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Russia’s Rosneft to undertake $2 bln share buyback program in 2018-2020

May 01, 23:06 UTC+3 MOSCOW

According to the statement, "the medium-term buyback would be financed through the organic free cash flow generation and divestments of non-core assets"

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MOSCOW, May 1. /TASS/. Rosneft’s Board of Directors has approved additional initiatives concerning its 2022 strategy, the oil company said in a statement on Tuesday.

"With the objective of enhancing shareholder returns, the management of Rosneft proposed that the Company undertakes a $2 bln share buyback program in the course of 2018-2020 through open market repurchases in addition to the approved dividend policy of a 50% payout of the basis of IFRS net profit," the statement reads. "The execution of the share buyback program would start in the second quarter of 2018 subject to the receipt of customary corporate approvals," the company added.

According to the statement, "the medium-term buyback would be financed through the organic free cash flow generation and divestments of non-core assets."

"Additional strategic initiatives include employee development programs, educational and social projects, regional development programs and goals for the accelerated technological advancement of Rosneft," the document says.

"The Board of Directors supported enhancing shareholder returns and improving the equity story of the Company," the statement added, pointing to the initiative "to establish the minimum target of 500 bln rubles for the year of 2018 for the decrease of the total debt and trading liabilities of the Company." In order to achieve this goal, Rosneft will enhance "investment governance, project management practices," while improvements will be made "in the procurement function with corresponding decrease in the capital expenditures guidance for 2018 at the level of 800 billion rubles (20% decline compared to the earlier guidance)." In addition, steps will be taken to improve "the working capital position of the Company by the end of 2018 in the amount of 200 billion rubles, which would be achieved with a number of initiatives in the trading business and the procurement function." Besides, Rosneft will review its asset portfolio focusing "on decreasing the share of tail and non-core assets, the disposal of which should provide incremental net cash flow to the shareholders."

CEO’s comment

While commenting on the initiatives concerning Rosneft’s 2022 strategy, the company’s Chief Executive Officer Igor Sechin said that the implementation of the 2022 strategy was a top priority. "It will help to further boost our competitive advantage in the volatile external environment. Specific targets are now part of the management performance assessment. The Company continues to demonstrate robust financial results and proposed new initiatives will enable us to improve the focus on the business using core strengths that will result in the enhancement of shareholder returns," he noted. "We are strong believers in the fundamental value of Rosneft that is not fully appreciated by today’s volatile equity markets," Sechin concluded.

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