Increase in profits predicted for Russian oil companies

Due to the devaluation of the ruble Russian oil companies are going through the oil crisis better than their Western counterparts, which may contribute to the growth of their operating ruble profit by the end of 2016, analysts of the international rating agency Fitch think; the rise will be about 20%.

Low oil prices successfully coincided with the weakening of the ruble and stably low taxes. According to Fitch, in 2015, the profits of the largest Russian oil companies in the calculation of a barrel of crude oil in dollars fell by 29%, while the price of Brent crude oil fell more in the first nine months of last year – by 48%.

But the falling ruble, in turn, helps to reduce the capital expenditures (measured in dollars) and support the free cash flow, adds Fitch. According to their forecast, in 2016, the weak ruble may increase the net ruble revenue and EBITDA of the Russian oil companies. In its review Fitch considered the performances of Gazpromneft (BBB-), Lukoil (BBB-), Novatek (BBB-), Bashneft (BB +) and Tatneft (BBB-); Fitch doesn’t cover Rosneft since 2013.