Russia's Surgutneftegaz goes up

Updated August 1, 2008

In the first half-year 2008 Surgutneftegaz net income grew by 85% by RAS standards (Russian Accounting Standards) as compared to analogical period 2007 and reached RUR 72,7 billion. Some analysts suppose that the company stocks can go up 1,5 times within the nearest months.

In 1Q 2008 the company net income totaled RUR 19,5 billion and grew 2,4 times as compared to analogical period last year. In 2Q this index reached RUR 53,2 billion.

"Rapid net income growth in 2Q is related to the fact the exported oil was imposed relatively low duties in terms of substantial growth of raw materials quotations. We forecast the extraction volume at last year level", as comments Financial Bridge Asset Management analyst Dmitry Aleksandrov. "Surgutneftegaz securities have been demonstrating a falling trend long enough. At RUR 18,5 and RUR 7,5 for common and preferred stock respectively, we recommend to buy them regardless of the current market situation. If the holding starts to report by IFRS standards and sets exact terms of oil refinery construction in Leningrad area, quotations growth can reach 50% within few months".

"We assess the reporting as neutral. In 1Q the company demonstrated low results in terms of rapid fall of extraction volumes and expenditures growth. Data about income is incomparable to last year one in terms of double growth of oil prices. However, Surgutneftegaz demonstrates positive and stable growth that has not been observed before", says Aton Company analyst Vyacheslav Bunkov. "Surgutneftegaz occupies the 4th place in Russia by volumes of oil extraction. Extracted oil and gas supplies total around 2,5 billion tons of oil equivalent".