Russnet 2H 19 Earnings Preview - Prices and capex to push 2H 19e results down on all counts
We expect the company to report the results for 2H 19e by the end of March. We forecast the results being negatively influenced hoh on all counts (from top line to NI and FCF) mainly on lower crude prices and higher capex. Nevertheless, now the main concern is the crude price drop this year which overshadows the results for FY 19e. As we have written before, FCF should be already zero or negative at crude prices below RUB 3,700/bbl whereas now Urals is RUB 2,000-2,500/bbl. In this environment, the share of crude subject to MET rebates and the prepayments from Glencore (as a quasi-debt) are becoming all the more crucial.NK Russneft' PAO is a Russia-based company engaged in the oil and gas industry. It is mainly involved in the extraction and distribution of crude oil, as well as production of associated petroleum gas (APG), natural gas and gas processing. The Company and its subsidiaries hold more than100 subsoil licenses and operate over 125 oilfields. The Company's extraction operations are structured into three geographical groups: West Siberian Group, Volga Region Group and Central Siberian Group. In addition, the Company operates on the territory of Azerbaijan. NK Russneft' PAO operates in various regions of Russia and in Belarus. The Company has its own research and technology center. The Company supplies oil both to Russian market and to export markets of Commonwealth of Independent States (CIS) and other countries, including Hungary and Slovakia.
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