• Q1 2023 HYDROCARBON PRODUCTION INCREASED BY 1.3% QOQ TO 5.6 MLN BOE PER DAY

• Q1 2023 PRODUCTION OF LIQUID HYDROCARBONS INCREASED BY 0.8% QOQ EXCEEDING 4.0 MILLION BARRELS PER DAY

• Q1 2023 GAS PRODUCTION INCREASED BY 2.7% QOQ TO 1.5 MLN BOE PER DAY

• Q1 2023 EBITDA INCREASED BY 25% QOQ TO RUB 672 BLN.
  THE EBITDA MARGIN REACHED 36.7%

• Q1 2023 NET INCOME ATTRIBUTABLE TO ROSNEFT SHAREHOLDERS INCREASED BY 46% QOQ REACHING RUB 323 BLN

• NET DEBT/EBITDA RATIO AS OF THE END OF Q1 2023 WAS 1.3X MATCHING THE LEVEL AS OF THE END OF 2022

Rosneft publishes Q1 2023 results prepared in accordance with the International Financial Reporting Standards (IFRS).

Rosneft’s Chairman of the Management Board and Chief Executive Officer Igor Sechin said:

"In Q1 2023, despite the deteriorating external environment, Rosneft was able to achieve production growth of both liquid hydrocarbons and gas. The Sakhalin-1 project was the main growth driver, increasing daily production by 1.8 times quarter-on-quarter. I should note that the downtime following the exit of the former project operator, American company ExxonMobil, had a negative impact on the technical conditions of field development.

The Company faced the following challenges in the reporting period: amendments to the Tax Code enacted in January, an embargo on petroleum products from a number of unfriendly countries coming into force in February in addition to the oil embargo, and Russia introducing crude oil production cut in March. While the cut did not have much influence on the Q1 2023 results, it will have a strong impact on the results of the following quarter.

The Company has been consistently working on minimization of its operating costs despite rising tariffs of natural monopolies. In Q1 2023, thanks to tight cost control our operating upstream costs and refining costs in Russia on a unit basis decreased by 5.0% and by 12.7% QoQ, respectively.^[1]

In the reporting period, Rosneft paid interim dividends to the Company shareholders totaling over RUB 216 bln in full and on time.

Operating Results

Upstream

In Q1 2023, production of liquid hydrocarbons reached 4.0 mln barrels per day, which is 0.8% higher than in Q4 2022. The key growth driver was Sakhalin-1, where average daily production increased 1.8 times QoQ. At the end of 2022, Rosneft became the operator of the project.

The Company's average daily gas production in Q1 2023 amounted to 1.5 mln boe per day, which was 2.7% higher QoQ. The share of gas in hydrocarbon production in Q1 2023 increased to 27.6%.

As a result, Q1 2023 hydrocarbon production reached 5.6 mln boe per day, 1.3% up QoQ.

In Q1 2023, the Company conducted 1.2 th. linear kilometers of 2D seismic and over 4.1 th. square kilometers of 3D seismic onshore. Rosneft tested 8 exploratory wells  with a 100% success rate.

Production drilling footage in Q1 2023 increased to 2.8 mln meters, or by 2.2% QoQ. Rosneft commissioned 700 new wells, 71% of which were horizontal wells. The share of new horizontal wells with multistage fracturing in Q1 2023 was 45%. Unit production per a horizontal well is twice as much as per one directional well.

Vostok Oil Project

The flagship Vostok Oil project has been executed on schedule. In Q1 2023, the Company completed 1 th. linear km of 2D seismic surveys and over 1.2 sq.km of 3D seismic surveys, drilled 2 exploration wells, with 5 more wells being tested.

As part of the pilot development of the Payakha cluster, in Q1 2023, the Company drilled approximately 20 th. meters and completed drilling of 5 production wells. At the beginning of April 2023, the Company launched pilot development of the Ichemminskoye field. Drilling of the first wells will make it possible to continue studying the geological properties of the formation, helping to determine the most effective way of developing the field.

Construction of the Vankor - Payakha - Sever Bay trunk pipeline is underway: over 25 th. piles have been installed and 200 km of pipeline have been welded. The Company continues the construction of the Sever Bay Port oil terminal, where a concrete plant was put in operation, a rotation camp for more than 1,000 people was deployed, and hydraulic engineering structures are being constructed.

The Yenisey Basin transshipment facilities are under construction, and the onshore and mooring infrastructure is being expanded. Production bases with the total area of more than 100 hectares have been set up, and more than 11 mln cubic meters of soil have been used for the sites construction. 570 th. tonnes of materials and equipment were delivered via the Northern Sea Route and winter roads during the winter season.

Downstream

In Q1 2023, the Company processed 22.6 mln tonnes of crude oil in Russia. Oil refining depth rate increased to 76.0% while light oil product yield reached 57.1%.

The Company has been consistently working on development of in-house technologies and import substitution. In Q1 2023, a pilot run confirmed the possibility of commercial production of winter and Arctic diesel fuel using isodeparaffinization and hydrofinishing catalysts developed and produced at Angarsk Catalyst Plant (a part of the Rosneft’s oil refining complex).

Price trends at the Company's retail sites on the domestic market remain below the inflation rate.

Financial Results

Operating performance patterns and the current macroeconomic environment combined with the management decisions determined the trends of our key financial performance.

In Q1 2023, the Company’s revenue^[2] amounted to 1,823 bln rubles, which is 1.1% lower QoQ, while the Urals price decreased by 8.2% in ruble terms. In settlements with the counterparties for export deliveries the Company gives priority to payments in rubles and national currencies of friendly countries.

In Q1 2023, EBITDA increased by 25.1%, reaching RUB 672 bln, which was partly attributable to the reduction of unit operating expenses for hydrocarbon production and for refining in Russia by 5.0% and by 12.7% QoQ, respectively. The EBITDA margin reached a record high of 36.7%.

The Q1 2023 net income attributable to shareholders amounted to RUB 323 bln, up 45.5% versus Q4 2022, primarily due to the higher operating profit.

Capital expenditure for Q1 2023 amounted to RUB 275 bln, showing a QoQ decline of 11.3%, primarily due to seasonal drivers.

The Company continues to optimize its debt structure in order to match the revenue structure and reduce the cost of debt. In March 2023, the Company completed its second placement of yuan-denominated bonds in the record high amount for the Russian market of 15 bln. At the same time, the ratio of Net debt/EBITDA at the end of the quarter was 1.3x in dollar terms, which is in line with the ratio level as of the end of 2022. Significant amount of liquid financial assets on the books as well as available credit lines also support the high level of financial stability of the Company.

ESG

In Q1 2023, the Company continued its efforts to achieve the Sustainable Development Goals as part of the "Rosneft-2030: Reliable Energy and the Global Energy Transition" strategy.

Rosneft has been consistently developing the management system to ensure integrity of its production facilities and equipment with the goal of achieving zero accident rate by 2030 or earlier. In Q1 2023, the PSER-1 process safety event rate improved by 59% YoY, while the PSER-2 improved by 36%.

In Q1 2023, the Company did not register a single accident or oil, gas or water show during well workover, development or drilling at its facilities.

Rosneft implemented a number of socially important initiatives aimed at minimizing its environmental footprint and preserving biodiversity at Company production sites. By using the innovative methods, the Angarsk Petrochemical Company increased its air monitoring efficiency by 35% due to the use of new methods. The Company applied a cutting-edge process system for reservoir pressure maintenance at the Samotlor oil field. The system is part of the corporate effort to improve water management, and its application allowed stopping water withdrawal from surface water sources. The Company’s producing subsidiary Samaraneftegaz completely stopped water withdrawal for reservoir pressure maintenance as well as water disposal into water bodies. The share of recycling and reused water in Company's operations has exceeded 90% in the past nine years.

^[1] In dollar terms, unit operating expenses for hydrocarbon production remained below USD 3/boe which is in line with the target formulated in the Company’s strategy.
^[2] Includes revenue and equity share in profits of associates and joint ventures.

Information and Advertising Department
Rosneft