Today, Bashneft Group, which comprises JSOC Bashneft, its subsidiaries and affiliates, released its unaudited consolidated financial statements for the third quarter of 2014 and the nine months ended September 30, 2014 prepared in accordance with International Financial Reporting Standards (IFRS).

3Q2014 vs.2Q 2014:

The Group’s revenue from sales decreased by 0.2% to 162,861 million 

Adjusted EBITDA increased by 2.6% to 30,298 million 

Net income attributable to the shareholders of the parent company declined by 1.54% to 15,611 million

Operating cash flow decreased by 27.2% from RUB 42,001 million  to RUB 30,575 million 

Capital expenditure increased by 31.5% and totalled  RUB 12,832 million 

Oil production increased by 5.1% (4,596 thousand tonnes), while the output of petroleum products fell by 1.1% (to 5,056 thousand tonnes).

The output of Euro 5 gasoline declined by 7.0%, while the output of Euro 5 diesel fuel grew by 0.4%.

9M2014 vs.9M 2013:

The Group’s revenue from sales increased by 13.3% to 472,705 million 

AdjustedEBITDA increased by 10.8% to 85,293 million 

Net income attributable to the shareholders of the parent company increased by 39.6% to 45,425 million

Operating cash flow increased by 31.8% from RUB 58,932 million  to RUB 77,697 million 

Capital expenditure added 37.6% and amounted to 31,643 million 

Oil production grew by 10.0%, while the output of petroleum products grew by 1.6%.

The outputof Euro 5 gasoline and diesel fuel increased by 34.1% and 21.7% respectively.

A considerable improvement in financial performance during the nine months of 2014 was driven mainly by an increase in oil production combined with a favourable pricing environment.

In the third quarter of 2014, a 27.2% quarter-on-quarter reduction in the amount of cash generated from operating activities was related to a high base in the second quarter, including prepayment received by the Company under a long-term contract for supply of petroleum products during that period which amounted to $ 500 million.

Higher capital expenditure was related primarily to an increase in investment in the development of the Trebs and Titov fields in the Nenets Autonomous District, as well as to the growth of capital expenditure at brownfields.

As of September 30, 2014, the Group’s total debt amounted to 166,436 million, up by 1.1% compared tothe level reached as of June 30, 2014 (RUB 164,604 million). As of September 30, 2014, adjusted net debt amounted to 127,577 million, which is 19.1% higherthan than the level reached as of June 30, 2014 (RUB 107,124 million).

During the nine months of 2014, oil production at the Company’s fields totalled 13,085 thousand tonnes, up by 10.0% compared to the same period in 2013. In the third quarter of 2014, average daily oil production reached 50 thousand tonnes per day.

The considerable increase in oil production in the third quarter of 2014 was related to a 3.8% increase in production at brownfields due to highly efficient geological and engineering operation sand the fact that the Company produced 572 thousand tonnes of oil at the Trebs and Titov fields and 397 thousand tonnes of oil at the Sorovskoye field of LLC Burneftegaz.

During the nine months of 2014, Bashneft’s refining complex in Ufa processed 16,323 thousand tonnes of hydrocarbons, which is 1.7% more than in the same period in 2013. During the nine months of 2014, average refining depth (84.9%) and the share of light products (60.1%) remained almost unchanged year-on-year.

In the third quarter of 2014, the output of commercial products decreased by 1.1% quarter-on-quarter to 5,056 thousand tonnes. In the third quarter of 2014, gasoline output declined by 7.8% quarter-on-quarter to 1,169 thousand tonnes, which was related to a number of operational factors. Consequently, the output of Euro 5 gasoline decreased by 7.0% to 1,047 thousand tonnes; at the same time, its share in the total gasoline output increased to 89.6%.

In the third quarter of 2014, the output of diesel fuel fell by 3.6% quarter-on-quarter to 1,880 thousand tonnes. At the same time, in the third quarter of 2014, the output of Euro 5 diesel fuel amounted to 706 thousand tonnes, remaining almost unchanged compared to the previous quarter.

During the nine months of 2014, the output of Euro 5 gasoline increased by 34.1% to 3,120 thousand tonnes, while the output of Euro 5 diesel fuel rose by 21.7% to 1,923 thousand tonnes.

KEY FINANCIAL AND OPERATING RESULTS FOR THE THIRD QUARTER AND THE NINE MONTHS OF 2014