Rosneft reports doubled profits ahead of TNK-BP buyout

Rosneft beat analysts' expectations on Thursday by reporting more than doubled quarterly profits to $5.8 billion in advance of its controversial $61 billion acquisition of Anglo-Russian rival TNK-BP. The report should help boost the confidence of one of the Russian state's two most important energy companies on the eve of its planned alliance with the British group BP and emergence as a global super-major by buying TNK-BP. Rosneft will be responsible for more than 40 percent of Russia's production and one-twentieth of the world's oil output by the time it takes command of both the British and Russian stakes of the country's third-biggest oil firm. "The third-quarter results reflect the beginning of broad-reaching transformations within the company to cut costs and improve efficiency, which have already yielded strong results in production and sales," said Rosneft chief executive Igor Sechin. "This allows us to improve the company's financial standing and build stronger foundation for efficient implementation of our strategic projects," he said in partial reference to the TNK-BP buyout. The quarterly report was being watched particularly closely for any signs of residual weakness from a bad second quarter during which Rosneft made a rare loss due to export duty fluctuations and falling energy prices. The same export duty lag -- applicable to all oil companies -- was this time responsible for a jump in profit that further benefited from a 3.4-percent increase in output over the first nine months of the year. "Net profit in the third quarter of 2012 reached a five-year high of 181 billion rubles ($45.8 billion)," Rosneft said in a statement. The company had also attributed its gains to better cost controls and efficiency. Analysts had forecast a net profit of between $3.3 and $5.5 billion dollars for the July through September months. Rosneft has now earned 285 billion rubles ($9.1 billion) through the first nine months of the year -- a 15.4-percent increase from the 2011 figure. The company reported a loss of $250 million in the second quarter of 2012 and a $2.8-billion profit in the same third quarter of last year. Analysts expect its acquisition of TNK-BP -- due to be completed in the first half of next year -- will consolidate Rosneft's position as pillar of the modern Russian state under President Vladimir Putin along with gas giant Gazprom. Sechin said on Wednesday called the framework agreements announced with BP and its Russian partners at TNK-BP as "binding" -- a signal that the government is likely to soon formally approve acquisition.