Page 13 - FSUOGM Week 37 2021

FSUOGM NEWS IN BRIEF FSUOGM

RUSSIA company’s sales are not gas. Bloomberg.
Given this, Sova sees Novatek's shares The nation pumped an average of 1,456.9
Upside on shares of as fairly priced, noting that "Novatek is the thousand tons of oil per day between
September 1 and 13, according to data from
most expensive stock in our universe on
Russia's Novatek seen multiples, though this does not seem to be the Energy Ministry’s CDU-TEK unit seen
deterring the market."
by Bloomberg. That equals 10.679 million
limited by gas price rally publication of solid 2H21 results, the sale of barrels per day, based on a 7.33 barrel-per-
Further catalysts for the name include
ton conversion ratio, which is 2.4% above
Sova Capital analysts upgraded the target 9.9% of the Arctic LNG-2 plant to an Indian August’s level.
price on the shares of Russian gas major consortium, and gas prices remaining high If that rate of production is maintained
Novatek by 36% and 24% to RUB1,980 globally. Main risks according to Sova for the whole of September, it would be
per share and $270 per Global Depository include gas prices in 2022-2023 being the biggest monthly increase in Russian
Receipt (GDR) respectively, and reiterate weaker than expected, the highly unlikely production in just over a year. The country’s
the Hold rating on the name. changes in taxation, and increased costs for output on September 13 rose to 10.72
Novatek posted 84% year-on-year and materials. million barrels, indicating the full-month
8% quarter-on-quarter growth in revenues As followed by bne IntelliNews, Novatek average may be higher than in the first
in 2Q21 under IFRS to RUB264bn ($3.6bn), is securing the financing for Arctic LNG-2, weeks.
with EBITDA jumping 3.5-fold y/y to its second liquefaction project to launch The gain was mainly driven by a 13.9%
RUB83bn (margin flat q/q), and net income production. Its first, Yamal LNG, went hike in production at Rosneft PJSC’s
more than doubling y/y to RUB99.3bn. on stream in December 2017 and is now Bashneft unit and an 11.9% increase in
"Novatek has outperformed just about producing 17mn tonnes per year (tpy) of the output of smaller oil producers, which
every other stock in our coverage universe, super-cooled gas. include Gazprom.
but we see the company’s upside as limited The Organization of Petroleum
despite record-high gas prices in Europe," Exporting Countries and its allies agreed
Sova Capital commented, expecting the Russian oil output climbs in to boost their production from August in
share price to continue to exhibit strength response to growing global energy demand.
in the near term, but possibly drop "once line with OPEC quota deal While the alliance seeks to add 400,000
gas prices inevitably start to come down". barrels a day to the market each month,
While the company has benefited from Russia’s crude oil and condensate output concerns have mounted recently about
record-high gas prices globally, its share jumped in the first weeks of September whether some members of the group are
of gas sales as a portion of total revenue as some of the nation’s key producers able to meet their targets. Russia’s share of
decreased 43% in 2Q21 versus an average ramped up in line with the OPEC+ deal the increases is some 100,000 barrels a day.
of 51% in 2020, Sova analysts note while and Gazprom PJSC recovered from a fire In August and September, the extra
reminding that more than half of the at a facility in West Siberia, according to supply from OPEC and its allies will

Week 37 15•September•2021 www. NEWSBASE .com P13