Page 108 - RusRPTApr19

thus already outpaced its original buyback guidance. For $1.64bn the company bought 17.3mn shares and 4.2mn American Depositary Receipts (ADRs) in Moscow Exchange and London Stock Exchange, respectively. In 2018 the capitalisation of Russia’s biggest privately owned oil company on Moscow Exchange caught up with such state-controlled heavyweights as Sberbank and Rosneft oil major, despite it having smaller reserves and lower output, as bne IntelliNews reported in the article” King of the castle.” Lukoil’s new strategy, presented at an investors’ day in London in March 2018, was met positively by analysts and investors. The strategy outlined Lukoil's four key goals: organic extraction growth, optimising refining to maximise free cash flow, development of petrochemical segment, and a progressive dividend policy. While most of Russia’s bluechip stocks have been flat over the last year, Lukoil’s shares have almost doubled in value, putting it on a par with its state-owned peers, despite having much less in way of reserves and production.
● Other
The Russian Fund for Direct Investment (RDIF) is still looking to increase its stake in the oil servicing major Eurasian Drilling Company (EDC) from 16.1% to 30% after an acquisition deal with US oilfield service Schlumberger failed earlier this year, Vedomosti daily said on March 10 citing unnamed sources. The report not only confirms that RDIF will seek to consolidate the stake in EDC, possibly with the help of UAE's Mubdala or Saudi Aramco, but also claims the fund has tried to obstruct the deal with Schlumberger by pressuring Russian watchdogs. EDC was created on the basis of Lukoil Drilling and is one of the largest oil service companies in Russia. Its main owners are Alexander Dzhaparidze and the first president of Rosneft, Alexander Putilov. In July 2017, Schlumberger agreed to buy a 51% stake in EDC. Experts estimated the value of the transaction at that time at $1.9bn. Schlumberger had been trying to close the deal for 1.5 years but could never get the Federal Antimonopoly Services (FAS) to sign off on the acquisition amid deteriorating US-Russia relations and sanctions. The company finally withdrew its bid from FAS in February 2019. Sources close to EDC told Vedomosti note that even should RDIF succeed in getting more shares in EDC, the benefits of the deal would be dubious, as the company does not need cash, but rather technology which was the main motivation behind the failed Schlumberger partnership. The analysts surveyed by the daily value EDC at $2bn-2.8bn and the 30% stake at $600mn-$850mn. The company is seen as a stable asset being a key
108 RUSSIA Country Report April 2019 www.intellinews.com