Russia’s rating agency Expert RA reaffirmed the credit rating of PJSC Rosneft at ruAAA, noting a stable outlook in its latest assessment. The rating, first set in place in mid-2017, remains unchanged, reflecting Rosneft’s enduring financial strength despite evolving external conditions.
The agency characterizes the group’s sector resilience as moderate, attributing this stability to steady global demand for hydrocarbons, comparatively low production costs, and a built-in hedge mechanism within Russian oil companies that helps dampen profit fluctuations caused by oil price swings.
Rosneft reported very favorable hydrocarbon production costs in the first quarter of 2023, with expenses coming in at under $3 per barrel. This places the company among the lowest-cost producers globally. Comparisons cited by industry observers show Persian Gulf benchmarks around $3 per barrel of oil equivalent, while peers such as TotalEnergies in France, bp in the United Kingdom, Equinor of Norway, and Petrobras of Brazil reported higher averages in related metrics.
Analysts note Rosneft’s competitive standing remains strong even in the face of sanctions. This strength stems from ample proven reserves, low operating costs, and a diversified sales network. Supporting this view, reserve audits under the international PRMS framework show robust category 1P hydrocarbon reserves totaling 42.3 billion barrels as of December 31, 2022, with 2P reserves at 84.2 billion barrels and 3R reserves at 132.4 billion boe. Notably, reserve replacement exceeds one hundred percent, underscoring a growing reserve base alongside production levels.
The Expert RA report also highlights the efficiency of Rosneft’s business model. The firm’s assessment points to strong IFRS-based financial results for the first quarter, underscoring profitability and operating performance that surpasses expectations held by many market participants. Key earnings indicators, including EBITDA and net income, exceeded forecasts from leading investment banks covering the company.
Net earnings attributable to shareholders rose by roughly 46 percent in Q1, reaching 323 billion rubles, a figure that outpaced consensus estimates by about 37 percent. EBITDA rose about 25.1 percent to 672 billion rubles, and the EBITDA margin expanded by five percentage points to a record 36.7 percent. Revenue for the quarter reached 1.823 trillion rubles, reinforcing the company’s solid top-line trajectory.
Analysts at Expert RA argue that Rosneft’s high profitability supports a stable financial position and strong liquidity. They note that operating cash flow is expected to comfortably cover debt service, capital expenditures, and dividend obligations, aided by a solid cash balance and reliable access to credit facilities. This financial resilience, combined with a broad asset base and disciplined execution, positions Rosneft well to navigate potential shocks and maintain credit strength in a volatile energy market.