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FSUOGM INVESTMENT FSUOGM

Tatneft confirms growth goals,

taxes and dividend

RUSSIA THE CEO of Russian regional oil major Tatneft, other proposed reforms to the taxation of the oil
Nail Maganov, held a conference call with inves- sector. The management estimated the losses at
The Tatarstan oil tors on November 6, in which management con- RUB80bn ($1bn).
company was hit hard firmed its continuous efforts to adapt to a new The company's management previously
by changes in Russian tax regime, and outlined plans for long-term indicated that perhaps 20 fields, having lost
oil taxation. growth, dividends and buybacks. explicit tax breaks in September’s change to the
Tatneft was the first Russian oil major to tax code, could be moved over the new EPT
cancel its dividends for Q4 2019 due to the coro- tax regime.
navirus (COVID-19) crisis, prompting fears of "Tatneft is looking closely at every field,
across-the-board lower payouts in the Russian making detailed calculations, and going over
oil and gas equity sector. But the company has financial models with the government. The final
since confirmed its dividends and reiterated its number of fields to be transferred should be
long-term strategy. known by 1 December," BCS GM notes, seeing
The dividend policy was again reiterated, the news as positive.
(minimum 50% of IFRS net income and 100% of In September 2018 the company approved a
FCF, whichever is greater). Tatneft said it would 2030 strategy, which includes the construction
likely pay a dividend on Q3 2020 results. The of a RUB70.6bn gas chemical complex by 2024,
management also stated that it does not exclude boosting oil output to 38.4mn tonnes by 2030.
the possibility of conducting share buybacks or a The company maintains the ambitious
buyout of the preferred share. growth plans, seeing the output going to about
"However, the latter may have limited 0.75mn barrels daily versus the current, OPEC+
manoeuvre room between the actual dividend reduced rate of 0.5mn bpd.
paid on H1 2020 results and 9M 2020 RAS net However, which resources would be tapped
income, which implies a dividend of about to support that growth (high-viscous oil vs.
RUB13/share or a 2.9% yield," BCS Global Mar- medium-grade crude oil) may change and will
kets estimated on November 6. likely depend upon further evolution of the tax
The buyback the company is considering regime, BCS GM believes.
would also be a positive catalyst for the stock, VTBC on November 6 sees the long-term
VTB Capital (VTBC) believes, overall seeing the goals as optimistic, forecasting the output at
information provided on the call was positive for 28.3mn tonnes by 2025 versus the 37.7mn tonnes
stock sentiment, maintaining a Buy recommen- assumed in the 2030 Strategy, as the OPEC+ lim-
dation on the name. itations are not seen being eased in the near term.
In the meantime, as reported by bne Lower investment and less production of
IntelliNews, Tatneft is the company most high-viscous oil under a more hostile tax regime
exposed to the proposed raising of the mineral is also seen as "clearly positive for Tatneft if it
extraction tax (MET) on high viscous oil and were to materialise," VTBC noted. ™

Week 45 11•November•2020 www. NEWSBASE .com P13