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Lukoil To Spend Over $1B On Share Buybacks By End-2019

Sakhalin

Russia’s second-largest oil producer Lukoil will spend more than US$1 billion on share buybacks by the end of 2019, as part of its recently announced US$3-billion buyback program, the company’s first vice president for finance Alexander Matytsyn said on Friday.

The buybacks as part of the program, which Lukoil announced last week, will begin as early as this month, Russian media quoted Matytsyn as saying today. Lukoil has picked Citi to handle the buybacks, the manager added.

Last week, Lukoil announced the start of an open market repurchase of the shares and the corresponding depositary receipts for a total amount of up to US$3 billion. The sum is equivalent to 44 million common shares of Lukoil, or 5.2 percent of its share capital, at a closing price of US$68.16 per depositary receipt (representing 1 common share) on August 29, 2018, at the London Stock Exchange.

The buyback will run between September 3, 2018, and December 30, 2022, Lukoil said.

“This is an important step which evidences our commitment to the delivery on our strategic plans, including the capital distribution policy,” Lukoil’s CEO and President Vagit Alekperov said.

The higher oil prices and the weakened ruble against the U.S. dollar have helped Russian companies boost profits this year, and now they have started to announce more returns to shareholders.

The biggest producer by output and market capitalization, Rosneft, approved last month a share buyback program of up to US$2 billion that will run until December 31, 2020. Earlier this week, Rosneft appointed UBS as an independent agent to conduct the open market share buyback on behalf of the Russian company.

In August, Rosneft reported record-high free cash flow and a near three-fold increase in net profit for the second quarter on the back of higher oil prices combined with a weaker Russian ruble, which reduces oil producers’ expenses.

By Tsvetana Paraskova for Oilprice.com

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  • Alex on September 09 2018 said:
    Someone is under the mistaken impression that a share in a Russian corporation has some value. If you believe that I have some shares in PDVSA to sell you.

    Dictator Putin could confiscate all profits at any time. Sanctions have put Russia under extreme financial stress. The Russian economy is as small as only one USA state of New York. Russia cannot finance the wars in Donbass and Syria without sucking the food supply out of the mouths of ordinary Russians.
  • Bob on September 08 2018 said:
    ...any chance that Gazprom might follow suit?

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