A Review of the Nigerian Energy Industry

Lukoil net profit doubles on higher sales, acquisition

Lukoil-Inks-PSC-for-Offshore-Block-in-Ivory-Coast31 August 2013, Moscow – Russia’s number two oil producer, Lukoil, posted a doubling in second-quarter net income on Friday, just missing forecasts as a weaker rouble and higher-than-expected taxes dampened a rise in sales and the impact of an acquisition.

Lukoil said its second-quarter net income jumped to $2.1 billion, flattered by a weak performance in the same period last year when earnings were hit by a higher tax bill. However, that missed analysts’ average forecast of $2.25 billion.

Lukoil has been struggling with a decline in oil production at its depleted fields in Western Siberia, which account for more than a half of its resource base.

To stem the decrease, the company has bought into foreign assets, including Iraq’s West Qurna-2 project. In April, it also acquired Russia’s Samara-Nafta oil producing company from Hess Corp, boosting second-quarter results.

Lukoil’s shares were down 1 percent in early trade, lagging a 0.5 percent slide in the broader market.

Rosneft, Russia’s top oil company, last month reported a $1.1 billion second-quarter net profit on a margin of 3 percent. That compares with Lukoil’s 6 percent, according to Reuters calculations.

Lukoil said second-quarter sales rose 8 percent to $35 billion from $32.4 billion in the year-earlier period. Analysts had expected sales to be flat.

Earnings before interest, taxation, depreciation and amortisation (EBITDA) rose 26 percent to $4.36 billion, in line with expectations.

– Rigzone

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