LUKOIL's Polar Bears Are Lost In The Arctic
Joshua S. Hall • 32 Comments
Joshua S. Hall • 32 Comments
Lukoil Not Out Of The Woods Yet
Stephen Simpson, CFA
Stephen Simpson, CFA
From Russia With No Love, Lukoil Trading At A Very Low Multiple
Stephen Simpson, CFA • 18 Comments
Stephen Simpson, CFA • 18 Comments
Mon, Jun. 6, 12:54 PM
- Russia's Lukoil (OTCPK:LUKOY, OTC:LUKOF) says its Q1 net profit tumbled 59% Y/Y to 42.8B rubles ($651M) on 18% lower revenue to 1.18T rubles because of lower oil prices, but results mostly beat analyst expectations.
- However, free cash flow was the weakest part of the Q1 report, falling 43% Y/Y percent to 36B rubles; Q1 EBITDA fell to 145B rubles
- Lukoil says it daily hydrocarbon production declined 0.6% Y/Y at 2.35M boe, as it ramped up production at its West Qurna-2 project in Iraq but output fell at its main Soviet-era fields in western Siberia.
Thu, Jun. 2, 8:10 AM
- May monthly performance was: -4.57%
- No dividends were paid in May
- Top 10 Holdings as of 4/29/2016: China Mobile Ltd (OTCPK:CHLKF): 3.79%, China Construction Bank Corp H (OTCPK:CICHF): 3.58%, Taiwan Semiconductor Manufacturing Co Ltd (2330): 2.53%, Ambev SA (ABEV3): 2.15%, Gazprom PJSC ADR (OTCPK:OGZPY): 1.86%, CNOOC Ltd (OTCPK:CEOHF): 1.75%, Samsung Electronics Co Ltd (OTC:SSNLF): 1.7%, Mining and Metallurgical Company NORILSK NICKEL PJSC ADR (OTCPK:NILSY): 1.45%, PJSC Lukoil ADR (OTCPK:LUKOY): 1.41%, Wal - Mart de Mexico SAB de CV Class V (OTCPK:WMMVF): 1.12%
Wed, May 25, 3:43 PM
- Russia's Lukoil (OTC:LUKOF, OTCPK:LUKOY) says it is in talks with Mexico's state-run Pemex over possible joint development of an onshore block in the country's Chicontepec basin.
- Lukoil says the discussions revolved around a potential joint project on the Amatitlan block, where it entered into a service contract with a 50% interest in July 2015, as well as its participation in forthcoming bidding rounds.
- The Amatitlan block in Mexico's Veracruz state is said to contain 993M boe in proven, probable and possible reserves.
Wed, May 25, 7:29 AM
- A Chevron-led (NYSE:CVX) consortium is set to invest up to $37B starting in 2017 as it increases output at the giant Tengiz oil field in Kazakhstan, the country’s energy minister tells Dow Jones.
- The investment would represent one of the first big commitments by a major oil company to spend on new production during the nearly two-year slump in crude prices.
- The Tengiz project is one of the world’s biggest oil fields and a key source for CVX’s growth in crude output in the next few years; CVX is the biggest partner in the field’s operator, with a 50% stake, while Exxon Mobil (NYSE:XOM) holds a 25% stake, Kazakhstan’s state-run oil company has 20% and a Lukoil-controlled (OTC:LUKOF, OTCPK:LUKOY) group owns 5%.
Wed, May 18, 11:22 AM
- Norway awards its first new oil and gas acreage in more than two decades, including an expansion into a new part of the Arctic Barents Sea in an area previously disputed with Russia in a bid to stimulate exploration.
- The government offered 10 drilling licenses to 13 different companies, including Chevron (CVX -0.3%), ConocoPhillips (COP +0.1%), Statoil (STO +0.1%), Lundin Petroleum (OTCPK:LNDNF) and Russia's Lukoil (OTCPK:LUKOY, OTC:LUKOF).
- STO, Norway's dominant oil company and 67% owned by the government, was awarded the operating rights on four of the new licenses; three of the 10 licenses were awarded in a previously disputed area with Russia in the southeast Barents Sea.
- Companies that applied but were not awarded any licenses include BP and Russia’s Rosneft (OTC:RNFTF).
- Now read Statoil wins seabed lease for world's first floating windarm
Fri, May 13, 5:35 PM
- Global oil firms have warned Iraq that projects to increase crude oil output will be delayed if the government insists on drastic spending cuts this year, Reuters reports.
- Oil companies helping Iraq develop its oil fields must clear spending with the government each year, and they are then repaid with crude oil produced from existing fields; since crude prices have weakened, the government has been struggling to find enough oil to repay the companies for their investment and is spending heavily to fight Islamic State in its northern and western provinces.
- The Iraqi government request was contained in Oil Ministry letters to BP, Shell (RDS.A, RDS.B), Exxon (NYSE:XOM), Eni (NYSE:E), Lukoil (OTCPK:LUKOY, OTC:LUKOF) and Petronas, some of whom say that the proposed budgets may prevent them from continuing operations in the country.
Tue, Apr. 5, 10:34 AM
- Kazakhstan has filed a $1.6B claim against a group led by Eni (E -1.8%) and BG Group which is developing the Karachaganak gas condensate field.
- The dispute relates to a formula which determines how profit from the development is split between the companies and the government, consortium member Lukoil (OTCPK:LUKOY, OTC:LUKOF) said in its financial report published yesterday, which also said the parties were in talks on a possible settlement.
- Eni and BG, recently acquired by Royal Dutch Shell (RDS.A, RDS.B), each own 29.25% of the project in northwest Kazakhstan, which they jointly operate; state-owned KazMunayGaz owns 10%, Chevron (CVX -0.3%) has 18% and Lukoil 13.5%.
- The Kazakh government has said the consortium would start an expansion project in 2017 that will cost $12B; in 2015, the field produced 141M boe.
- Now read Russian oil output hits 30-year high, dampens hope for production freeze
Mon, Apr. 4, 10:30 AM
- Russia says its oil production rose to the highest level in nearly 30 years last month, adding to doubts about the ability of the world's largest oil exporters to reach an when they meet in Doha this month to discuss how to align global supply and demand.
- Russia produced 10.91M bbl/day in March, up 0.3% from February and reaching the highest level since 1987 when the country produced 11.5M bbl/day.
- Some oil industry observers believe it would be difficult for Russia to stick to an output freeze since the domestic industry is dominated by big companies such as Gazprom (OTCPK:OGZPY), Rosneft (OTC:RNFTF) and Lukoil (OTCPK:LUKOY, OTC:LUKOF), each with their own agenda.
- Commerzbank analysts say speculative investors, who drove oil prices higher between mid-February and mid-March on hopes of a deal, likely will pull out of the market again in light of the latest developments.
- Separately, Lukoil, Russia's second largest oil producer, reports a 26% drop in net profit in 2015, hit by falling crude prices and writeoffs; EBITDA fell 3.7% Y/Y to 768.9B rubles.
- ETFs: USO, OIL, UWTI, UCO, DWTI, SCO, BNO, DBO, DTO, USL, DNO, OLO, SZO, OLEM
- Now read Expect "sharply lower" oil prices in coming weeks - Goldman
Fri, Feb. 12, 10:21 AM
- Lukoil (OTCPK:LUKOY, OTC:LUKOF) has told the Russian government it wants to buy recently nationalized rival Bashneft, as the state decides whether to sell a controlling or minority stake in the firm to plug a budget deficit, Reuters reports.
- A sale would mark a significant reversal after more than 15 years of non-stop consolidation and nationalization of Russia's energy industry.
- Pres. Putin has ordered a privatization drive to cover a budget deficit and reportedly is considering selling stakes in oil major Rosneft (OTC:RNFTF).
Thu, Feb. 4, 10:50 AM
- Iran has been discussing possible oil sales to Rosneft (OTC:RNFTF), according to Russian news agencies quoting a top adviser to Iran's Ayatollah Khamenei as saying in Moscow.
- Reuters says its shipping data shows that since western sanctions were removed, a number of vessels have been tentatively fixed to sail from Tehran to various locations in Europe and the Mediterranean.
- Litasco, the trading arm of Russia's Lukoil (OTC:LUKOF, OTCPK:LUKOY), is said poised to become the first post-sanctions buyer of Iranian oil in Europe.
Thu, Jan. 21, 6:24 PM
- European companies and trading houses are not rushing to buy Iranian oil because of legal uncertainties over the lifting of sanctions that are likely to take weeks to clarify, Reuters reports.
- Iran ordered a 500K bbl/day increase in oil production after international sanctions were lifted on Saturday, but many European firms reportedly are wary of violating other sanctions that were imposed by the U.S. and have not been lifted.
- The CEO of Russia's Lukoil (OTCPK:LUKOY, OTC:LUKOF), Vagit Alekperov, says it remains unclear whether the company's refineries in Italy or the Netherlands are free of legal risks to buy Iranian oil, and the head of Swiss trading house Mercuria also believes Iranian oil imports into Europe remain complicated.
- Alekperov says he thinks it will take 5-7 years for Iran to raise output significantly, and that this would happen only if the country enacts the right legislation to compete for investments.
- Market players, however, assume that companies which bought Iranian crude before the sanctions - such as Royal Dutch Shell (RDS.A, RDS.B), Total (NYSE:TOT), Eni (NYSE:E), and traders such as Glencore (OTCPK:GLCNF, OTCPK:GLNCY) and Vitol - will resume purchases at some point later this year.
Dec. 21, 2015, 7:15 PM
- Continental Resources (NYSE:CLR) Chairman and CEO Harold Hamm tells CNBC that the crude oil market will recover in 2016 as supply and demand come into balance.
- "We've seen tremendous growth in the market for our supply. It's up about 3% on an annual basis, so it's quickly correcting," Hamm says, adding that the U.S. industry does not necessarily need oil prices to return to $100/bbl because of efficiency gains in the U.S. oil patch.
- Allowing producers to export U.S. crude will help the product find a market in countries with refineries capable of processing it, Hamm says, noting that foreign acquisition of U.S. refineries has reduced capacity for American oil.
- Lukoil (OTC:LUKOF, OTCPK:LUKOY) CEO Vagit Alekperov agrees, saying "the current purchases taking place in the industry do not incentivize the development of new exploration projects... as a result, [the oil] price will be climbing back, but that will happen during the mid-term" of 2016.
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, USL, DNO, OLO, SZO, OLEM
Dec. 4, 2015, 8:56 AM
- Norway's government says 26 oil companies have applied for drilling permission in the country's latest licensing round, which includes a previously unexplored Arctic frontier area at the border with Russia.
- Among the applicants in Norway's 23rd concession round, which is mostly focused on the Arctic Barents Sea - including the area where Norway settled a 40-year border dispute with Russia just five years ago - include Statoil (NYSE:STO), Shell (RDS.A, RDS.B), BP, Chevron (NYSE:CVX) and Russia's Lukoil (OTC:LUKOF, OTCPK:LUKOY).
- The Barents Sea is considered a costly area to develop, due partly to the lack of infrastructure, and STO's Snoehvit gas field so far is Norway's only Arctic offshore field in production, but it accounts for 40% of the oil and gas resources on the Norwegian continental shelf that have yet to be produced.
Oct. 21, 2015, 10:49 AM
- Iran will pay foreign oil companies larger fees than it did under previous buy-back contracts and offer 20-year contracts on oil and natural gas projects, says Roknaddin Javadi, the managing director of state-run National Iranian Oil Co.
- New contract terms will be introduced next month, as part of plans to boost oil production to 5.7M bbl/day and gas output to 1.4B cm/day by 2021, the official says.
- Iran's previous buy-back contracts merely paid oil companies a fixed fee over 5-7 years without giving investors a share of a field’s production in the longer term, but Javadi says the new contract will link payments to oil companies to the quantity they produce.
- Western companies such as BP, Royal Dutch Shell (RDS.A, RDS.B), Total (NYSE:TOT) and Lukoil (OTCPK:LUKOY, OTC:LUKOF) have shown interest in investing in Iran after sanctions are lifted, hoping to tap into the country’s vast oil and gas reserves.
Oct. 14, 2015, 10:59 AM
- Lukoil (OTCPK:LUKOY, OTC:LUKOF) says it has made a large deepwater gas discovery with a wildcat well drilled at the Lira prospect in the Romanian sector of the Black Sea.
- Lukoil says seismic data indicates the area of the gas field could reach up to 15 sq. miles and reserves could exceed 30B cm of gas.
- The Russian company says the success of the well will reduce the risk for further exploration on a series of prospective sites with significant potential reserves, located both close to the Lira structure and in other parts of the block.
Oct. 2, 2015, 8:55 AM
- Lukoil (OTCPK:LUKOY, OTC:LUKOF) says it expects to sign a deal with Iran for exploration and production following changes in the country’s tax laws.
- Lukoil stopped work in Iran in 2010 due to sanctions, which western countries are poised to lift following Iran's agreement with the U.S. and other world powers to curb its nuclear program.
- Separately, Lukoil officials say they do not expect Russia's air strikes on Syria to affect relations with OPEC.
LUKOIL is one of the world's leading vertically integrated oil & gas companies. Main activities of the Company are exploration and production of oil & gas, production of petroleum products and petrochemicals, and marketing of these outputs. Most of the Company's exploration and production... More
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