Gazprom Moves Further Toward Investor Friendliness

Buy-recommended Gazprom (OGZPY.PK) offers unlevered appreciation potential of 200% to a McDep Ratio of 1.0 and levered appreciation potential of 250% to Net Present Value (NPV) of $64 a share. From the recent depressed stock price, we see investor confidence rebuilding in the world’s largest publicly traded company measured by energy content of production.

With the release today of financial results for 2008, the time lag for disclosure has been reduced to four months from five months a year ago. Moving further toward investor friendliness, management offers guidance for the current year (see graphic Gazprom Management Guidance, 2009). As a result, we have scaled back our projected cash flow for the next twelve months by about 30% to $35 billion.

At our unchanged NPV, unlevered present value multiple (PV/Ebitda) remains reasonable considering the lower denominator (Ebitda) and in comparison to high reserve to production ratio (Adjusted R/P). Though diversified operations in oil and electricity are becoming more important, natural gas sales remain dominant as the most important source of cash flow. Gazprom is a sleeping giant slowly awakening to the powerful potential reward from applying global standards to its business and to building investor trust and confidence.

Originally published on April 29, 2009

Comments

[Tonda:]

excellent, excellent

May 29 09:07 AM

[Albert Meyer:]

I agree.

May 29 09:59 AM

[manuel:]

can you tell me how you calculate your npv?

Jun 17 11:35 AM