Page 14 - FSUOGM Week 49 2021

FSUOGM NEWS IN BRIEF FSUOGM

RUSSIA price of $87.4/share since November 26, or controlled by Naftogaz will be released
about some $40mn in total. soon.
Dividends of Russia's investment case of being one of the most statements for 2021 will be published in
The company’s audited financial
To remind, Lukoil reinforced its
Gazprom keep growing with valuable Russian oil and gas blue chips in 2022 as required by law.
2019 with the pledge to pay at least 100% of
gas prices cash flow in dividends and by the launch of
the second $3bn buyback programme.
Russian natural gas giant Gazprom held a "These buybacks are being conducted Gazprom sets Belarus price
management call following the publication under a $3bn buyback programme that was for 2022 to remain at $128
of its 3Q21 IFRS results pledging a dividend approved and announced by the company
of RUB29.7 per share for 9M21 based on in October of 2019, but never (at least per 1,000 cubic metres
adjusted net income of RUB1.4 trillion until now) put into operation," BCS Global
($19bn), or RUB11.9 per share for 3Q21 Markets notes on December 6. Gazprom and Belarus signed a new gas
alone. Prior to this, Lukoil had not been active agreement yesterday. Interfax reported on
As closely followed by bne IntelliNews, in buybacks since the previous programme December 2, citing an announcement by the
the dividend payout of Gazprom has been expired in August of 2019. Belarusian government.
steadily growing after having been fixed "The restart of buybacks by Lukoil Belarus will keep the same price for gas
at RUB8 per share for years. The company could have a noticeable impact on its share in 2022 that it had this year – twice as high
previously pledged to double the dividends price by providing steady buying interest as that paid by Russian consumers, but far
after record-smashing results in 2021, with in the market. However, note this is just lower than those in Europe.
the consensus expectations moving to another way of returning free cash flows to “No surprises here – Higher price than
RUB36 per share. investors, complementing the company’s Russia, much lower than in Europe. The
Now the expectations of the DPS are dividend policy rather than representing price of $128.52 per 1,000 cubic metres
approaching RUB50, while the dividend a new, additional source of cash flows to is roughly 2x higher than the average
yield of the company is expected to be in shareholders," Ronald Smith of BCS GM Russian city-gate price, but is 8-9x below
the double digits, as management highlights commented. current spot prices in Europe. Belarus is the
expectations of even better results for 2022. Smith reminds that Lukoil's shareholders largest consumer of Gazprom gas among
The management said that the weighted would in any event get 100% of free FSU countries, taking c19 bcm in 2020,
average export price as of October 25, 2021 cash flows generated by the company via out of total sales to the region of c31 bcm.
for 4Q21 was $550 per thousand cubic dividends, and by company policy the However, it also gets the lowest price, as the
metres, which would imply an average of buybacks should be deducted from FCF other countries in that list tend to pay prices
$320/mcm for 2021, which is in line with before determining dividends. on oil or European hub-based links,” BCS
the company’s guidance. "In other words, this doesn’t signal that GM said in a note.
"With 2022 expected by management the company is likely to tap its overly strong
to be at least as good as 2021 in terms of balance sheet to add cash to existing and
price and volumes, we think our current expected FCF to increase overall flows to Naftogaz breaks gas
assumptions and 2022 dividend per share investors," a BCS GM analyst believes.
forecast of RUB49/share are within reason," Still, by providing a natural buyer that contract with Firtash’s Ye
Sova Capital commented, while affirming a will presumably be in the market on a
Buy call on Gazprom's shares. regular basis, the "buyback programme Energy
VTB Capital (VTBC) estimated that should have a noticeable, direct and
Gazprom could deliver a DPS of RUB48 sustainable impact on the share price", BCS Naftogaz has broken its gas contract with
(versus the previous estimate of RUB45), GM wrote, while affirming a Buy call on the Firtash’s Ye Energy, says it could have
which would imply a "healthy" 14.2% company's shares. cost taxpayers $4bn. Naftogaz announced
dividend yield. on November 26 that it had broken its
The analysts at VTBC agree with contract to supply 6bn cubic metres of gas,
Gazprom, however, that the current approximately 15% of Ukraine’s annual
elevated gas prices are not sustainable, and EASTERN EUROPE consumption, to oligarch Dmytro Firtash’s
have pointed out that given the current Ye Energy. The state-owned oil and gas
pricing environment, the market tends to Naftogaz generated giant’s communications director, Maksym
ignore news about the company’s capital Bilyavskyi, estimated that Naftogaz could
expenditure hikes. UAH2.5bn ($91mn) net profit have lost $4bn in revenue. According to
Bilyavskyi, Naftogaz was supposed to sell
in Q3 2021 gas to Ye Energy for $0.27 per cubic metre,
Russia's oil major Lukoil Naftogaz of Ukraine NJSC generated which is too low. In July, Ukrainska Pravda
reported that Ye Energy was planning to
restarts $3bn buyback UAH2.5bn ($91mn) net profit in Q3 2021 sell the gas to industrial consumers for a
as compared to UAH1.8bn ($66mn) net
lot more. In November, gas traded at an
Russian independent oil major and the loss in the same period last year, according average $1.33 per cubic metre. Firtash has
country's second-largest crude producer to the Naftogaz separate financial lived under house arrest in Vienna since
Lukoil has announced the start of its statements released on 29 November. 2014 after being indicted for bribery by the
buyback of its own shares, with it having Consolidated financial statements US government.
purchased 464,950 shares at an average covering the entire group of companies

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