OAO Rosneft, Russia's biggest oil producer, said first-quarter profit surged sevenfold after incorporating production units and refineries bought from bankrupt OAO Yukos Oil.
Net income jumped to US$2.56 billion from US$358 million a year earlier, the Moscow-based company said yesterday. That's more than the US$2.46 billion median estimate of 10 analysts surveyed by Bloomberg News.
State-run Rosneft was transformed from a second-tier oil company into Russia's largest producer after buying assets from Yukos, which collapsed under back-tax claims of more than US$30 billion.
Rosneft borrowed US$22 billion to buy units and refineries at auctions last year after former Yukos Chief Executive Officer Mikhail Khodorkovsky was jailed for tax evasion and fraud.
Sales in the quarter almost doubled to US$16.4 billion. The price for Urals crude, Russia's export blend, averaged US$92.84 a barrel in the period, up 70 percent, according to data compiled by Bloomberg.
"Prices for oil and refined products continued their climb to new record levels," Deutsche Bank analysts Pavel Kushnir and Tatiana Kapustina wrote in a note to investors.
Rosneft's output grew in the period even as average Russian output fell. The company produced about 2.3 million barrels a day, almost a third more than a year earlier, according data from the Energy Ministry's central dispatch unit, CDU TEK. The company began to consolidate Yukos's Tomskneft and Samaraneftegaz oil producers in May 2007, and agreed to sell half of Tomskneft in December to Russian oil company OAO Gazprom Neft.
Russia's total output fell 1 percent in the first quarter to an average 9.78 million barrels a day, according to CDU TEK.
Prime Minister Vladimir Putin has pledged to cut taxes for the oil industry to stimulate development of new and more difficult deposits as companies' costs soar.
Rosneft plans capital spending this year of 217 billion rubles (US$9.22 billion).
By 2020 the company hopes to expand production by 70 percent and double refining capacity, Chief Executive Officer Sergei Bogdanchikov said at the annual shareholders' meeting last Thursday.
Rosneft refined 40.2 million tons of crude last year, an average of 807,000 barrels a day. The company produced 101 million tons of oil last year, an average of 2 million barrels a day.