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- LUKOIL's huge reserves of conventional oil give it a strategic advantage compared to other oil majors.
- LUKOIL is undervalued by at least 100% and is a superior inflation-hedged income solution.
- LUKOIL's management has consistently proven itself as a model operator over more than 2 decades. Recent headline "noise" is biased and short-sighted.
- Fields in Iraq and the Caspian Sea, as well as unconventional shales in Russia, could spur meaningful production growth for Russia's second-largest oil company.
- Finding and producing oil is getting more expensive and Lukoil is hampered by Russian favoritism toward state-owned business for exploration licenses, putting a premium on M&A and foreign exploration.
- Lukoil is in the same valuation boat as Gazprom, but could have upside to over $80 if investors turn more positive on Russia's energy sector.
A Brief Look At Lukoil's Operations In Iraq And Why The Company Will Not Be Affected By ViolencePower Hedge • Wed, Jun. 25
- Russia's Lukoil has been developing what will soon be one of the largest oil fields in the world, West Qurna-2 in Iraq.
- The nation of Iraq is in the midst of sectarian violence between the national government and a Muslim fundamentalist group.
- This violence has caused several oil companies to evacuate the country.
- The violence has been so far focused in the north and central areas of the country but Lukoil's field is in the south.
- Thus, the risk to Lukoil is not particularly high at this point, but could get that way if ISIS expands the fighting to other areas.
- The Russian stock market has been recently out of favor, but valuations seem to be too much cheap to ignore.
- Investors should look for companies with low governmental influence like Lukoil, which is mainly owned by its management.
- Lukoil is one of the world's largest oil & gas companies and has very good growth prospects.
- It currently trades at only 4x its estimated 2014 earnings and offers a dividend yield of 5%.
Patience Paid for Shareholders in Lukoil Litigation
Lukoil Combines Rich Resources with Effective ManagementKurt Wulff • Jan. 10, 2008
Lukoil Warms to the Continued Strength of the RubleKurt Wulff • Oct. 15, 2007
Fri, Dec. 19, 10:37 AM
- Even some of Wall Street's big boys are taking a beating in the oil sector: Carl Icahn’s holdings of Talisman Energy (NYSE:TLM) have tumbled $230M since late August, and John Paulson’s firm had one of its largest losses of the year on a bet that big oil companies would buy smaller ones.
- Before TLM agreed to be bought by Repsol, which boosted TLM shares, Icahn's losses stood at more than $540M as recently as Dec. 11, and he still will have lost ~$290M at the deal price; Icahn also holds stakes in hard-hit Chesapeake Energy (NYSE:CHK) and Transocean (NYSE:RIG).
- Paulson was the biggest shareholder in Whiting Petroleum (NYSE:WLL) and Oasis Petroleum (NYSE:OAS) at the end of Q3, but his strategy could yet pay off, as many analysts expect consolidation in the energy sector as lower oil prices pressure smaller firms.
- Also caught flat-footed by the oil price pullback was Prosperity Capital’s Mattias Westman, a longtime investor in Russia whose firm has lost more than $1B this year, in part on stakes in Russian energy companies Gazprom (OTCPK:OGZPY) and Lukoil (OTCPK:LUKOY, OTC:LUKOF).
Fri, Nov. 28, 4:22 AM
- Lukoil (OTCPK:LUKOY) vice-president Leonid Fedun warns that falling oil prices and western sanctions will lead to a bigger fall in Russian oil production than previously forecast.
- Although the decline would not be "dramatic", he predicts a drop from a peak of about 525m tonnes this year to 490m tonnes within four to five years.
- Lukoil announced yesterday that profits had more than halved in Q3 due to tumbling oil prices and a weak rouble.
Fri, Nov. 21, 12:42 PM
- Lukoil (OTCPK:LUKOY, OTC:LUKOF) has climbed 12% in U.S. trading this week, and BCS Financial is advising clients to buy the Russian oil producer’s stock, saying the “huge discount” to its biggest competitors is not justified.
- Lukoil’s stock price does not reflect the tax benefits it will get from developing new Caspian Sea fields as well as production in areas where crude is more difficult to extract, BCS believes.
- Lukoil, up 3.5% today, said yesterday that overseas output jumped 44% YTD.
Wed, Oct. 8, 6:55 AM
- Lukoil (OTCPK:LUKOY, OTC:LUKOF) has launched an oilfield in western Siberia today ahead of schedule to counter falling production and recent U.S. sanctions.
- The U.S. imposed sanctions against Russian energy companies last month prevents U.S. firms from supporting Russian firms' activities in exploration or production from deep water, Arctic offshore or shale projects.
- Lukoil plans to produce 200 tonnes of oil per day at the field this year. In 2015, it plans to produce 300K-400K tonnes, while in five years annual output is set to reach 3M tonnes with a future maximum annual production of 5M tonnes.
- The field, which has total extractable oil reserves of 194M tonnes (1.4B barrels), was originally due to be launched in March next year.
Tue, Sep. 30, 7:51 AM
- Schlumberger (NYSE:SLB) reportedly is withdrawing employees who are citizens of the U.S. and EU from Russia amid sanctions.
- Russia relies on fracking for 25% of its oil production and replacing technology developed by companies like SLB would require “colossal funds,” Lukoil (OTCPK:LUKOY, OTC:LUKOF) CEO Vagit Alekperov says.
- SLB gets 5%-7% of its global sales from Russia.
Mon, Sep. 22, 5:22 PM
- Total (NYSE:TOT) says its joint venture with Russia’s Lukoil (OTCPK:LUKOY, OTC:LUKOF) to explore shale oil in western Siberia has been halted as a result of western sanctions, a clear sign that the latest round of sanctions against Russia over Ukraine will put a brake on plans to develop the country’s shale oil resources.
- TOT also is developing the $27B Yamal liquefied natural gas project with Russia's Novatek and China’s CNPC, but CEO Christophe de Margerie says he hopes Yamal can raise financing from western banks but not in dollars, adding that the Chinese had committed to cover 60% of Yamal’s financing needs.
- The comments come as TOT used an investor day to announce plans to sell $10B worth of assets during 2015-17.
Fri, Sep. 12, 10:32 AM
- Sberbank - Russia's largest lender - is added to the sanctions list and will be blocked from accessing U.S. debt markets for financing any longer than 30 days. Five Russian state-owned defense-technology firms are also now under sanction.
- Sanctions now restrict anything other than financial services to five firms in the Russian energy sector, including Gazprom (OTCPK:OGZPY), Lukoil (OTCPK:LUKOY), and Rosneft (OTC:RNFTF).
- ETFs: RSX, RUSL, RSXJ, RUSS, ERUS, RBL, RUDR
Thu, Sep. 11, 7:03 AM
- Lukoil (OTCPK:LUKOY) has placed a bid for a diesel pipeline which runs through Ukraine to Hungary, reports Vedomosti quoting a letter from the company to Vladimir Putin. The pipeline is now operated by a subsidiary of Russia's Transneft.
- Vedomosti says Putin has approved of the bid after receiving the letter, which stated that following the purchase of the pipeline's owner, a consortium of Russian and European companies would be created to operate the pipeline.
- The pipeline transported 925K tonnes of oil products to Ukraine and 815K tonnes to Hungary in 2013.
Thu, Sep. 4, 2:22 PM
- The EU is preparing to bar Russia’s state-controlled oil companies from raising funds on European capital markets, according to legislation approved by the European Commission and reported by the Financial Times.
- The legislation, which is expected to be approved by EU ambassadors by the end of this week, would hit Rosneft (OTC:RNFTF), Russia’s largest oil group, Gazprom Neft (OTCQX:GZPFY), the Gazprom (OTCPK:OGZPY) oil subsidiary, and probably Transneft, the world’s largest oil pipeline company.
- Other Russian oil groups, such as Lukoil (OTCPK:LUKOY, OTC:LUKOF), appear to be exempt because of their private ownership.
- The ban would add to a similar restriction adopted in July on Russian banks seeking to raise cash in Europe.
Tue, Sep. 2, 2:15 PM
- Russia's Lukoil (OTCPK:LUKOY, OTC:LUKOF) has made a discovery at Ghana’s offshore Cape Three Points project, Bloomberg reports.
- Ghana and its partners, including Tullow Oil (OTCPK:TUWLF, OTCPK:TUWOY) and Anadarko Petroleum (NYSE:APC), plan to spend $20B in the next decade to boost oil production to 500K bbl/day from current output of ~100K bbl/day.
- If commercially viable, the Lukoil find would be Ghana’s fifth planned offshore field.
Fri, Aug. 29, 2:32 PM
- Russia's no. 2 oil producer Lukoil (OTCPK:LUKOY, OTC:LUKOF) says its H1 commercial hydrocarbon production rose by 3.2% Y/Y to 410M boe, as overall crude production for Q2 gained 7% to 2M bbl/day.
- Says production at the West Qurna-2 project in Iraq had reached 330K bbl/day, and expects to eventually peak at 1.2M bbl/day from estimated recoverable reserves of ~13B barrels.
- Lukoil says it plans to cut capital spending by as much as $2B starting from 2015 because of economic and political volatility, after H1 capex came in at $7.7B.
Tue, Aug. 19, 12:40 PM
- Iraq is moving ahead with an ambitious increase in production at its prolific southern oil fields despite a surge of violence in the country.
- Russia's Lukoil (OTCPK:LUKOY, OTC:LUKOF) says it had shipped 1M barrels of oil produced from southern Iraq's giant West Qurna-2 oilfield, its first shipment from the field; output at West Qurna-2 field has reached 280K bbl/day from 120K bbl/day when it first started pumping from the field in March.
- Iraq's oil ministry also says crude has started to flow through a new pipeline connecting the Halfaya and Missan fields to the southern port of Faw, expanding export capacity, while crude also has started to flow from the Badra Field, which is operated by the Gazprom (OTCPK:OGZPY), to a storage facility in Basra.
- Iraq's oil production hit 3.6M barrels in February, its highest level in 35 years, but has since fluctuated because of logistical constraints and political turmoil.
Thu, Aug. 14, 7:57 AM
- Russia's Lukoil (OTCPK:LUKOY, OTC:LUKOF) warns in its quarterly report of a possible decline in sales abroad due to Russia's negative public image.
- Lukoil itself isn't under sanctions the West introduced against Russian officials and corporations, but it says "a negative perception of Russian Federation's public image in the majority of the company's countries of operations... may lead to a short-term decline in retail sales" by association.
- Rosneft reportedly is asking the Russian government for $42B to make up for sanctions.
Thu, Jul. 31, 6:51 AM
Wed, Jul. 23, 7:53 AM
- EU foreign ministers failed to impose any tough sanctions against Russia during a meeting of the bloc's foreign ministers yesterday, NYT reports.
- Dependent on Russia's energy and wary of confrontation, Europe’s leaders have largely decided they will have to live with a newly assertive Russia.
- The Netherlands lost at least 193 victims in the Malaysian Airlines crash over Ukraine, but Royal Dutch Shell (RDS.A, RDS.B) is one of the largest foreign investors in Russian gas fields in Siberia; if Shell loses money, the pensions of Dutch teachers, civil servants and many others suffer.
- Significant Russian companies include Gazprom (OTCPK:OGZPY), Lukoil (OTCPK:LUKOY) and Yandex (NASDAQ:YNDX), while BP has a 20% stake in Russian energy company Rosneft (OTC:RNFTF).
Wed, Jun. 18, 8:53 AM
- Russia's Lukoil (LUKOY, LUKOF) is in talks with Hess (HES) to buy a stake in the Deepwater Tano/Cape Three Points offshore project in Ghana, Reuters reports, as part of its strategy to look beyond a closed Russian market.
- The project is 90% owned by Hess, with the rest held by Ghana's state-owned oil company; Hess started pre-development studies on the block after finishing drilling its seventh well last year.
LUKOY vs. ETF Alternatives
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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