Russia’s Lukoil, investors buy back Lukoil’s 5 pct from Conoco for $2.4 Bln

Lukoil buys back its own 5 pct from Conoco

MOSCOW — Lukoil, Russia’s second-largest oil company, and investors led by UniCredit SpA have spent nearly $2.4 billion to buy 5 percent of Lukoil shares from U.S. oil company ConocoPhillips — half the amount allowed in an option that expired Saturday.

Lukoil bought 42.5 million, or 5 percent, of its own American Depository Receipts as part of a strategy to raise shareholder returns through a share buyback from the market, the Moscow- based company said in a statement on Sunday.

Lukoil’s president, Leonid Fedun, said in the statement that the buyback “allows us to support our share prices, since the transaction is funded by the group’s internal resources, without increasing the company’s total debt.”

Houston-based ConocoPhillips said in July that the option, which allowed for the purchase of 98.7 million shares (11.6 percent), was valued at $56 a share. The U.S. company is selling Lukoil shares to raise cash to pay back debts and buy back its own shares.

Lukoil in August spent $3.4 billion to buy 7.6 percent of its own stock back from Conoco.

The American company will sell the remaining stocks on the market until the end of 2011 in line with the option agreement.

Lukoil on Thursday secured an important tax break that will allow it to ship oil from its new offshore Caspian Sea fields next year with a lower export duty.

Moscow bourses were closed on Sunday.