One of the main features of the Open Society “Surgutneftegas” is its extremely steady financial position.
“Surgutneftegas” – the unique company in its branch which has no debts at all. On the contrary to many other companies, “Surgutneftegas” has a considerable stock of the money resources, allowing it to provide financing of the planned projects without dependence from external factors.
Strategy of development of the company assumes calculation exclusively on its own forces. For the last years “Surgutneftegas” hasn’t created any joint venture, didn’t involve large foreign loans, and didn’t place the bond.
The creation of the company
On April, 6th, 1993 oil company “Surgutneftegas” has been registered by administration of Surgut.
On October, 13th, 1993 “Surgutneftegas” has carried out a share issue. 45 % of actions «Surgutneftegas” have been fixed in state ownership, 8 % – are sold at the closed auction, 7 % – are redeemed by the company for vouchers. The remained 40 % of actions have been exposed on the mortgaging auction which has taken place on November, 3rd, 1995. The winner of auction recognizes a nonstate pension fund “the Surgutneftegas” which has paid 400 billions of rubles.
Central Office Of Surgutneftegas
Unlike the majority of the Russian oil companies, “Surgutneftegas” didn’t apply efforts on attraction of the large strategic investor. On the contrary to this fact, “the Surgutneftegas” management in every way aspired to keep large share holdings in the hands, and the remained actions to distribute among a wide range of small investors – labor collectives of the enterprises and local population.
Transition to the uniform action
In 1996 “Surgutneftegas” has developed the program of transition of branches on the uniform action. Within the limits of the program shareholders of the marketing enterprises were offered to exchange securities belonging to them for actions of Open Society “Surgutneftegas” or “Surgutneftegas”. To the end of an exchange of actions the affiliated marketing enterprises were supposed to be transformed to limited liability companies with 100 %-s’ participation of “Surgutneftegas”. However these plans have come across rigid counteraction from minority shareholders of the marketing enterprises. And they accepted the offered factors, and the fact of carrying out of an exchange. Resistance from shareholders has appeared so great that “Surgutneftegas” has been compelled to postpone carrying out of consolidation of the marketing enterprises.
Exit on the world financial market
At the beginning of January, 1997 the Open Society “Surgutneftegas” has carried out placing American depositor’s receipts of the 1st level. As depositary has acted Bank of New York. 1 ADR it is equivalent to 50 ordinary actions of Open Society “Surgutneftegas”.
|Vladimir Bogdanov – CEO of Surgutneftegas||Extraction of oil|
Crisis of 1998
Unlike the majority of other Russian oil companies, financial crisis of 1998 has a little influence on “Surgutneftegas”. Crisis was reflected only in the exchange stock quotes of the company which have fallen approximately in 10 times concerning the maximum values, reached in the middle of 1997. However this falling has been caused not by disappointment of investors in “Surgutneftegas”, and reflected the general negative spirit in relation to actions of all Russian companies.
The policy of rely only on own forces, declared by company management, in the conditions of crisis has appeared especially effective. “Surgutneftegas” had no large debts in foreign currency that has allowed living without special losses both the period of the low prices for oil, and sharp falling of a rate of national currency.
Acquisition Surgut GPZ
In December, 2001 “Surgutneftegas” has redeemed the actives of the Surgut gas-processing factory which were in property “SIBUR-Tjumeni” for $40 million.
The Analytical Information
Company’s financial results
|Revenue, USD mln||9 602||14 291||16 683||19 862||18 223|
|Gross profit, USD mln.||3 025||5 472||5 273||5 852||4 979|
|Net income, USD mln||4 080||3 815||2 570||2 954||4 797|
Strong financial position
“Surgutneftegas” has considerable volume of free money resources and their equivalents. The company has no long-term debt.
Favorable geographical position NPZ
Unique oil refining factory “Surgutneftegaz” (Kirishsky NPZ) is located in immediate proximity from sea terminals that gives the chance to deliver its production for export. The company realizes the scale project of reconstruction Kirishsky NPZ. It will allow rising quality of let out fuel to the European level.
Working out of deposits of the Eastern Siberia
“Surgutneftegas” owns the license for development of the central block of the Talakansky deposit, and also for a number of deposits adjoining to it. Association of several deposits in the uniform project will raise efficiency of their working out. Deposits new that will provide “Surgutneftegaz” with qualitative resource base for many years.
High expenses on oil recovery
Expenses on ton of the extracted oil at “Surgutneftegas” – one of the highest in branch. The company carries out huge volume of chisel works, surpassing in absolute indicators even much larger competitors.
Inefficient investment of means
Available assets which the company has, aren’t put in new projects, and stored on bank accounts and used for acquisition of the bad debt papers. The saved up means could be used effectively in crisis, buying up attractive actives at the low prices, but the company doesn’t carry out any favorable purchases.
The recommendation: ON the MARKET
Lagging behind in speed of development of the other companies during the periods of economic growth, “Surgutneftegas” shows stable development during crisis times when other companies are compelled to turn off perspective projects because of shortage of means. Reserved strategy, absence of a debt, orientation to own forces – the present celebration of conservatism. “Surgutneftegas” actions can be considered in quality of “a protective paper” for the periods of problems in economy. “Surgutneftegas” quotations can decrease at market falling, but the probability of bankruptcy of the company is minimum, it will continue to develop and pay dividends despite shocks in world economy. The greatest interest is represented by company preference shares as value of a vote at meeting of shareholders of “Surgutneftegas” is rather doubtful.
Official web site: www.surgutneftegas.ru