Russian Lukoil Starts $3bn Buy-Back

Russian privately-held oil and gas producer Lukoil will dip into its reserves to carry out a $3bn share buy-back programme that will run from September 3 to the end of 2022, it said August 30. As of August 29, that sum would buy 5.2% of the capital.

CEO Vagit Alekperov said the plan was backed by “our strong business fundamentals. This is an important step which evidences our commitment to the delivery on our strategic plans, including the capital distribution policy.”

The announcement came a day after its financial results, which were boosted by a weak ruble, strong gas output and more trade than in the same period last year.

In 2Q 2018, adjusted free cash flow was up by 65.4% quarter-on-quarter to a quarterly record of rubles 152.0bn ($2.2bn), and amounted to rubles 243.8bn for the first half – almost double the figure for 1H 2017.

Pre-tax earnings ((Ebidta) in the second quarter were rubles 295.2bn, up 34.5%. Gas production over the six months of this year was 16.1bn m³, up from 13.4bn m³ in the same period 2017. The main driver of gas production growth was the successful development of projects in Uzbekistan, where production at Kandym and Gissar projects in 1H 2018 doubled year-on-year to 6.1bn m³.

Q2 2018 profit rose 53.4% quarter-on-quarter to rubles 167.3bn, mainly driven by non-cash foreign exchange effects, as well as a gain on sale of Arkhangelskgeoldobycha in Q2 2017. Excluding these factors, profits rose 47.4% year-on-year and by 35.6% quarter-on-quarter.