Tatneft 3Q 20 - Stronger than expected EBITDA pushed FCF above estimates
Today, Tatneft released its 3Q 2020 results, which came in above both our and market expectations on revenue, EBITDA and net income. As compared to our forecasts, the revenue was stronger due to higher than expected volumes of crude oil purchases, which brought about higher crude oil sales vs our estimates. In turn, Tatnefts 3Q 20 EBITDA exceeded our estimates mainly on lower than projected effective MET rate, which resulted in lower than forecasted MET payments. Consequently, this led to net income above our forecast as well. Moreover, higher than projected EBITDA also pushed Tatnefts net operating cash flow ahead of estimates to USD 677 mn. However, this was partly mitigated by higher than projected companys capital expenditures in 3Q 20.Tatnefts 3Q 20 free cash flow came in above our estimates, turning back to the positive zone of USD 317 mn. Overall, we treat the results as positive for the stock, since they exceeded our projections on all items, including EBITDA and free cash flow.
Tatneft PJSC and its subsidiaries are engaged in crude oil exploration, development and production principally in the Republic of Tatarstan, Russia. Co. is a holding structure, which incorporates oil and gas production boards, crude oil and gas refining companies, as well as enterprises and servicing works selling the crude oil and also the products of crude oil and gas refining and petrochemical products. In addition to this, Co. is also participating in the banking and insurance activities. Co.'s operations are divided into the following main segments: Exploration and Production; Refining and Marketing; and Petrochemicals.
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