Page 19 - FSUOGM Week 49

FSUOGM NEWS IN BRIEF FSUOGM

RUSSIA (COVID-19) hitting European gas markets hydrocarbons in Ukraine. The Poltava
hard, prices began rallying in August, earlier Petroleum Company, owned by JKX,
Rosneft oil major extends and faster than expected. is one of the largest non-state oil and
gas companies in Ukraine. It holds five
"Having fought through its worst quarter
buyback (2Q20) in over 15 years, Gazprom’s key gas production licences and one for geological
export business should see a significant
exploration, including pilot production.
Russian state-controlled oil giant Rosneft rebound already in 4Q20," BCS GM JKX's largest shareholder is the Eclairs
has prolonged the buyback of its shares until believes. Even as exports volumes remain Group, which owns a 27.54% stake.
end-2021, according to Interfax. Previously down in year-on-year terms, the rebound
Rosneft had allocated $2bn for a buyback of in European gas prices could mean a return
up to 340mn shares. to the low end of ‘normal’ Ebitda already in US Congress agrees on
As followed by bne IntelliNews, the the fourth quarter, the analysts argue.
analysts previously welcomed the buyback, Overall, BCS GM maintains an draft sanctions on Russia's
as it is seen as maintaining investor interest optimistic outlook on Gazprom’s export
despite the political and geopolitical pressure business, and with rising Asian demand Nord Stream 2
on Russian equities. absorbing the second LNG glut, falling
Rosneft did not buy shares during the European gas production, and more normal The US Congress has agreed on sanctions
week ending November 27, for the first time (cooler) weather, Europe’s call on Russian against the Nord Stream 2 pipeline of
since it started active purchases in March, piped gas should return to about 200 bcm Russia's natural gas giant Gazprom, which
but the company resumed making purchases by 2023. will included in the country’s 2021 defence
during the week ending December 4, "Add in 38 bcm of high-margin Chinese budget, according to RBC business portal.
according to Interfax. flows, and by 2025 Gazprom’s gas export As reported by bne IntelliNews,
"The market was likely expecting Rosneft business should be in new territory," BCS Gazprom still has to complete the last part
to extend its buyback, and the buyback GM analysts forecast. of the pipeline in Danish waters, under
should continue to support the company’s While investors seem sceptical of pressure from US sanctions.
share price," Sova Capital commented on Gazprom’s commitment to higher dividend The latest draft includes previously
December 4, reiterating a Buy call on the payouts, BCS GM fully expects a 40%+ reported sanctions on companies providing
company's shares. payout on 2020 earnings and 50% from insurance and certification services, as well
As followed by bne IntelliNews, a massive 2021 as stipulated by the new dividend as welding equipment, and modernisation
share buyback programme was part of policy. and installation related to the project
Rosneft's 2018 investment makeover, when As followed by bne IntelliNews, construction.
it pledged to cut debt, rein in its investment Gazprom suffered another net loss in the The draft which has been submitted
programme and shed non-profitable assets. third quarter of 2020 on foreign exchange also requires consulting with the UK,
The company also raised its dividend payout effects and weaker gas prices in Europe. Switzerland, Norway, the EU and other
to 50% of IFRS profit. But core earnings saw a significant recovery countries when imposing sanctions, VTB
quarter on quarter as international gas sales Capital (VTBC) reminds on December 4.
surpassed the levels seen last year. Analysts As reported by bne IntelliNews, ADD NS
Investment case of Russian also expect the company to stick to its 2 updated: We think that this development
might trigger another obstacle to
current dividend plan, despite the strain on
Gazprom supported by its finances. completing the Nord Stream 2 pipeline, and
so might be slightly negative for sentiment

exports recovery on Gazprom," VTBC commented, while
reiterating a Hold recommendation on the
BCS Global Markets "enthusiastically EASTERN EUROPE company's shares.
confirmed" a Buy call on shared of Russian However, this does not substantially
natural gas giant Gazprom with an Cascade Investment Fund change the expectations of VTBC analysts,
unchanged target price of $8 per American who conservatively see the launch of the
Depository Receipt (ADR) and estimated sells 20% of Ukraine- Nord Stream 2 pipeline in mid-2022 (with
return of 58%. The analysts note that the full-scale launch only in 2023 and some
Gazprom's exports are recovering faster operating JKX $1.4bn saving on transport expenses, which
than expected after a tough year, with is about 5% of that year’s Ebitda).
European exports seen returning to normal Cascade Investment Fund, owned by Vitaliy As reported by bne IntelliNews, last
by 2023. Khomutynnik, has sold 20% in the oil and week BCS Global Markets "enthusiastically
As reported by bne IntelliNews, the gas company JKX, which operates Ukraine's confirmed" a Buy call on shared of Russian
company's exports to Europe and China Bridgewater fund, Interfax-Ukraine natural gas giant Gazprom with an
rose to 17.5bn cubic metres in October reported on December 7. unchanged target price of $8 per American
2020, marking the company's highest ever In 2019 JKX received $22.21mn in net Depository Receipt (ADR) and estimated
non-CIS export volume for the month profit, which is 45.6% better than in 2018. return of 58%.
of October. Gazprom also reportedly is The increase in profitability is associated The analysts note that Gazprom's exports
discussing increasing supplies to China. with an increase in revenue by 9.6%, to are recovering faster than anticipated after
After a "triple whammy" of the second $101.74mn. a tough year, with European exports seen
liquefied natural gas (LNG) glut, an JKX Oil & Gas is engaged in returning to normal by 2023..
abnormally warm winter, and coronavirus the exploration and production of

Week 49 09•December•2020 www. NEWSBASE .com P19