Consolidated segment indicators

Consolidated segment indicators were formed based on the actual financial statements.

Revenue, MM RUB
EBITDA, MM RUB
Average headcount, persons
Arktikmorneftegazrazvedka JSC
Ownership Structure, %

Arktikmorneftegazrazvedka JSC is a Company that renders services in the oil and gas sector.

Activities

The priority region of the Company’s activities is in South-East Asia where it participates in prospective projects for drilling the wells offshore the Socialist Republic of Vietnam.

The main line of AMNGR JSC’s development is the implementation of Zarubezhneft JSC’s projects for offshore wells construction as a drilling contractor.

Performance in 2018

In 2018, Arktikmorneftegazrazvedka JSC obtained the following performance results:

  • Ensuring the operation of the jack-upjack-up "Murmanskaya" for 225 days for the construction and testing of exploratory wells 1903 (Block 09-1) and EF-1X (Block 12/11).
  • Also the historical name for the drilling vessel "Valentin Shashin" was returned under the RF colors.
  • Optimization of operating expenses by reducing the costs for the personnel of the jack-upjack-up, transport costs and other production expenses;
  • Development of the Industrial Engineering Education School business stream: 4,418 people were trained (30% of growth compared to 2017), including 972 people on remote courses (71% growth compared to 2017), an increase in the remote courses base from 13 to 19 disciplines, entry into the international market has been done, two courses for foreign customers were held.
Arktikmorneftegazrazvedka JSC assets Brief description
1. “Murmanskaya” jack-up Year made/modernization 1991/2013
Self-elevating drilling rig, capable of drilling wells up to 6,000 m deep with a maximum sea depth of 100 m Dimensions 109 x 68 м
Accommodations 84
2. Valentin Shashin DV Year made/modernization 1982/2014
Drilling vessel (DV) capable of drilling wells up to 7,000 m deep with a maximum sea depth of 1,715 m Dimensions 149 x 28 м
Accommodations 116
3. The coastal infrastructure of Arktikmorneftegazrazvedka JSC includes:
- Maintenance engineering area - (Kola City, Kildinskoe highway, 2),
- Industrial Engineering Education School.

Revenue, MM RUB

The decrease in revenue in 2018 in regards to the previous period is due to the early repair of “Murmanskaya” jack-upjack-up to obtain a Grade to fulfill the relevant requirements of supervisory authorities and an earlier need for the jack-upjack-up to work on Block 12/11.

OPEX, MM RUB

The reduction in operating expenses is due to changes in schedules of “Murmanskaya” jack-up and the down time of V.Shashin DV.

Average headcount, persons

In 2018, Arktikmorneftegazrazvedka JSC retained Company’s headcount target value set by the Corporate Center.

GIPROVOSTOKNEFT JSC
Ownership Structure, %

Giprovostokneft JSC is an industry-level design and engineering company focused on integrated survey and general design of facilities at all field development stages (exploration, development, facilities construction and production) to ensure the most efficient hydrocarbon resource recovery.

Activities

The main activity of Giprovostokneft JSC is designing and engineering surveys of oil production, treatment and transportation facilities. The Company has plenty of experience in various areas - developing concepts for elaboration of oil and gas companies assets (individual fields and clusters of raw hydrocarbon fields), research practice in the area of drilling and developing projects for well construction, consulting services on construction project management, and also is a scientific and technical center of Zarubezhneft Group of Companies competences in the following areas:

  • drilling engineering,
  • integrated design,
  • arrangement of technically complex facilities,
  • development of regulatory and procedural guidelines in the field of oil and gas production,
  • pricing and rating in design and construction.

Performance in 2018

In 2018, the total revenue from survey and design works, academic research work, designer supervision and other works (services) on primary activities of Giprovostokneft JSC amounted to RUB 1,609 million, including the work carried out using its own resources in the amount of RUB 1,229 million, by subcontractors in the amount of RUB 380 million.

1,609
MM RUB
is the revenue in 2018, which is 7% higher than in 2017 owing to the increase of the operations’ scope performed with in-house capacities.

Revenue, MM RUB
OPEX, MM RUB

The increase in EBITDA compared to 2017 was due to an increase in the amount of work performed in-house. The increase in operating expenses is due to the reflection of irrelevant costs in accountancy 2018.

VNIIneft JSC
Ownership Structure, %

VNIIneft JSC is a leading industrial institute specializing in oil fields development.

Activities

The primary activities of VNIIneft JSC are scientific and technical support of Zarubezhneft JSC projects, R&D aimed at overcoming the current technical and economic thresholds up to displ. ratio and sweep ratio in hydrophobic carbonate reservoirs, creating and improving modern methods of enhancing oil recovery, laboratory studies of core and formation fluids, elimination of the Company’s licensing risks, work in the field of oil and gas reserves calculation and designing Oil and Gas Field Development, training on further vocational education program.

Performance in 2018

In 2018, the following strategic tasks and projects were completed:

  • research and development works (R&D) on studying the structure of pore spaces was completed;
  • compounds of surfactant-polymer flooding were tested (in collaboration with BASF, Solvay, RSU of Oil and Gas, and KFU);
  • gas pumping was performed to assess the effectiveness of use at LLC “JC “RUSVIETPETRO” fields;
  • the potential effectiveness of ion-modified water for optimizing the injection to carbonate reservoirs was experimentally confirmed;
  • three-phase filtration tests were carried out, a linear model was adjusted, the combustion characteristic were determined;
  • a program was drawn up with polymer injection at Kharyaga field;
  • high rates of oil recovery by steam at the core of M formation at Boca de Jaruco field were experimentally obtained;
  • support of innovation activities and innovative development program (IDP) of Zarubezhneft JSC was carried out;
  • a new focus area on studying the reagents for chemicalization of the fields of Zarubezhneft Group of Companies was organized;
  • the work was performed on calculating the geological reserves of oil, dissolved gas and related components and the Process scheme for the development of East-Yanemdeyskoye field was developed;
  • the work was performed on calculating the geological reserves of oil, dissolved gas and related components and a Supplement to the process scheme for the development of the Sikhoreyskoye and Kharyaga fields of LLC “JC “RUSVIETPETRO” was drawn up;
  • on-going calculation of oil and dissolved gas reserves of South-Syurkharatinskoye field of LLC “JC “RUSVIETPETRO” was carried out;
  • the prospecting survey unit of the technical research center performed an operational assessment of reserves increment for exploratory drilling, in particular, the prospecting survey program of Block 09-1 was prepared taking into account seismic inversion results;
  • the project groups on the projects JV “Vietsovpetro”, ZARUBEZHNEFT-Production Kharyaga LLC, LLC “JC “RUSVIETPETRO” are staffed by 95%. The main tasks include the analysis and optimization of the current development state, the construction of operational geological and hydrodynamic models, as well as the formation of a geological and technical measures rating;
  • assessment and development of the Middle East projects was performed, which ensured the accession into these assets;
  • the institute development strategy was prepared and approved (including, as part of the 75th anniversary celebration, a series of events was carried out to shape the image of VNIIneft JSC);
  • more than 10 students undertook an internship, followed by employment.

In the structure of income received from the implementation of all types of activities, the greater relative weight traditionally accounts for income from R&D deliverables.

Prospects

In 2018, VNIIneft JSC Development Strategy was developed and approved for the period of 2018-2022. The main goal of the Company in the medium term is to create the leading sectoral research institute of the Russian Federation in the sphere of enhanced oil recovery methods (EOR) and carbonate fields, forming an ideology of elaboration in these fields and being the main expert. The focal point is focused on the development of the infrastructure and technical potential of the Company.

Revenue, MM RUB

The increase in revenue in 2018 compared to 2017 was due to an increase in the scope of work of the technical research center owing to changes in the structure and volume of filling the stock of orders, including in Zarubezhneft Group of Companies.

OPEX, MM RUB

The increase in operating expenses in the reporting year is associated with an increase in the scope of subcontracting services.

Average headcount, persons

Taking into account the Company’s objectives, in 2018, the production staff was redistributed towards the staff increase in the field “Scientific and Technological Center”. In general, the average headcount corresponds to the existing business processes.

712
MM RUB
is the revenue in 2018, which is 14% higher than in 2017 owing to the increase of the work scope
RMNTK NEFTEOTDACHA JSC
Ownership Structure, %

RMNTK Nefteotdacha JSC is an enterprise that performs a wide range of oilfield services (well workover and maintenance, integrated drilling services, geological engineering studies, hydrodynamic studies, etc.), including technical and personnel support for service work.

In addition, the Company performs a function of an operator in terms of pilot projects and introducing steam-thermal methods of increasing oil recovery at the fields of Zarubezhneft Group of Companies and beyond.

Activities

The production activities of RMNTK Nefteotdacha JSC are performed in the following fields:

Zarubezhneft JSC Group of Companies:

  • On the territory of the Arkhangelsk region (Nenets Autonomous District), at the fields of LLC “JC “RUSVIETPETRO”, and on the territory of Kharyaga PSA, on the facilities of ZARUBEZHNEFT-Production Kharyaga LLC, the oilfield services are being carried out:
    • integrated service in drilling,
    • production well maintenance and well workover,
    • geological and technological research,
    • reservoir testing,
    • hydrodynamic well research,
    • drilling supervision,
    • repair and insulation works,
    • implementation of enhanced oil recovery methods

External customers:

  • The facilities of RN-Yuganskneftegaz LLC are supervised during the construction of production and exploratory wells under separate service conditions.

Performance in 2018

Revenue, MM RUB

5% growth in revenue compared with the previous year was due to an increase in the scope of work on the well workover and maintenance, well intervention works by using the cable technology, and an increase in the scope of work on drilling supervising.

OPEX, MM RUB

The increase in operating expenses is stipulated by the commissioning of the 2nd wells servicing and workover brigade (March 2018) and the 2nd cable work brigade (June 2018) at the facilities of ZARUBEZHNEFT-Production Kharyaga LLC, and also due to the arrangements for the drilling rig start. The scope of work was carried out as per the approved plan for 2018.

ВIn the medium term, the main scope of work of RMNTK Nefteotdacha JSC is related to the provision of integrated services in drilling and workover at the fields of LLC “JC “RUSVIETPETRO” and ZARUBEZHNEFT-Production Kharyaga LLC.

The Company’s focal point is focused on the load of its own production facilities, increase in the development coefficient of wells servicing and workover teams, reduction of unproductive time, operational efficiency control, and access to foreign markets.

ZARUBEZHNEFTESTROYMONTAZH LLC
Ownership Structure, %

Zarubezhneftestroymontazh LLC is a Company that performs the organization of construction, reconstruction, overhaul, construction control, and preparation of design documentation, engaged by developers or customers, based on a general contractor agreement.

Activities

The main activities of Zarubezhneftestroymontazh LLC in 2018:

  • arrangement of the fields of LLC “JC “RUSVIETPETRO” of the Central Khoreyver Uplift and Kharyaga field of ZARUBEZHNEFT-Production Kharyaga LLC;
  • construction of a preliminary water discharge unit for formation pressure increasing system at Pashkinskoye field of Orenburgnefteotdacha JSC;
  • provision of engineering services and performance of work on supply of materials at the Boca de Jaruco field, the Republic of Cuba, as part of the arrangement of the pilot works site.

Performance in 2018

Compared to 2017, in the reporting year, the scope of work performed with Company’s own efforts was expanded: the work started on anticorrosion treatment, heat insulation and thermal treatment of welded joints, a station for admission testing of welders was organized.

Revenue, MM RUB
OPEX, MM RUB

The main stock of orders of Zarubezhneftestroymontazh LLC is focused on customers within the Zarubezhneft Group of Companies. The total revenue amount for the reporting year amounted to RUB 3,977 million. The decline of 6% compared to last year was due to a change in the scope of capital construction for the main customers (LLC “JC “RUSVIETPETRO” and ZARUBEZHNEFT-Production Kharyaga LLC), incl. on dumping sites and roads, construction of oil and gas pipelines and water conduits, construction of high voltage power lines and winter roads.

The decrease in operating expenses in 2018 made 4%, or RUB 121 million, including subcontracting services.

A part of the construction and installation work was carried out solely by Zarubezhneftestroymontazh LLC, the management organ for construction and installation work and the radiographic and visual-measuring control laboratory. The work was carried out in-house at the Central Khoreyver Uplift and Kharyaga Field facilities.

In 2018, the Company constructed 26 km of pipelines and 18 km of high-voltage lines, and also performed works on dumping sites and roads covering 377 thousand m3. The Company built 125 km of winter roads using its own resources.

Prospects

In the medium term, the main focus of Zarubezhneftestroymontazh LLC is increasing the competences for development of the fields of LLC “JC “RUSVIETPETRO” of the Central Khoreyver Uplift and Kharyaga Field of ZARUBEZHNEFT-Production Kharyaga LLC. Possible options for entering the work performance market at construction facilities outside Zarubezhneft Group of Companies have been worked out.

Zarnestservice LLC
Ownership Structure, %

Zarnestservice LLC is engaged in marketing the crude oil produced by the Zarubezhneft Group of Companies on domestic and foreign markets, supplying materials and equipment, as well as rendering services for JV “Vietsovpetro” requirements.

Activities

The order portfolio of Zarnestservice LLC has a focus on the Zarubezhneft Group of Companies.

Its areas of activityactivities include:

  • Supplying Russian goods to JV “Vietsovpetro”;
  • Commission operations for the oil sales of Zarubezhneft JSC’s subsidiaries on domestic and foreign markets;
  • Oil sales under sale and purchase contracts with calendar risks hedging;
  • Commission operations for chartering a supply and tug vessel for the needs of JV “Vietsovpetro”;
  • Supplying goods to Zarubezhneft JSC’s subsidiaries.

Performance in 2018

Zarnestservice LLC is a commissioner for oil sales from the resources of subsidiaries engaged in oil production in the Russian Federation. In 2018, 3,290,631 tons of oil were sold under the commission agreements, of which 1,885,101 tons were distributed to the domestic market and 1,405,530 tons were exported.

Sales of additional oil volume under sales contracts with calendar risks amounted to 812,132 tons.

10 transactions were performed on calendar risks hedging; the total actual volume of deliveries was 5,869,295 barrels of oil. The total financial result on hedging transactions using production and financial instruments (PFI) amounted to more than 6 million USD.

The actual proceeds from inventory delivery to LLC “JC “RUSVIETPETRO”, ZARUBEZHNEFT-Production Kharyaga LLC and other subsidiaries of Zarubezhneft JSC GC in 2018 amounted to RUB 1,289 million, incl. RUB 374 million – cable and wire products delivery (delivery was carried out for the first time). The increase is also due to the development of a new line of activity for the supply of petroleum products (PPs) ≈ 500 tons, with revenue amountingamounted to RUB 60 million.

The actual proceeds from inventory supply and provision of services for JV “Vietsovpetro” requirements in 2018 amounted to RUB 1,644 million.

The total revenue in 2018 amounted to 6,501 million tons of oil equivalent. (including transactions on hedging terms – RUB- 37,781 million), which is higher than 2017 level. The revenue growth is stipulated by gaining a high cumulative financial result from supply transactions using hedging tools, as well as an increase in the range and volume of supplies of inventory to subsidiaries of Zarubezhneft JSC.

The increase in operating expenses is associated with additional volumes of third-party oil resources under sales contracts, as well as an increase in staff costs due to changes in the organizational structure and an increase in headcount (in May 2018, 13 employees of the Competitive Tendering Organization Office were transferred).

Oil sales, thous. t
Tubing deliveries, t
Revenue, MM RUB
ОРЕХ, MM RUB

The Company’s success in 2018 was due to the high aggregate financial result of the delivery transactions with application of hedging tools as well as increase of the products’ range and the materials and goods supply volumes.