Gazprom Neft expects its free cash flow to stay positive even as it is planning a $16billion (£9.6billion) expansion over two years.
The oil arm of Russia’s natural gas exporter gained from an unexpected $2billion in free cash flow in 2013 on higher-than-forecast oil prices and lower spending, chief financial officer Alexey Yankevich said.
“We are doing better than our estimates. We thought we would have negative free cash in 2013. Cash flow might not go negative,” Yankevich said.
Gazprom Neft is investing 574billion rubles (£9.5billion) under a plan to boost output by about 60% to 100million metric tons of oil equivalent in 2020, with new fields in Iraq, the Arctic offshore and Siberia.
The producer plans to spend 304billion rubles this year and 265billion to 270billion rubles in 2015, Yankevich said. It doesn’t intend to take on more debt.
“We did our main borrowing last year,” he said. “If we do something this year, it will be substituting other less profitable credit.”
The company expects its controlling stake in Naftna Industrija Srbije will bring cash flows of about $140million this year and next year from dividend payouts and repayments on loans it made to the Serbian company, he said.
Gazprom Neft net income in 2013 advanced 0.9% to 177.9billion rubles (£2.9billion), according to a statement on the company website. Sales fell 1% to 1.5trillion rubles.
Oil and gas output rose 4.2% to an average of 1.25million barrels of oil equivalent a day in 2013, according to the statement.
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