Public Joint Stock Rosneft Oil : 2020 Second quarter IFRS (Presentations)

Rosneft Oil Company

IFRS Results

Q2 2020

August 14, 2020

Important Notice

Information herein has been prepared by the Company. The presented conclusions are based on the general information collected as of the date hereof and can be amended without any additional notice. The Company relies on the information obtained from the sources which it deems credible; however, it does not guarantee its accuracy or completeness.

These materials contain statements about future events and explanations representing a forecast of such events. Any assertion in these materials that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. We assume no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting such statements.

This presentation does not constitute an offer to sell, or any solicitation of any offer to subscribe for or purchase any securities. It is understood that nothing in this report / presentation provides grounds for any contract or commitment whatsoever. The information herein should not for any purpose be deemed complete, accurate or impartial. The information herein in subject to verification, final formatting and modification. The contents hereof has not been verified by the Company. Accordingly, we did not and do not give on behalf of the Company, its shareholders, directors, officers or employees or any other person, any representations or warranties, either explicitly expressed or implied, as to the accuracy, completeness or objectivity of information or opinions contained in it. None of the directors of the Company, its shareholders, officers or employees or any other persons accepts any liability for any loss of any kind that may arise from any use of this presentation or its contents or otherwise arising in connection therewith.

2

Inclusive Approach* to Combat COVID-19

Concern for people's well-being is the Company's top priority

Strict compliance with sanitary and epidemiological requirements

• Regular testing, over 270,000 test taken
• Over 16 mln units of personal protective equipment
• Epidemiological alertness regime in 151 rotation camps

Integrated pandemic threat response system

• The Company has ensured business continuity and maintained control over the performance of its core operations
• Safety of employees and customers at corporate retail sites
• Antiseptic components production: 21,700 tons of acetone and 2,100 tons of ethyl alcohol
• Providing support to medical institutions in the regions of the Company's presence
• Volunteer teams operate in more than 60 Group Subsidiaries

* The approach embraces the best Russian and international practices of combating COVID-19, including those recommended by Rospotrebnadzor	3
More information onhttps://www.rosneft.com/upload/site2/attach/0/87/03/Covid-19_ENG.pdf

H1 2020 Key ESG Results

Environmental

c. RUB 17 bn

	«green» investments*
Social	Constant progress in occupational safety:
	Process safety events rate
	complies with top quartile**
Governance	Extension of goals and functions:
	focus on social and environmental responsibility
	Board Strategy and Sustainable
	Development Committee

World-class transparency and information disclosure

Rosneft: Contributing to Implementation of UN Sustainable Development Goals 2019 Sustainable Development Report

Rosneft Public Position in the Field of Human Rights

Declaration on Human Rights for interacting with suppliers of goods, works and services

* Key investment patterns included the Gas Program, the Pipeline Reliability Improvement Program and efficient waste management
** Process safety events rate - the frequency of accidents with respect to occupational safety, falls into the top quartile of The International Association of Oil & Gas Producers (IOGP) and	4
Conservation of Clean Air and Water in Europe (CONCAWE)

COVID-19 Impact

on Crude Oil and Petroleum Products Demand

Oil demand in Europe

15	mmbd
								2019
			-8%
				-9%	-4%	+6%	+4%
10
5
	Jan-20	Feb-20	Mar-20	Apr-20	May-20	Jun-20	Jul-20

Oil demand in Asia-Pacific region

35	mmbd
30									2019
	-13%
		+2%	-5%				+3%
				-2%	+1%
25
20
	Jan-20	Feb-20	Mar-20	Apr-20	May-20	Jun-20	Jul-20

Main petroleum products demand in Europe

50 mmt		Gasoline		Jet fuel		Diesel		Fuel Oil

40

30

20

10

0 Jan-20Feb-20Mar-20Apr-20May-20Jun-20Jul-20

Domestic demand for main petroleum products

9	mmt		Gasoline		Jet fuel		Diesel		Fuel Oil

6

3

0 Jan-20Feb-20Mar-20Apr-20May-20Jun-20Jul-20

Source: Wood Mackenzie, Petromarket Research Group. Data for domestic demand in July is preliminary

5

Record Low Oil Prices

Followed by Partial Recovery

Oil prices and differentials1

Gross Upstream margin2

80	$/bbl	Brent
		Urals
		ESPO
60

40

20	Urals-Brent	$/bbl
	ESPO-Brent
0

Jul-20

Jun-20

May-20

Apr-20

Mar-20

Feb-20

Jan-20

Dec-19

Nov-19

Oct-19

Sep-19

Aug-19

Jul-19

Jun-19

May-19

Apr-19

Mar-19

Feb-19

Jan-19

10

5

0 -5-10

12	'000 Rub/t
				Monthly average
9				FY average

6

3

0

Jul-20

Jun-20

May-20

Apr-20

Mar-20

Feb-20

Jan-20

Dec-19

Nov-19

Oct-19

Sep-19

Aug-19

Jul-19

Jun-19

May-19

Apr-19

Mar-19

Feb-19

Jan-19

Note: (1) Monthly averages, (2) Calculated as Urals price less MET, export customs duty and transportation costs at the Yugansk-Primorsk route

6

Key H1 2020 Events

1	Final 2019 dividends approved. Payments
completed ahead of schedule (July 14)

2

3

45 mln shares and GDRs for a total of c. $196 mln have been purchased under the share buyback program1

Positive free cash flow generation and debt decrease despite a 40% oil price drop and decline in demand

4	Production cuts under
the new OPEC+ agreement

Completed the disposal of Venezuelan assets.

5 Following the transaction 9.6% of treasury shares

put on the Company's balance sheet

Note: (1) Since the start of the Program as of August 12, 2020

7

Operating Results

8

Key Operating Indicators

Oil production,

kbd

Gas production,

mmcmd

Petroleum product and petrochemical output,

mmt

4,640	4,6814,338
4,036
Q1'20 / Q2'20	H1'19 / H1'20

182.7	166.6	184.7	174.7
Q1'20 / Q2'20	H1'19 / H1'20
		4.70	5.47
2.93	2.54	45.76	46.00
25.07	20.93
Q1'20	Q2'20	H1'19	H1'20

in Russia				abroad	9

Navigating OPEC+ Environment

Crude oil production in Russia (2020)

6	mmbd		11	 The Company has started oil production cuts under the
				new OPEC+ agreement since May 2020
			stage 2	 Production cuts on a pro rata basis
			 Production reduced by 18% in May-June vs Q1 2020
5	stage 1		9
	average
				 Stage 1 extended till the end of July 2020
				 The Company successively executes its approach to
4			7	production cuts:
				 Asset selection (to cut production) is based on
				economic efficiency
				 Continued development of new fields
3			5	 Efficient long-cycle wellworks to be continued
				according to schedule
				 Efficient well stock management
2			3
	Jan Feb Mar Apr May Jun	Jul	Aug Sep Oct Nov Dec
	Rosneft (LHS)		Russia total* (RHS)

* Indicative level for Russia

10

Examples of Successful Production Management

Regulating pump jacks parameters

(Bashneft-Dobycha, lowering stroke length and pumping speed)

Reduction of flow rates

Number of wells

1/7

2/7

3/7

4/7

5/7

6/7

7/7

8/7

9/7

10/7

11/7

12/7

13/7

14/7

15/7

16/7

17/7

18/7

19/7

20/7

21/7

22/7

23/7

24/7

25/7

26/7

27/7

28/7

Average frequency of the active wells stock

(Tomskneft, April-July 2020)

57

before limitations

after limitations

Regulation of the ESP* rotation frequency and the SRP** number of swings enables to quickly manage the operating mode of the mechanical well stock without replacing the equipment. These approaches are actively used on active wells stock

*EPS - electrical submersible pump **SRP - sucker-rod pump

55

average frequency, Hz

11

Development of Key Oil Projects

Сев. Комсомольское м/р

3Р (PRMS) reserves - 269 mmtoe1

The implementation of the 1st stage of full-scale field development (PK-1 horizon) has begun

Development drilling is in progress, 43 wells have been drilled as of June 30, 2020

Engineering preparation of the main facilities sites for the full-scale development of the field is underway

Лодочное месторождение

3Р (PRMS) reserves - 85 mmtoe

Pilot development programs are being implemented with connection to the facilities of the Vankor field, preparation for starting is underway

Development drilling is in progress, 38 wells have been drilled as of June 30, 2020

Construction and installation work is underway at infrastructure facilities and oil and gas processing facilities

YaNAD

KhMAD

Irkutsk

Region

Erginskiy LA

3Р (PRMS) reserves - 89 mmtoe

Launch year - 2020, production plateau - ~4.5 mmt (2024)

Development drilling is in progress at 11 pads, 144 wells have been drilled as of June 30, 2020

A 79 km pressure pipeline welding is nearing completion, preparatory work is underway to verify the testing of the pipeline at the finished sections

Construction of infrastructure facilities, infield pipelines and electric power transmission lines are underway

Severo-Danilovskoye

3Р (PRMS) reserves - 101 mmtoe

Launch year - 2020, production plateau - ~2 mmt (2024)

95 well to be drilled, 10 wells have been drilled as of June 30, 2020. The majority of wells will be horizontal

Work continues on the construction of well pads, infrastructure facilities, the oil pipeline and the motor road (currently operated in a year-round technical mode) to the Verkhnechonskoye field

Note: (1) Reserves volume of the entire field

12

Development of Key Gas Projects

Rospan

3Р (PRMS) reserves - 897 bcm of gas; 204 mmt of gas condensate, LPG and oil

Production plateau - >21 bcm of gas, >5 mmt of stable condensate and oil, up to 1.3 mmt of LPG

Launch of the first stage - Dec. 2020, project daily production year - 2021, production plateau year - 2022

The installation of the main technological equipment, installation and testing of process pipelines and control gear at the first start-up complex of the gas and condensate processing facility of Vostochno-Urengoysky LA and the railway terminal at the Korotchaevo station were completed. The main construction and installation works at the oil processing facility have been completed. Commissioning activities arecarried out «under load» on completed construction sub-facilities

YaNAD

Sibneftegaz

3Р (PRMS) reserves - 514 bcm of gas

6M 2020 production - 5.25 bcm

Gas production plateau - >13 bcm

Production plateau year - 2022

Production drilling, work on the construction of gas processing and transportation facilities to be continued in 2020

Kharampur

3Р (PRMS) reserves - 735 bcm of gas

Gas production plateau: 1st stage (Senoman) - ~11 bcm

Project launch - 2021; Production plateau year - 2022

Construction and installation work is underway at the complex gas processing facility; equipment is being installed at the commercial gas metering unit on the gas pipeline of external transport, welding of a tunnel for the construction of a crossing using the method of directional drilling across the river Ayvasedapur has begun

Construction works on the site and linear facilities, as well as other ground infrastructure facilities to be continued in 2020

Kynsko-Chaselskoye Neftegaz

3Р (PRMS) reserves - 195 bcm of gas

Production plateau - 8.7 bcm - Stage 1, >15 bcm - KChLA exploration

Project launch - 2026

13

Excess Profit Tax Introduction Impact

Crude oil production growth

at fields that switched to EPT, 2019

mmt

+41%		 The EPT regime was introduced since 2019
	 It is an important step towards a sustainable and
		economically balanced fiscal regime in the industry
		 It enables to improve economic efficiency and
		increase investments in projects which are
		economically unviable under the standard regime
Standard regime	EPT	 As a result of EPT introduction starting 2019:
Growth of investments
	 total production at fields that switched to EPT grew
at fields operating under EPT, 2019
Rub bn		by 41%
	 investments in projects increased by 2.1x times

	+214%
Standard regime	EPT

14

Gas Business is Resistant to

Volatile Prices at Global Markets

Domestic and export netback														 Starting 2020 domestic gas netbacks have been
from Novy Urengoy																	more efficient compared to export deliveries at
																			Rub/mcm	spot prices. Forward prices imply domestic market
8,500						Netback, export (TTF)				Netback, Russia (Moscow)	premiums throughout the year
									 The Company's long-term domestic gas supply
6,500
4,500																							portfolio is up to 70 bcm per annum
																						 Power producers subject to the smallest demand
2,500
																						reduction under restrictive measures comprise
500																							60% of the supply portfolio
-1,500
-3,500
01	02 03	04	05	06	07	08	09	10	11	12	01	02	03	04	05	06	07	08	09	10	11	12
				2019											2020

Competitive advantages of Rosneft's gas business:

• Low risk profile of gas projects focused on the domestic market
• Stable and predicted cash flow, unaffected by the external environment
• No need to subsidize gas exports at the expense of the domestic market
• Gas condensate production is excluded from OPEC+ restrictions

15

Gas Business

Gas production in Russia

(OPEC+ impact is limited by the amount of associated gas)

 The Company's H1 2020 gas production declined by c.

4% (YoY) compared to 9.6% total reduction in Russia1

	-9.6%	bcm
	-3.8%
31.0		29.8
H1 2019		H1 2020

Decrease of production in Russia

Decrease of the Company's production

 The main growth driver is the Rospan project, which

provides the largest incremental production increase

for both gas and liquids. The launch of the project is

planned for December 2020

 Projects development at Sibneftegaz and

Kharampurneftegaz fields is in active phase

 According to the Federal Antimonopoly Service gas

			prices for industrial consumers and citizens have been
Gas sales volumes and average price		increased by 3% starting August 1, 2020
4.16	4.13		 Decrease of revenues was caused by demand
31.38	27.97	Average price	reduction following warm weather conditions as well as
('000 Rub/mcm)
external factors that negatively influenced end
2	2	Volume (bcm),
consumers
	including.:
		gas procured
H1 2019	H1 2020

Gas sales revenues

Rub bn

130.5115.6

H1 2019

H1 2020

Note: (1) Gas extracted less gas flared

16

Refining

Refining margins

			Russia1				Europe				9.23		8.56	$/bbl
		7.52		7.62	7.78
							6.31
5.63								5.27	5.13			5.22
							5.06
										2.62
												1.89
		-0.63		0.38			-1.00	-0.10
-1.30
							-1.58
										-3.35
Q1		Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2
2018	2018		2018	2018		2019	2019	2019	2019	2020	2020

Key refining indicators
58.4	56.9	mmt
	56.3
	2.77
2.09		2.51
22.87	25.95	21.49
Q2 2019	Q1 2020	Q2 2020

	Refining in Russia		Refining abroad				Light product yield

Refining economics in Q2 2020

• Decrease of refining margin in Russia during Q2 2020 was mainly caused by a negative impact of macro environment: outstripping recovery of oil prices against the lagging petroleum products prices, reduced refining volumes, as well as negative damper component of the excise tax
• Decline of refining margin in Germany QoQ driven by decrease in oil products demand amid COVID-19 pandemic

Q2 2020 results and achievements

• Over the reporting quarter the refining depth increased by 1.4 p.p. to 75.2%, light product yield reached 56.3%
• Syzran refinery launched production of RMLS low sulphur marine fuel in comliance with IMO 2020 requirements
• RMLS residual low sulphur marine fuel sales geography expansion: the start of fuel supply to the seaports of the Black Sea, Arctic and Baltic regions

Note: (1) Including the reverse excise tax on crude and damper for motor fuels

17

Focus on Distribution Channels Development

Netbacks of the main crude oil marketing channels

					Export, Asia								Export, Europe
					Refining in Russia							Domestic market
450								$/t
400
350
300
250
200
150
100
			Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2
	2018	2018	2018	2018	2019	2019	2019	2019	2020	2020

• Crude oil supplies eastwards reached 14.9 mmt, i.e. 57.8% of total sales to non-CIS countries
• In Q2 2020 crude oil exports to non-CIS countries reached 24.4 mmt while the share of 1+ years term contracts amounted to c. 90%
• Motor fuel sales via the exchange exceeded the required level by over 2x times

Crude oil marketing breakdown

mmt
	61.7	63.4	50.6
Export, West	24%	24%	22%
			29%
Export, Asia	34%	33%
			4%
Export, CIS	3%	2%	3%
Domestic market	2%
Refining in Russia	37%	41%	42%
	Q2 2019	Q1 2020	Q2 2020

18

Financial Results

19

Key Financial Indicators

479Rub bn	H1 2020 EBITDA amid the
demand reduction and oil
price drop

206 H1 2020 free cash flow

Rub bn

-4.3		Reduction of debt and trading
$ bn	liabilities YTD

20

EBITDA and Net Income Dynamics

EBITDA Q2 2020 vs. Q1 2020

Net Income Q2 2020 vs. Q1 2020

Q1 2020

Exchange rate

EPT effect

Crude oil price

Share in profits of

associates and JVs

Export duty lag

Other taxes

Damper and MET rates

Change in volumes

Intragroup balances

OPEX

General costs

Exploration costs

Other costs

	309		Rub bn
			56
			(47)
(175)
(6)			External
		factors:
102	-111 Rub bn
-35.9%
(3)
(38)
(9)
(6)
(19)
12		Internal
			and seasonal
(2)		factors:
			-28 Rub bn
(4)		-9.1%

Net Income

attr. to shareholders Q1 2020

Minorities

Q1 2020

EBITDA

DDA

Financial expenses

(net)

Other income

Other costs

Pandemic costs

Income tax

FX gains/loss

Q2 2020

Minorities

1. Rub bn

13

(143)

(139)

11

54

(1)

25

(2)

(46)

286

45

2

Q2 2020	170

Net Income

attr. to shareholders Q2 2020

43

21

Efficient Cost Control

Lifting costs
Rub/boe	Quarter		12M average	% YoY
			199
203		196	191	208
201
5.7%	4.1%			2.5%
		-4.4%	-2.1%
Q2 19	Q3 19	Q4 19	Q1 20	Q2 20
General and administrative costs1
Rub/boe	Quarter		12M average	% YoY
88		90	79	90
			73
11.4%	64
				2.3%
		-8.2%	-3.9%
	-21.0%
Q2 19	Q3 19	Q4 19	Q1 20	Q2 20

Refining costs in Russia
Rub/bbl		Quarter	12M average	% YoY
		220	200
207			207
	191		181
20.3%
	6.1%	2.3%
		-1.1%	0.0%
Q2 19	Q3 19	Q4 19	Q1 20	Q2 20

Producer Price Index (annual basis)

6.6%
	-0.6%
		-5.6%	-1.7%
				-11.6%
Q2 19	Q3 19	Q4 19	Q1 20	Q2 20

Note: (1) excl. provisions

22

Strong Free Cash Flow

Free cash flow calculation

Net cash provided
383
by operating activities
Reimbursement of	135
prepayments received
(historical FX rate)
Reimbursement of
other financial obligations
FX rate change effect
Interest on prepayments
Net change in operations
of subsidiary banks
Prepayments for
future supplies
Reimbursement of
prepayments granted
Adj. operating cash flow	573
CAPEX	(367)
Free cash flow	206

	Crude oil price and free cash flow dynamics, LTM
	Rub bn
	4.50	4.47
			4.25	4.11
74					3.85
67						3.33
21
(110)	1,220	1,119
12			920	941	931	826
(9)
	Q1 19	Q2 19	Q3 19	Q4 19	Q1 20	Q2 20

Free cash flow, Rub bn

Urals price, '000 Rub/bbl

23

Debt Optimization

Liquidity position as of June 30, 2020, $ bn

Financial debt breakdown as of June 30, 2020

18.5

14.4

Sort-term financial	Available liquid
liabilities	assests

Available credit lines

Liquid financial assets

	35%	Rubles
	Foreign currencies
50%	50%	Floating rates

Fixed rates

65%

CBR key rate and LIBOR

• Available liquid assets exceed short-term financial liabilities by 28%
• Interest expenses reduced by 21% (22 Rub bn) in H1 2020 (YoY)
• Reduction of financial debt and trading liabilities in H1 2020 by almost $4.3 bn (-5.3%)

10%					5%
8%	7.75%	7.50%			4%
		6.25%
	2.81%
6%				3%
	2.34%	4.50%	4.25%
			1.91%
4%					2%
2%			0.30%	0.26%	1%
0%					0%

31.12.2018	30.06.2019	31.12.2019	30.06.2020	12.08.2020
		CBR key rate (LHS)				3M USD LIBOR (RHS)

24

CAPEX

CAPEX evolution

Rub trln

	0.85
0.44		0.37
H1 2019	2019	H1 2020	2020
			Plan

Following negative macro environment and production cuts the CAPEX program was

optimized by 20%

The program still allows for fast project

development recovery and production

buildup whenever the market conditions change / production limitations will be lifted

Revision of CAPEX

Rub trln

~1

CAPEX

optimization in

Russia c. 0.2

2020	Upstream Downstream	Other	2020
Plan			Revised

Key areas for optimization

• Postponing/eliminating less economically viable projects
• Rising hurdle rates for certain groups of projects
• Maintaining active pre-investment work on high-margin perspective projects

Projects in Russia		International projects	25

Appendix

26

Key Operational Highlights

Indicator	Q2 2020	Q1 2020	%	H1 2020	H1 2019	%

Hydrocarbon production, incl.

kboed

Liquids

kbpd

Gas

kboed

Oil refining

mmt

Product output in Russia

mmt

5,051

5,753

(12.2)%

5,402

5,806

(7.0)%

4,036

4,640

(13.0)%

4,338

4,681

(7.3)%

1,015	1,113	(8.8)%	1,064	1,125	(5.4)%

24.00

28.72

(16.4)%

52.72

51.83

1.7%

20.93	25.07	(16.5%)	46.00	45.76	0.5%

27

Key Financial Highlights

Indicator	Q2 2020	Q1 2020	%	H1 2020	H1 2019	%
EBITDA, Rub bn	170	309	(45.0)%	479	1,063	(54.9)%
Net Income, Rub bn	43	(156)	-	(113)	325	-
attributable to Rosneft shareholders
Adjusted net income1, Rub bn	(56)	34	-	(22)	472	-
Adjusted operating cashflow2, Rub bn	169	404	(58.2)%	573	785	(27.0)%
CAPEX, Rub bn	182	185	(1.6)%	367	436	(15.8)%
Free Cash Flow, Rub bn	(13)	219	-	206	349	(41.0)%
EBITDA, $ bn	2.5	4.9	(49.0)%	7.4	16.3	(54.6)%
Net Income, $ bn	0.7	(2.0)	-	(1.3)	4.9	-
attributable to Rosneft shareholders
Adjusted net income1, $ bn	(0.8)	0.3	-	(0.3)	7.2	-
attributable to Rosneft shareholders
Adjusted operating cashflow2, $ bn	2.4	6.3	(61.9)%	8.7	12.0	(27.5)%
CAPEX, $ bn	2.5	2.8	(10.7)%	5.3	6.7	(20.9)%
Free Cash Flow, $ bn	(0.1)	3.5	-	3.4	5.3	(35.8)%
Urals price, '000 Rub/bbl	2.26	3.19	(29.2)%	2.75	4.28	(35.8)%

Note: (1) Adjusted for FX gains/losses and other one-off effects; (2) Adjusted for prepayments under long-term crude oil supply contracts (including accrued interest), net change in	28
operations of subsidiary banks and operations with trading securities (RUB equivalent)

EBITDA and Net Income Dynamics

EBITDA H1 2019 vs. H1 2020

Rub bn

Net Income H1 2019 vs. H1 2020

Rub bn

H1 2019

Exchange rate

Tax maneuver completion

EPT effect

Crude oil price

Share in profits of

associates and JVs Export duty lag

Transport tariffs indexation

Damper and MET rates

Change in volumes

Other taxes

Number of days

Sales mix and margin (trading)

OPEX & General costs

Exploration costs

Other

H1 2020

1,063

(36)

(75)

(9)

(129)

(62)

(10)

(1)

22

(1)

(2)

(4)

479

11

(19)

43

(312)

External factors:

-599 Rub bn -56.3%

Internal and seasonal factors:

+15 Rub bn

+1.4%

Net income

attr. to shareholders H1 2019

Неконтролирующие

доли

H1 2019

EBITDA

DDA

Financial expenses (net)

Other income

Other costs

Pandemic costs

Incoe tax

FX gains/loss

H1 2020

Minorities

Net income

attr. to shareholders H1 2020

(584)

(3)

(15)

(1)

54

(2)

103

(26)

(98)

15

(113)

325

51

376

29

Calculation of Adjusted OCF

Profit and Loss Statement

№	Indicator	H1 2020,
$ bn
1	Revenue, incl.	42.5
	Reimbursement of prepayments and other	4.0
	financial obligations received
2	Costs and expenses, incl.	(40.1)
	Reimbursement of prepayments granted	(0.2)
3	Operating profit (1+2)	2.4
4	Expenses before income tax	(3.7)
5	Income before income tax (3+4)	(1.3)
6	Income tax	0.2
7	Net income (5+6)	(1.1)

Cash Flow Statement

H1 2020,	Indicator	№
$ bn
(1.1)	Net income	1
4.0	Adjustments to reconcile net income to cash	2
flow from operations, incl.
	Reimbursement of prepayments received
(2.9)	under crude oil and petroleum products supply
	contracts

(1.1)	Reimbursement of other financial obligations
received

Reimbursement of prepayments granted

0.1 under crude oil and petroleum products supply contracts

3.5	Changes in operating assets and liabilities, incl.	3
(0.3)	Interest on prepayments under long- term
crude oil supply contracts
(0.4)	Income tax payments, interest and dividends	4
received
6.0	Net cash from operating activities (1+2+3+4)	5
(1.7)	Net change in operations of subsidiary banks	6
0.2	Prepayments for future supplies	7
4.2	Effect from prepayments	8
8.7	Adjusted operational cash flow (5+6+7+8)	9

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Finance Expenses, Rub bn

Indicator	Q2 2020	Q1 2020	%	H1 2020	H1 2019	%

1. Interest accrued1
2. Interest paid and offset2
3. Change in interest payable (1-2)
4. Interest capitalized3
5. Net loss from operations with financial derivatives4
6. Increase in provision due to the unwinding of a discount
7. Interest on prepayments under long-term oil and petroleum products supply contracts
8. Change in fair value of financial assets
9. Increase in loss allowance for expected credit losses on debt financial assets

10. Other finance expenses

Total finance expenses (1-4+5+6+7+8+9+10)

63	65	(3.1)%	128	145	(11.7)%
60	66	(9.1)%	126	141	(10.6)%
3	(1)	-	2	4	(50,0)%
32	36	(11.1)%	68	82	(17.1)%
(4)	7	-	3	-	-
6	6	-	12	10	20.0%
9	12	(25.0)%	21	40	(47.5)%
(20)	22	-	2	-	-
-	1	(100.0)%	1	2	(50.0)%
3	3	-	6	5	20.0%
25	80	(68.8)%	105	120	(12.5)%

Note: (1) Interest accrued on credits and loans and other financial obligations, (2) Interest is paid according to the schedule, (3) Interests paid shall be capitalized in accordance with IAS
23 standard Borrowing Costs. Capitalization rate is calculated by dividing the interest costs for borrowings related to capital expenditures by the average balance of loans. Capitalized
interest shall be calculated by multiplying average balance of construction in progress by capitalization rate, (4) Net effect on operations with financial derivatives was related to FX	31
component fluctuations of cross-currency interest rate swaps.

Variance Analysis

H1 2020 EBITDA and net income sensitivity to +/- 10%		H1 2020 EBITDA and net income sensitivity to +/-
change in Urals price				10% change in Rub/$ exchange rate
					Run nb									Rub bn
		EBITDA									EBITDA
(84)			84	(104)	104
	Net Income							Net Income
(67)			67				(83)			83

-10%	39.7	+10%	-10%	69.3	+10%
$/bbl	Rub/$

Source: Company data

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Questions & Answers

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