UPDATE 3-Rosneft posts record Q3 results, tops forecast

(Adds conference call, capex, analysts on Q4)

By Tanya Mosolova

MOSCOW, Jan 16 (Reuters) - Russia's top oil firm Rosneft (ROSN.MM) reported on Wednesday a jump in its third-quarter earnings, slightly beating analysts' forecasts, and said it was confident it can refinance and repay its massive debt.

State-controlled Rosneft said the results, which included a 79.8 percent year-on-year rise in net profits and an 83 percent increase in earnings before interest, taxation, depreciation and amortisation (EBITDA), came on the back of strong oil prices and consolidation of new assets.

"The third quarter was another record quarter for Rosneft both in terms of operational performance and increased profitability, whether reviewed only on an organic basis or incorporating recent acquisitions," Rosneft's President Sergei Bogdanchikov said in a statement.

Rosneft said its net profit, calculated under the U.S. Generally Accepted Accounting Principles (GAAP), rose to $1.89 billion from $1.05 billion in the same period last year. Analysts had expected net profit to reach $1.84 billion.

EBITDA jumped to $4.02 billion from $2.2 billion a year ago, also above analysts' estimates of $3.86 billion. Revenues rose by 53.5 percent to $13.74 billion versus $13.14 billion forecast by analysts.

Bogdanchikov said he expected 2008 to be another successful year for the company.

"We are confident in our ability to continue to demonstrate leading operational and financial performance through rigorous cost control, improved downstream margins via increased sales through new and more profitable sales channels to end customers and continued organic volume growth."

Last year, Rosneft bought almost all assets of bankrupt oil firm YUKOS at state-forced auctions. The assets, which included two production units and five refineries, helped Rosneft become Russia's largest oil producer and refiner.

Rosneft's vice-president for finance Peter O'Brien told a conference call capital expenditures would rise on the back of new acquisitions to $7 billion in 2008. Rosneft's capex were over $4.5 billion in the first nine months of 2007.

Rosneft shares closed 4.05 percent down, roughly in line with the broader market , which suffered heavy loses following sharp drops in Asian and U.S. indexes.

DEBT BURDEN

Analysts praised the results, saying profitability had been helped by higher margins from refined products exports -- which Russia encourages at the expense of crude oil -- after Rosneft obtained control of new refining facilities.

"Now the market will be waiting for Rosneft's development strategy, which should be published this quarter and clarify the company's prospects," said Sobinbank's Alexander Razuvayev.

Konstantin Reily from Finam brokerage said the results had been slightly soured by the firm's heavy debt burden.

Heavy borrowing for acquisitions of YUKOS' assets made Rosneft the most leveraged Russian oil firm and its debt stood at around $28 billion as of the end of the quarter.

Rosneft plans to refinance most of the debt this year and will also use cash flows to partly reduce the leverage, O'Brien told Reuters in an interview on Wednesday.

To read the interview please click on [ID:nL16125069].

Rosneft's net cash from operating activities rose to $13.1 billion from $12.6 billion at the end of the previous quarter.

"Free cash flow generation would have been strong if not impacted by negative changes in the working capital, which made them negative in Q3," said Oleg Maximov from Troika Dialog.

Third quarter financials became the first to fully include all new assets from YUKOS thus allowing analysts to make like-to-like comparisons from the next quarter.

"Next quarter will help determine whether Rosneft and other Russian oil firms are able to benefit from record high oil prices under the current fiscal regime and inflation levels," said Evgenia Dyshlyuk from UralSib.

Russian crude prices rose 19 percent in the fourth quarter but gains could be offset by a 20 percent rise in export duties. (Editing by David Cowell)