Bashneft’s net income increases by 62.3% in the third quarter of 2012

Bashneft Group, which comprises JSOC Bashneft, its subsidiaries and affiliates, has published its unaudited consolidated financial results for the third quarter of 2012 and the nine months ended September 30, 2012 prepared in accordance with International Financial Reporting Standards (IFRS).

In the third quarter of 2012, net income attributable to the shareholders of the parent company totalled US$ 547 million, which is 62.3% higher than in the second quarter of 2012. In the third quarter of 2012, EBITDA added 26.1% compared to the second quarter and amounted to US$ 962 million. In the third quarter of 2012, the Group’s sales revenue totalled US$ 4,622 million, which is 13.2% higher than in the second quarter of 2012.

During the nine months of 2012, the Group’s net income excluding minority interest amounted to US$ 1,328 million, demonstrating a 1.5% year-on-year increase. EBITDA added 7.6% and totalled US$ 2,549 million, while the Group’s revenue for the period from January to September 2012 amounted to US$ 12,627 million, which is 1.3% higher than in the same period in 2011.

During the nine months of 2012, Bashneft Group’s net cash flow from operating activities demonstrated a 17.5% year-on-year increase to US$ 1,817 million. The growth of operating cash flow during the nine months of 2012 enabled Bashneft to increase capital expenditure by 5.9% to US$ 630 million, pay dividends for 2011 and buy back securities from the shareholders as part of Bashneft’s reorganization.

“In the third quarter, Bashneft achieved the best results this year. Our net income increased significantly; we optimized the range of petroleum products and increased retail sales,” highlighted Alexander Korsik, the President of JSOC Bashneft. “A reduction in unit costs in production and refining during the nine months of 2012 provides evidence that our strategy for improving performance in all key business areas is implemented consistently.”

Between January and September 2012, oil production at the Group’s fields totalled 11,529 thousand tonnes, demonstrating a 2.4% year-on-year increase. In the third quarter of 2012, Bashneft produced 3,878 thousand tonnes of oil, which exceeds the level of the second quarter by 1.8%. The Group’s production has been stable and amounted to about 42 thousand tonnes per day for five consecutive quarters.

During the nine months of 2012, Bashneft’s Ufa refining complex processed 15,397 thousand tonnes of oil, which is 2.1% less than in the same period in 2011. However, in the third quarter of 2012, refining added 7.4% compared to the second quarter, when the Ufimsky Refinery Plant was shut down due to the scheduled major repairs. During the nine months of 2012, the average refining depth amounted to 85.2%, while the output of light petroleum products totalled 59.8%, demonstrating a slight year-on-year increase. At the same time, in the third quarter of 2012, the output of light petroleum products rose to 61.4% compared to 57.9% in the second quarter due to an increase in the share of gasoline and diesel fuel in the product range.

In the third quarter of 2012, sales of petroleum products and petrochemicals amounted to 5,306 thousand tonnes, which is 12.0% more than in the second quarter. During the nine months of 2012, the sales volume totalling 14,380 thousand tonnes decreased by 1.2% compared to the same period in 2011. The pattern of exports also changed: during the nine months of 2012, exports of petroleum products and petrochemicals to the countries outside the CIS decreased by 26.3% to 4,175 thousand tonnes, while exports to the CIS added 47.6%, totalling 2,181 thousand tonnes.

Besides, Bashneft continued to increase its share in the retail segment, implementing the strategy for developing marketing channels in order to supply products to consumers on the domestic market. Between January and September 2012, the Group’s retail sales of petroleum products demonstrated a 43.3% year-on-year increase and amounted to 1,016 thousand tonnes.

KEY FINANCIAL AND OPERATING RESULTS
FOR THE THIRD QUARTER AND THE NINE MONTHS OF 2012