Page 10 - FSUOGM Week 11

FSUOGM INVESTMENT FSUOGM
Russian oil bosses snap up shares in producers
RUSSIA
The heads of Lukoil and Novatek have exploited their companies’ low share price.
LUKOIL CEO Vagit Alekperov has taken advan- tage of the Russian oil producer’s currently low stock price to acquire an additional 200,000 of its shares for RUB950mn ($12.9mn).
Lukoil’s share price in Moscow slumped 18% during trading on March 10, following the col- lapse of OPEC+ talks at the end of the previous week. It has fallen further since then, closing at RUB4,251 ($57.20) per share on March 16, down 24% from the level at the close of trade on March 6.
Since the start of the year, Lukoil has lost around a third of its share price value, as geopo- litical tensions and the coronavirus (COVID-19) outbreak have weighed down on oil prices. Oil prices saw their biggest decline since the Gulf War on March 6, after Russia dropped its sup- port for OPEC+ supply quotas and Saudi Arabia retaliated by slashing its prices.
Alekperov made his purchase on March 11, on the same day Lukoil published its finan- cial results for 2019. The company’s adjusted EBITDA was up 3% at $4.37bn in the three months ending December 31, but net income
was down 23% at $1.87bn.
The Lukoil founder now controls 3.11% of
the company’s shares directly, versus 3.08% before the transaction. Taking into account his indirectly held shares, he owns around 27% of the company.
Alekperov is not the only Russian oil and gas boss to exploit the oil price crash to snap up stock cheaply. In trades on March 9 and March 10, Novatek CEO Leonid Mikhelson spent $7mn on the gas producer’s London-listed global depos- itory receipts (GDRs) and its Moscow-listed shares.
Novatek similarly declined in value this month, closing at RUB824 per share on March 16, which is 15% less than at the close of trade on March 6.
Mikhelson is thought to be Russia’s richest man, with the Moscow-based edition of Forbes magazine estimating his net worth at $24bn. The businessman owned 24.75% of stock in Novatek prior to last week’s purchases, and is also a major shareholder in Russian petrochemicals group SIBUR. ™
Saudi bid for Russian oilfield equipment producer falls through
RUSSIA
SAUDI oil giant Saudi Aramco’s bid for a stake in Russian oilfield equipment supplier Novomet has fallen through because of “market uncer- tainty,” Kommersant reported on March 16 cit- ing the Russian Direct Investment Fund (RDIF)
RDIF teamed up with Aramco and the Saudi Public Investment Fund (PIF) in 2018 to acquire a 30.7% stake in the Perm-based company cur- rently held by government-run Rusnano. The deal looked set to be closed after Russia’s com- mission on foreign investment control cleared it last November.
However, sources told Kommersant that the transaction, priced at RUB7.5bn ($100mn), had been suspended owing to “market uncertainty.” Oil prices collapsed on March 6 after talks between Saudi Arabia and Russia on extended output cuts broke down, leading the kingdom to slash its prices and announce plans to ramp up production. These moves have pitted Aramco against Russian producers in a supply war.
Sources confirmed to Kommersant that it
was unlikely the deal would proceed, although Rusnano told the newspaper that “information about the breakdown of negotiations is not true; the parties are reviewing the parameters.”
Novomet specialises in the production of pumping and downhole equipment, and is viewed by Moscow as having strategic importance for the Russian oil industry. It reported an 8.7% growth in revenues last year to RUB25bn, with most of its Russian orders coming from state-owned produc- ers Rosneft and Gazprom Neft.
In addition to Rusnano, its shareholders include Russian private equity firms Baring Vostok and Russia Partners Management. Rus- nano first announced it wanted to divest its stake in 2016, and US oilfield services giant Haliburton later made an offer to buy 100% of the company. But this deal was held up and eventually blocked by Russian regulators amid fears that potential new US sanctions could hinder Novomet’s busi- ness activity. Aramco and its partners then filed a bid in October 2018. ™
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Week 11 19•March•2020