Lukoil’s Q2 profit drops 16 percent to $1.9 billion on higher export duties

Tuesday, August 31, 2010

Lukoil’s Q2 profit drops 16 pct to $1.9 Bln

MOSCOW — Lukoil, Russia’s second-largest oil producer, said Tuesday its second-quarter net profit dropped 16 percent from a year ago to $1.9 billion due to a rise in export duties and cost inflation.

Sales rose to $25.8 billion from $20.1 billion a year earlier, driven by higher oil prices.

Oil production remained flat at 24 million tons while total oil and gas output advanced 2 percent in January-June compared to a year ago. The total production growth was driven by an advance in Lukoil’s gas projects in Kazakhstan and Uzbekistan, analysts at Swiss bank UBS said in a note.

U.S. oil company ConocoPhillips announced in July that it is planning to sell its 20 percent stake in the Russian oil producer. Lukoil said at the time that it would be willing to buy some of the stake.

The company’s management, however, has since sent conflicting signals about how much the company would be willing to buy. Several top managers spoke in favor of the wider ownership of the stock.

Lukoil is expected to clarify its position on the buyback at the conference call later on Tuesday.

Investors are also watching the potential introduction of a preferential tax regime for oil produced at Lukoil’s fields in the Caspian Sea, which would likely drive up the company stock.

Lukoil shares were down 0.8 percent at the MICEX stock exchange Tuesday morning in line with the market.

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