Highlights From Lukoil's NY Investor Meeting

Buy-recommended Lukoil Oil Company (LUKOY.PK) presented its long-term outlook and recent results on October 18 in the same New York St. Regis venue as buy-recommended ExxonMobil (XOM) has used. Ironically, Chairman Alekperov was more respectful of investors than was the past chairman of XOM in a meeting we recall.

While the Russian executives’ presentation was translated into English for most of us, the two English speaking American directors also spoke. Some of Mr. Alekperov’s insights included the opinion that the Russian oil export tax, which he said Lukoil helped design, was being managed responsibly and acted to insulate Russian producers from volatility in the global price.

Lukoil sees natural gas, which we have not been counting in our analysis so far, as providing most of its growth in hydrocarbon
volume. The chief executive looks for a five-fold increase in the domestic price in the next five years. Second quarter results were as strong as those for leading global companies reported in late July and early August.

Political Risk in Investing in Russia
We understand that our positive opinion on Lukoil and Gazprom (GZPFY.PK) may not suit all investors. Borrowing words from a popular U.S. President, we trust our analysis, but we also want to verify as best we can that circumstances unfold constructively on balance.

On the positive side, we believe in global growth. In our opinion, Russia will be better off with prosperous energy companies that satisfy stockholders, customers and the long-term interests of the country.

LUKOY.PK 1-yr chart:

[Editor's Note: This article was first published on October 20.]

Comments

[dcappe10]

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