Quarter ended 30 September 2011
- Total revenue amounted to MUSD 794.4 (Q3 2010: MUSD 581.0).
- EBITDA amounted to MUSD 173.9 (Q3 2010: MUSD 129.7).
- Profit before tax amounted to MUSD 84.1 (Q3 2010: MUSD 105.7).
- Foreign currency swap revaluation loss of MUSD 18.9 negatively affected profit before tax.
- Net profit amounted to MUSD 63.1 (Q3 2010: MUSD 85.4).
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Basic and diluted earnings per share amounted to USD 0.36 and
USD 0.33, respectively (Q3 2010: USD 0.49 and USD 0.45, respectively). - 7.1 mbbl (Q3 2010: 6.5 mbbl) of oil were refined and 4.2 mbbl (Q3 2010: 4.3 mbbl) produced.
- Production at the Kolvinskoye oil field was launched.
Nine months ended 30 September 2011
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Total revenue amounted to MUSD 2,257.3 (nine months 2010:
MUSD 1,613.6). - EBITDA amounted to MUSD 454.2 (nine months 2010: MUSD 319.9).
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Profit before tax amounted to MUSD 274.1 (nine months 2010:
MUSD 211.0). - Foreign currency swap revaluation loss of MUSD 19.1 negatively affected profit before tax.
- Net profit amounted to MUSD 209.1 (nine months 2010: MUSD 165.0).
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Basic and diluted earnings per share amounted to USD 1.18 and
USD 1.11, respectively (nine months 2010: USD 0.94 and USD 0.89, respectively). -
20.2 mbbl (nine months 2010: 18.1 mbbl) of oil were refined and
12.1 mbbl (nine months 2010: 11.9 mbbl) produced. - Rouble bond offerings raised MUSD 530 in February and June 2011.
- Repsol and Alliance Oil to form an exploration and production joint venture in the Russian Federation.
Outlook 2011
- Upstream production is currently 64,000 barrels per day and downstream run-rate is 75,000 barrels per day
- Downstream refining volume forecast of 26.5 mbbl (target 25 mbbl) and upstream production volume forecast of 18.0 mbbl (target 20 mbbl).
Dear Shareholders,
Market conditions remained favourable during the third quarter of 2011. The Urals was trading above 100 USD per barrel with minor decreases quarter-on-quarter. The Russian Rouble depreciated against the US Dollar. The financial results in the upstream segment were up due to increased production. In the third quarter, the downstream segment enjoyed strong seasonal demand for oil products. Segment economics improved as the Company effectively could benefit from the lower cost of crude oil.
We significantly improved our efficiency. Alliance Oil Company produced 4.2 mbbl and refined
7.1 mbbl of oil in the third quarter of 2011. The Company’s EBITDA and Operating cash flow before changes in working capital were up by more than 40% quarter-on-quarter and 35% year-on-year respectively. Consolidated net income increased by 13% compared to the second quarter of 2011, despite negative non-cash financial items - currency exchange loss and revaluation of swap agreements.
In the upstream segment, revenues increased compared to the second quarter of 2011 primarily as a result of higher sales volumes. Segment EBITDA improved by 3% quarter-on-quarter. The Company drilled 11 new wells in the third quarter of 2011.
We launched production at the Kolvinskoye oil field in September. To date, 18 production wells have been put on stream at the Kolvinskoye with current production of around 24,000 bpd. This field contributed 0.4 mbbl to the third quarter production.
In the downstream segment, demand for oil products stabilized and capacity utilization at the Khabarovsk refinery remained high. Lower export prices and depreciation of the Rouble led to the segment’s revenue decline by 8% quarter-on-quarter. EBITDA almost doubled compared to the second quarter of 2011.
Outlook
We have a positive view on market developments in coming quarters. Following the launch of the Kolvinskoye oil field, we expect significant growth of revenues and operating cash flow driven by higher volumes, lower taxes and a favorable pricing environment in the upstream segment. In the downstream segment we see continued strong demand for oil products and further fiscal pressure to economic performance due to higher export duties applied from 1 October 2011.
Today the Company produces about 64,000 bopd, which is 40% higher than the average production in the third quarter of 2011. We forecast to produce approximately 18 mbbl of crude oil in 2011, which is more than last year volumes but short of our target of 20 mbbl, primarily due to the start of the Kolvinskoye oil field later in the third quarter and our decision to stabilize production in order to review the initial wells’ performance and update the geological model of this field. In the downstream segment, capacity utilization at the Khabarovsk refinery remains high despite low season with a current run-rate of 75,000 bopd. We forecast to refine approximately 26.5 mbbl in 2011 compared to the current target of 25 mbbl.
The joint venture agreement with Repsol is expected to be signed before year-end, which will further facilitate M&A driven growth.
In coming quarters, the Company’s main focus is revenue and cash flow growth and further improvements in operational efficiency.
Arsen Idrisov, Managing Director
Conference call
Date: Tuesday, 22 November 2011
Time: 10.00 CET
To participate by telephone, please dial:
from Sweden +46 8 505 598 53
from Russia +7 499 270 19 65, pin code: 190905#
from other countries +44 203 043 24 36
The presentation will be webcasted live at www.allianceoilco.com.
A replay of the presentation will be available at www.allianceoilco.com.
For further information:
Arsen Idrisov, Managing Director, Alliance Oil Company Ltd, telephone +7 (495) 777 18 08.
Eric Forss, Chairman of the Board, telephone +46 8 611 49 90.
Alliance Oil Company Ltd is a leading independent oil company with vertically integrated operations in Russia and Kazakhstan. Alliance Oil has proved and probable oil reserves of 638 million barrels and downstream operations that include the Khabarovsk refinery and a leading network of gas stations and wholesale oil products terminals in the Russian Far East. Alliance Oil's depository receipts are traded on the NASDAQ OMX Nordic under the symbol AOIL.
