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James Hammond
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18 years tracking emerging markets and running data businesses in them, I now run Emerging Markets Direct, a Boston based information company employing a global network of analysts and editors putting out newsletters and industry research on the worlds fasted growing economies.
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Emerging Markets Direct
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IntelliNews
  • Oil Major TNK-BP’s US GAAP Net Profit Up To USD 9.2bn In 2011. 0 comments
    Apr 5, 2012 3:14 AM | about stocks: BP, HNR

    IntelliNews flagged intriguing results from Russian-British oil major TNK-BP's (TNBP) today.

    GAAP net profit shot up by 41% y/y to a record-high USD 9.21bn in 2011. Revenues rose 33.5% y/y to USD 54.89bn and EBITDA increased by 34% y/y to USD 13.74bn. Improved revenues were attributed to higher oil prices, as well as active overseas operations.

    TNK-BP's net debt as of January 1, 2012 increased by 44% y/y to USD 6.74bn.

    This is a significant turnaround for the company, which posted far less rosy results in recent years. TNK-BP US GAAP net profit declined by 5.7% y/y to USD 5bn in 2009, but began a rebound in 2010 when their net improved by 17% y/y in 2010.

    TNK-BP is third largest oil company in Russia, owned equally in what sometimes is an uneasy partnership between British oil major BP, and AAR (Alfa group, Access Industries and Renova; controlled by tycoons Mikhail Friedman, Leonard Blavatnik and Viktor Vekselberg, respectively).

    In 2011 Russian shareholders of TNK-BP (AAR alliance) managed to block the what had been called the "deal of the year"...a deal that had broad Russian government support, proposing a strategic alliance for exploring the Arctic shelf between BP and Rosneft based on a USD 16bnshare swap.

    In Stockholm Arbitration, AAR blocked the deal claiming that TNK-BP's co-owners' agreement states BP was obligated to carry out all oil and gas projects in Russia and Ukraine with TNK-BP's cooperation.

    TNK-BP also controls a 50% stake in Slavneft, and the two companies account for about 16% of Russia's oil extraction.

    In November 2011 Fitch Ratings affirmed a long-term Issuer Default Rating (IDR) of BBB- on TNK -BP. But debt seems manageable.

    Fitch noted that financial situation of TNK-BP would to remain stable given the current structure of debt refinancing. As of September 30 2011 the company had a total unsecured debt of USD 7.8bn, with an average repayment at 3.8 years.

    Until 2012 the company had to refinance USD 1.2bn, but Fitch saw operational cash flow of TNK-BP in 2012 at USD 7.4bn before capital investment, acquisitions and dividends that amount to USD 8.4bn, while liquidity will be supported by USD 2.4bn cash and unused credit lines of over USD 0.4bn.

    In August 2011 TNK-BP raised a USD 1.5bn club loan from 10 banks, the company announced. 4-year loan is carrying an interest of LIBOR+1.3%, to be repaid in quarterly payments starting in two and a half years.

    Of note in Management's presentation is prospective interest in acquisitions, particularly in Vietnam and Venezuela. This is clearly an intrepid management mix. A target could well be assets of Harvest natural Resources (NYSE:HNR), whose woes in the Land of Chavez are not insignificant. But that is another investment story.

    This is an oil major worth a look.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: Information in this post comes from IntelliNews (intelliNews.com) and it's Russia Today newsletter. Thanks to the editors.

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