TNK-BP today reported its results for the year and the fourth quarter 2010.
(US$ millions unless otherwise stated)
|n/a||n/a||n/a||Total Proved Reserves
(PRMS, million boe)*
|1,733||1,715||1,766||Oil and Gas Production
|1,282||1,447||1 934||Net Income||5,815||4,973|
|1,963||3,012||2 741||Operating Cash flow||9,682||6,581|
|5,967||4,290||4 677||Net Debt||4,677||5,967|
|1,028||1,100||1 302||Capex (organic)||4,051||3,126|
Commenting on the results, Mikhail Fridman, Executive Chairman of TNK-BP Ltd., said:
“2010 was a year of many accomplishments for TNK-BP. Not only did we achieve record production and refining levels since the company’s inception, but we also laid down a firm foundation for TNK-BP’s development going forward. We proceeded with building a portfolio of international assets which will add value to our existing operations and broaden our skill set. We made significant strides forward in our gas business, having secured a long-term transportation agreement for our major gas fields at Rospan. Constructive dialogue between the government and the oil companies resulted in a breakthrough decision on joint infrastructure development at Yamal, paving the way for full-scale production at greenfields in the region.
In 2011, we will continue the evolutionary transformation of TNK-BP towards our strategic goal of becoming a world-class oil and gas company with international credentials and a leading position in the Russian industry in terms of sustainable development, reserve renewal and operational efficiency.”
2010 OPERATIONAL HIGHLIGHTS
· Oil and gas volumes for 2010 increased by 3.1% relative to 2009 (excl. Slavneft) due to incremental greenfield production from the Uvat group of fields in West Siberia, and the Verkhnechonskoye oil field in East Siberia as well as continued growth in Orenburg in the Volga-Urals region.
· In October 2010, the company achieved a historic daily production record of 1,794 thousand barrels of oil equivalent per day due to increased operational efficiency and dedicated teamwork.
· The company replaced 134% of production with new reserves on the SEC LOF basis (322% on the PRMS basis), adding 854 million barrels of oil equivalent (SEC LOF), excluding divestments. The average SEC LOF reserve replacement ratio over the past 7 years amounted to 140% which is a world-class achievement.
· Exploration success rate amounted to 72% due to application of advanced technologies in 3D seismic and data interpretation as well as strategic partnerships with leading international drilling companies. In 2010, the exploration program included further exploration in Orenburg and West Siberia as well as exploration and appraisal work in Uvat and Yamal to gain better understanding of the resource potential.
· In 2010, Rospan, our gas producing subsidiary, produced 2.7 billion cubic meters, up 16% on 2009. The company also signed a long-term transportation agreement with Gazprom granting 6-year access to the pipeline system for Rospan up to 13.2 billion cubic metres a year in 2016. The agreement provides a foundation on which to build the full field development plan of Rospan, which is one of the core projects in the company’s asset portfolio.
· Refining throughput reached a historic maximum of 732 thousand barrels per day primarily due to successful debottlenecking of the Ryazan and Saratov refineries.
· Operational availability of our refineries in Russia was at the historically highest level of 97%.
· The company continued to grow its retail market share and increase fuel sales through its retail networks resulting in a retail cover growth of 7.5%. The retail network expansion was underpinned by targeted acquisitions in the Belgorod, Smolensk, Pskov and Novgorod regions in Russia as well as Ukraine and Belarus.
· In 2010, we achieved an important milestone in our B2B operations by winning a tender for TZK Sheremetyevo fuelling company which will allow to significantly increase “in the wing” sales at Russia’s main airport hub.
· In 2010, the company strengthened its presence on the international markets which will add value to its existing asset portfolio:
· TNK-BP and BP reached an agreement for TNK-BP to acquire BP’s upstream and pipeline assets in Vietnam and Venezuela for an overall consideration of $1.8 bn. The company estimates closing the deals by the end of 1H2011.
· The company participated in establishment and commencement of operations of the joint venture between Russian oil companies and PDVSA, the state oil company of Venezuela to develop the Junin-6 block in Venezuela.
· The company signed a Memorandum of Cooperation on tight sand exploration in Ukraine to develop its gas business opportunities.
· In 2010, the company saw improvements in its environmental protection activity with spills frequency down 22% on 2009. Implementation of health care programs resulted in Days Away From Work Cases frequency down 14% on 2009. There was only one major vehicle accident recorded in 2010 as compared to four major vehicle accidents in the previous year due to continuous training in safe driving for our employees and contractors.
Jonathan Muir, Chief Financial Officer, said:
“In 2010, we delivered a strong set of results supported by an improving trading environment, continued production growth and rigorous cost management. Our financial results benefited from above-plan production growth, successful refinery debottlenecking and optimization of exports sales. Net income increased by almost 17% to $5.8 billion which is the best result since the company’s inception adjusted for divestments. EBITDA posted a 15% gain due to stronger markets and performance improvements partially offset by tariff and tax increases. Our operating cashflow reached a historic high of $9.7 billion, or a 47% increase on 2009, underpinned by greater efficiencies achieved in working capital management. We continued to demonstrate strong financial discipline with a gearing ratio at 21% and effective management of our debt portfolio.”
2010 FINANCIAL HIGHLIGHTS
· Revenues for 2010 increased by 28% relative to 2009 reflecting strengthening of the markets and continuing increase in production driven by Verkhnechonskoye and Uvat greenfield ramp-up.
· Export duties and taxes other than income tax increased by 42% for 2010 relative to 2009 largely due to the effect of the Urals price increase on export duty and mineral extraction tax rates and a comparatively lower duty lag benefit.
· Cash costs (operating expenses, transportation and SG&A) increased by 15% reflecting the effect of a stronger rouble exacerbated by increased transportation and electricity tariffs.
· EBITDA for 2010 amounted to $10.4bn which is 15% higher compared to 2009 largely due to the increase in revenue partly offset by higher duties, taxes and costs as well as a comparative negative effect of the gain on disposal of oil field services business in 2009.
· Net income for 2010 amounted to $5.8bn which is 17% higher compared to the same period in 2009, in line with the increase in EBITDA.
· Operating cash flow in 2010 totaled $9.7bn representing an increase of 47% compared to 2009 reflecting higher EBITDA and efficient working capital management.
· Net debt was reduced by $1.3bn resulting in gearing falling to 21%.
· Organic capital investment in 2010 amounted to $4.1bn, aimed at focused development of both greenfields and brownfields together with targeted retail and refining spend.
4Q 2010 FINANCIAL HIGHLIGHTS
· Revenues for 4Q increased 10% quarter-on-quarter primarily due to stronger markets.
· Export duties and other taxes increased 3% quarter-on-quarter with a 13% increase from the price effect on export duties and MET partly offset by the effect of lower export sales volumes, duty lag and one-off charges in 3Q.
· Cash costs (operating expenses, transportation and SG&A) increased by 3% largely due to provisions and tariffs impacts.
· EBITDA for 4Q amounted to $3.2bn which is 23% higher compared to 3Q largely due to higher prices, increased positive duty lag and impairment recorded in 3Q, partly offset by higher 4Q costs.
· Net Income for 4Q amounted to $1.9bn, a 34% increase relative to 3Q due to higher EBITDA and the one-off benefit of released tax&legal provisions.
· Operating cash flow in 4Q was $2.7bn, 9% lower than in 3Q, primarily due to movements in working capital offsetting the underlying impact of stronger EBITDA
· Organic capital investments amounted to $1.3bn, representing an increase of 18% relative to 3Q, largely associated with continued development of greenfields and refining modernization.
· Compared to the 4Q 2009 results, 4Q 2010 EBITDA and net income increased by 35% and 51%, respectively. That reflects both stronger external environment with the Urals price higher by 15%, weaker rouble and comparative increase in duty lag benefit, as well as production growth by 1.9%, increase in trading volumes and improvement in trading mix, in particular higher share of refined products. These positive factors were partly offset by inflationary pressure on costs and tariffs.
The financial information shown in the press release relates to TNK-BP International Ltd.
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