decline was due to temporary decline
in demand from China for gas produced in Uzbekistan amid the
COVID-19 pandemic.
Refined products
In the fourth quarter of 2020 production of refined products at
LUKOIL Group's refineries was 12.4 million tonnes, which is 11.2%
lower quarter-on-quarter. As a result, in 2020 production of
refined products was 55.0 million tonnes, which is 15.5% lower
year-on-year. The decline was attributable to throughput
optimization at some of the Company's refineries on the back of
lower demand for petroleum products and decline in refining margins
due to the COVID-19 pandemic, as well as to scheduled maintenance
works.
Production of refined products in Russia in the fourth quarter
of 2020 decreased by 5.0% quarter-on-quarter to 9.2 million tonnes
due to scheduled maintenance works at Volgograd and Nizhny Novgorod
refineries. As a result, in 2020 production of refined products in
Russia was 38.1 million tonnes, which is 8.9% lower year-on-year
due to scheduled maintenance works and throughput optimization at
refineries.
Production of refined products in Europe in the fourth quarter
of 2020 decreased by 25.5% quarter-on-quarter to 3.2 million tonnes
mainly due to scheduled maintenance works and throughput
optimization at refineries in Italy and Bulgaria. As a result, in
2020 production of refined products in Europe totaled 16.9 million
tonnes, which is 27.4% lower year-on-year due to scheduled
maintenance works at refineries in Bulgaria, Italy and the
Netherlands, as well as throughput optimization at European
refineries.
http://www.rns-pdf.londonstockexchange.com/rns/7849R_1-2021-3-10.pdf
http://www.rns-pdf.londonstockexchange.com/rns/7849R_2-2021-3-10.pdf
http://www.rns-pdf.londonstockexchange.com/rns/7849R_3-2021-3-10.pdf
Note:
The full set of audited consolidated IFRS financial statements
of PJSC "LUKOIL" for the year ended 31 December 2020 and the
related notes as well as Management's Discussion and Analysis of
Financial Condition and Results of Operations are available on the
Company's websites: www.lukoil.com and www.lukoil.ru.
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 providing LUKOIL with maximum synergies from its
activities. 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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