“LUKOIL” has bypassed “Gazprom” capitalization, whether to buy shares of “Rosneft”

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Shares of LUKOIL, the largest private oil company in Russia, on Wednesday, surpassed the market capitalization of the securities of “Gazprom”, which allowed “LUKOIL” for the first time to take the second place. Lifting of quotations “LUKOIL” is a reaction to the company’s strategy, which was published last week. LUKOIL promised to send payouts to shareholders half of additional income with the price of oil above $50 a barrel. Besides, there is no more risk that quasicanonical stake in the company will go on the market.
As is known, 16.6% of shares of “LUKOIL” belongs to the Cyprian company Lukoil Investments Ltd. LUKOIL intends to redeem the 12% shares, the rest will be sent to incentive program management. There is another “bullish” factor: you can expect additional purchases from the funds after reviewing the weight of the company’s securities in the MSCI in may this year. Long-term global investors, especially in times of geopolitical tensions and a fairly cold attitude towards the “red chips” – shares of public companies. In Russia only two major private oil companies – LUKOIL and Surgutneftegaz, the market believes that sooner or later, “Surgutneftegaz” will be absorbed by Rosneft.
So in conclusion, comparable indicators of “LUKOIL” and “Rosneft” to make the right conclusion. In 2017, “Rosneft” has extracted 225,5 million tons of petroleum, 2.5 times more than was able to get “LUKOIL”. “Rosneft” cheap or “LUKOIL” roads?! We think that Rosneft is cheap. We recommend to gradually sell the shares of “LUKOIL”, paracladius in “Rosneft”. Gazprom is more risky because of the problems of Ukrainian transit and fears of the emergence of American LNG in Europe.
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Alexander Razuvayev,
The Director of analytical Department,
Alpari