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Lukoil Value Pushes Past Russian State-Owned Giants

Russian oil

Lukoil, Russia’s second-largest oil producer by output, now enjoys the highest market capitalization of any Russian energy company, after overtaking state-controlled giants Gazprom and Rosneft on Wednesday.

At the start of trading in Moscow on Wednesday, Lukoil’s shares traded at US$67.74 (3,900 rubles), which, although not its all-time high share price, was enough to help the company to overtake Gazprom and Rosneft in terms of market value.

Lukoil’s market capitalization early Wednesday stood at US$57.66 billion (3.32 trillion rubles), just above Gazprom’s US$57.49 billion (3.31 trillion rubles) and Rosneft’s US$56.27 billion (3.24 trillion rubles).

Lukoil’s Moscow shares jumped to their all-time intraday high in the middle of January this year, when oil prices rallied and Brent briefly topped $70 a barrel.

But back then, Lukoil couldn’t topple Gazprom from the no.1 spot.

Russia’s most valuable company, among all sectors, is the top bank Sberbank, whose current market capitalization is US$97.78 billion (5.63 trillion rubles).

Lukoil’s shares in Moscow have risen from the US$45.16 (2,600 rubles) mark at which they traded in June last year.

Apart from the recovery in oil prices, Lukoil’s stock has benefited from the company’s decision last year to cancel treasury shares and the announcement that it would launch a buyback program.

In its latest development strategy, presented last week, Lukoil said that it would target a dividend policy of continuous growth and “balanced distribution of additional free cash flow to shareholders.” The oil producer expects free cash flow to fully cover the increase in dividends at oil prices at $50 a barrel.

Lukoil has planned its strategy on a conservative $50 a barrel oil price scenario, under which it believes it is feasible to reach its strategic goals and increase dividend payouts.

The company’s strategic goals are sustainable production growth; expansion in petrochemicals; and improving sales network efficiency.

By Tsvetana Paraskova for Oilprice.com

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