Lukoil Reports $3.25B in 2Q Earnings, Up 67%

- Lukoil Reports $3.25B in 2Q Earnings, Up 67%

Wednesday, August 31, 2011
OAO Lukoil Holdings

LUKOIL has published consolidated US GAAP financial statements for the second quarter and first half of 2011.

The Company's net income was $6.768 billion in the first half of 2011, which is 69.1% higher y-o-y, including $3.251 billion in the second quarter. EBITDA in the first half of 2011 was $10.688 billion, which is 43.8% higher y-o-y. Sales revenues were $64.538 billion (+29.7% y-o-y). Positive dynamics of our financial results was mainly due to increase in hydrocarbon prices and refining margin in the first half of 2011 compared to the respective period of 2010.

Capital expenditures including non-cash transactions in the first half of 2011 were $3.6 billion, which is 13.3% higher y-o-y. The Company's strict financial discipline helped to generate high free cash flow which reached $4,714 million in the first half of 2011 compared to $3,127 million in the first half of 2010.

In the first half of 2011, lifting costs per boe of production were $4.72, which is 17.4% higher y-o-y. The growth was mainly due to the real ruble appreciation, which was 15.0% in the first half of 2011.

In the first half of 2011, LUKOIL Group total hydrocarbon production available for sale reached 2,162 th. boe per day, which is a 4.4% decrease y-o-y.

In the first half of 2011 throughputs at the Company's refineries (including its share in crude oil and petroleum product throughput at the ISAB and TRN refining complexes) decreased by 1.2% y-o-y and reached 32.03 MM tonnes. Throughputs at the Company's refineries in Russia increased by 1.5% y-o-y, throughputs at the Company's international refineries decreased by 6.9% y-o-y due to shutdown of the Odessa Refinery because of unfavorable economic conditions in the first half of 2011.

Measures aimed at higher efficiency and cost control allowed the Company to generate strong free cash flow and increase net income.

Also, an extended meeting of the OAO LUKOIL Board of Directors was held on Wednesday. The meeting considered the Company's production and financial performance and the investment program implementation results in the first half of 2011.

In his address to the meeting, LUKOIL President Vagit Alekperov specified the need to develop a Hydrocarbon Production Stabilization Program and to rigorously implement it.

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Baker Hughes Lands Gig at Lukoil's West Qurna Field

- Baker Hughes Lands Gig at Lukoil's West Qurna Field

Monday, August 08, 2011
Baker Hughes Inc.

Lukoil has awarded Baker Hughes a two-year contract to provide full drilling and completion services for 23 wells in the West Qurna field in southeast Iraq, 50 kilometers (31 miles) west of Basra.

Under the terms of the contract, Baker Hughes will provide engineering and project management for the turnkey drilling and completions scope of the project. Baker Hughes will supply drilling services, formation evaluation, casing and tubing running services, completion tools and services, wellbore intervention services, and wireline logging as well as perforation operations. Baker Hughes also will contract all third-party services, equipment, personnel, tools and materials required for the project, including the provision of up to five drilling rigs and three workover rigs.

Some of the wells will be drilled directionally, targeting the Mishrif formation, with step outs of up to 3,000 meters (9,842 feet). The wells are closely spaced, so the operation will employ a cluster (pad) drilling technique. The five drilling rigs and three workover rigs will be mounted on skids for fast, efficient rig moves.

Baker Hughes is well positioned in Iraq to execute the West Qurna project. In 2010 Baker Hughes opened a 120,000 square-meter (1.3 million square-feet) operations base in Basra to serve the Iraq oil and gas industry. The base includes a workshop to support a wide range of Baker Hughes products and services. The facility also houses chemical blending capabilities and inventory, as well as bulk drilling fluids storage for quick response to customers' requirements.

In addition to the LUKOIL drilling and completions award, Baker Hughes manages and operates drilling and workover rigs in the Zubair field for an international oil company. Baker Hughes also has a strategic alliance with the South Oil Company to support the development of Iraqi wireline capabilities; and supplies electrical submersible pumping (ESP) systems and services—including real-time remote monitoring and automation capabilities to optimize production—to three major international operators.

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Lukoil Takes Stake in Block Offshore Sierra Leone

- Lukoil Takes Stake in Block Offshore Sierra Leone

Wednesday, July 20, 2011
OAO Lukoil Holdings

Lukoil has acquired from the private company Oranto Petroleum Ltd. a 49% stake in the Petroleum Agreement for SL-5-11 Offshore Block in the Republic of Sierra Leone (West Africa).

The mandatory exploration program within the framework of the Agreement provides for the drilling of one exploration well before 2013.

The SL-5-11 offshore block with an area of 4,022 sq. km is located in the territorial waters of the Republic of Sierra Leone on the shelf and continental slope of the Atlantic Ocean. The water depth within the Block territory varies from 100 m to 3.3 km. 2D and 3D seismic surveys have been conducted at the block, revealing several promising structures. The block is part of the Sierra Leone - Liberia geological basin, where a number of major oil fields have been discovered during the last two years, thus proving its potential productivity.

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Lukoil, Partners Award Deal to Drill 23 Iraq Wells -Source

- Lukoil, Partners Award Deal to Drill 23 Iraq Wells -Source

Thursday, July 14, 2011
Dow Jones Newswires
LONDON
by Hassan Hafidh

Lukoil and its partners have awarded a deal to a "known" service company to drill some 23 new wells at Iraq's supergiant West Qurna Phase 2, a person familiar with the project said Thursday.

"The central contracts committee at the Iraqi Oil Ministry is studying the contract and we expect them to take a decision shortly," the person told Dow Jones Newswires.

Along with Norway's Statoil and Iraq's state South Oil Co., Lukoil is expected to award four other major deals in August to help develop the 12.9-billion-barrel field located in Basra governorate in southern Iraq.

The four contracts include a crude processing facility, a 126-megawatt power station, an export pipeline linking the field with a tank farm in Tuba near Iraq's southern export terminals, and six large storage tanks, the person said, adding the largest contract would be the crude processing facility.

The person said that Lukoil has shortlisted five oil services companies for this plant--Saipem, SNC-Lavalin Group, Punj Lloyd, Globalstroy-Engineering and South Korea's Samsung Engineering.

For the power station the Russian supermajor has received offers from a number of companies such as Petrofac and Greece's ENKA, the person said.

The contracts are part of an initial development plan to start production from the untapped oil field, set by Lukoil and Statoil and approved by Iraq's Oil Ministry last year. They are expected to help production at the field hit 150,000 barrels of oil a day in 2013, the person said.

Lukoil and Statoil were awarded a 20-year service contract for West Qurna Phase 2 in Iraq's second licensing round held in December 2009. The companies promised to get the southern field pumping at a rate of 1.8 million barrels a day for payment of $1.15 a barrel.

The development project is one of several that Iraq awarded last year with the ambitious objective of expanding its oil production capacity to 12 million barrels a day by 2017. But Iraq's oil minister said last month that Baghdad was considering scaling down this goal and could renegotiate deals.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Lukoil to Raise Funds for Uzbek Proj.

- Lukoil to Raise Funds for Uzbek Proj.

Monday, June 06, 2011
OAO Lukoil Holdings

Lukoil intends to raise USD 500 million to finance on a limited recourse basis the development of Khausak-Shady-Kandym project in Uzbekistan.

The lenders consortium is expected to include international financial organizations, the Asian Development Bank (ADB) and the Islamic Development Bank (IDB) and commercial banks: BNP Paribas (Suisse) SA, Korea Development Bank, Crédit Agricole CIB and UniCredit Group. The commercial part of the facility structure is expected to include risk insurance to be provided by ADB and the Multilateral Investment Guarantee Agency (MIGA).

The banks are now seeking internal approval for the transaction. However, the transaction is still subject to the government approval from the Republic of Uzbekistan. It is expected that financing will be closed in 3Q 2011.

The loan proceeds will be used to finance the investment program of the Kandym field development and production enhancement at the Khauzak-Shady field.

The agreement on the Khauzak-Shady-Kandym project was signed on June 16, 2004. The Khauzak gas field was commissioned in November, 2007 as per schedule. LUKOIL's share of proved reserves is 569 million BOE. The projected production rate is 12 billion cubic meters of gas per year.

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Lukoil Reports $3.5B in 1Q Profit

- Lukoil Reports $3.5B in 1Q Profit

Thursday, May 26, 2011
OAO Lukoil Holdings

LUKOIL has published consolidated US GAAP financial statements for the first quarter of 2011.

The Company's net income was $3.517 billion in the first quarter of 2011, which is 71.3% higher y-o-y. EBITDA was $5,343 million, which is 43.3% higher y-o-y. Sales revenues were $29.626 billion (+23.9% y-o-y). Positive dynamic of our financial results was mainly due to a sharp increase in hydrocarbon prices in the first quarter of 2011 compared to the respective period of 2010.

Capital expenditures including non-cash transactions in the first quarter of 2011 were $1.7 billion, which is 17.3% higher y-o-y. Free cash flow increased by 43.3% and reached $2.013 billion in the first quarter of 2011.

In the first quarter of 2011, lifting costs per boe of production were $4.52, which is 13.9% higher y-o-y. The growth was mainly due to the real ruble appreciation and increased expenses for power supply.

In the first quarter of 2011, LUKOIL Group total hydrocarbon production available for sale reached 2,186 th. boe per day, which is a 4.1% decrease y-o-y. Crude oil production of LUKOIL Group in the first quarter of 2011 totaled 22.84MM tonnes. Natural and petroleum gas output available for sale increased by 1.4%, to 4.79 bcm. Meanwhile, the production of gas on our major gas field - Nakhodkinskoe field amounted to 2.13 bcm in the first quarter of 2011 compared to 2.10 bcm for the respective period of 2010.

In the first quarter of 2011 throughputs at the Company's refineries (including its share in crude oil and petroleum product throughput at the ISAB and TRN refining complexes) decreased by 1.0% y-o-y and reached 15.19MM tonnes. Throughputs at the Company's refineries in Russia remained flat y-o-y, throughputs at the Company's international refineries decreased by 3.5% y-o-y due to the scheduled maintenance at ISAB Complex in the first quarter of 2011 and shutdown of operations at the Odessa Refinery due to unfavorable economic conditions.

Measures aimed at higher efficiency and cost control allow the Company to generate strong free cash flow and increase net income.

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Lukoil to Quadruple Overseas Oil Production

Lukoil to Quadruple Overseas Oil Production

Friday, May 06, 2011
Deutsche Presse-Agentur (dpa)

The Russian energy giant Lukoil plans to quadruple its overseas oil production with major projects in Iraq and the Aral Sea region, Interfax reported Friday.

The planned increase will take place over six years.

Lukoil's top overseas project is a joint venture with Norway's Statoil to develop a portion the massive West Qurna oil field, to the west of the Iraqi city Basra.

Initial production from West Qurna is scheduled for 2012 and full production should begin in 2017, company officials said.

The Russian corporation also is the lead member of a multi-national joint venture to develop oil and gas production in the Aral Sea region. The first test well was drilled in 2010.

Lukoil currently obtains approximately 90 per cent of its oil domestically, primarily from long-established fields in west Siberia, where production is slowly falling.

The corporation, which is Russia's second-largest company, would obtain as much as 40 percent of its oil from outside the country by 2017, the report said.

Copyright 2011 dpa Deutsche Presse-Agentur GmbH

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Lukoil Enters Offshore Project in Vietnam

Lukoil Enters Offshore Project in Vietnam

Friday, April 29, 2011
Dow Jones Newswires
by Alexander Kolyandr

Lukoil has acquired 50% of the Vietnam offshore Hanoi Trough-02 oil project from privately-owned Quad Energy S.A., which still keep the other half of the project.

The production share agreement project offshore Vietnam at the South China Sea will be operated by Lukoil Overseas, a Lukoil subsidiary.

The field's resource is estimated at 180 millions metric tons of oil equivalent, Lukoil said.

Lukoil to Begin Work with Rosneft in Caspian, Black Seas

Lukoil to Begin Work with Rosneft in Caspian, Black Seas

Monday, April 25, 2011
Dow Jones Newswires
by Jacob Gronholt-Pedersen

Russia's biggest private oil producer Lukoil and state oil champion Rosneft plan to begin joint exploration in the Black and Caspian Seas under a new long-term cooperation agreement, Lukoil Chief Executive Vagit Alekperov said Saturday, according to the government's website.

The two companies announced a deal to merge forces in offshore exploration last week.

"It's a step forward that today allows us to take on very complex projects, both technological and capital-intensive," Alekperov told Prime Minister Vladimir Putin during a meeting.

Alekperov said Lukoil and Rosneft are likely to begin their joint work on projects in the Caspian and Black Seas, and may also merge two projects in the Timan Pechora region, where Lukoil already has oil export infrastructure in place.

Black Sea

The agreement also envisions joint development of offshore fields in the Azov Sea and in Arctic waters, Alekperov said.

Alekperov didn't say when work would begin, but said the deal with Rosneftby Sept. 1.

Rosneft, Lukoil Agree to Joint Offshore-Exploration Deal

Rosneft, Lukoil Agree to Joint Offshore-Exploration Deal

Thursday, April 21, 2011
Dow Jones Newswires

Rosneft and the country's biggest private oil producer, Lukoil, on Thursday signed a long-term cooperation deal that includes offshore exploration in Russian Arctic waters.

The two companies agreed to work together on "geological exploration in the license areas of Rosneft on Russia's shelf and development of fields already discovered," Lukoil and Rosneft said in a joint statement.

Lukoil Buys 25.1% Stake in Trebs, Titov Project

Lukoil Buys 25.1% Stake in Trebs, Titov Project

Friday, April 15, 2011
Dow Jones Newswires
by Jacob Gronholt-Pederson

Lukoil has agreed to buy a 25.1% stake in the Trebs and Titov exploration project in northwest Russia from mid-sized oil company Bashneft.

Lukoil paid RUB4.7 billion ($166.7 million) for the stake in the project, which needs investment of $6 billion, Lukoil's Chief Executive Vagit Alekperov said.

Lukoil expects first oil from Trebs and Titov in the fourth quarter 2013 or the first quarter 2014, he said.

Bashneft, which is majority-owned by conglomerate AFK Sistema, last year won the right to develop the Trebs and Titov oil fields ahead of bigger rivals such as Lukoil and TNK-BP Ltd.

Last year's auction for the Trebs and Titov fields, which combined hold 1.5 billion barrels of oil, was mired in controversy after bidders were told by authorities they couldn't bid because of incorrectly-filed applications.

Lukoil Declares Force Majeure Offshore Cote d'Ivoire

Lukoil Declares Force Majeure Offshore Cote d'Ivoire

Monday, April 04, 2011

OAO Lukoil

LUKOIL released an official force majeure notification under the PSA terms with regards to the CI-205 offshore geological prospecting project to the Government of Cote d'Ivoire, relevant ministries and Oranto Petroleum and PETROCI Holding partner companies.

LUKOIL Overseas will resume active operations under the CI-205 project as soon as the situation in Cote d'Ivoire subsides.