Lukoil's Net Income Grew 70.9% in First Nine Months of '08

Lukoil has published consolidated US GAAP financial accounts for the first nine months of 2008.

Lukoil's net income reached $10,765 million in the first nine months of 2008, which is an increase of 70.9% y-o-y. EBITDA was $16,652 million, which is 60.6% higher y-o-y. Revenue from sales rose by 56.3%, to $89,265 million.

The increase in net income was due to favorable market conditions, high refinery margin, increase in refinery throughputs as well as due to effective cost control. Growth of the net income was held back by appreciation of the ruble against the dollar, increase in transportation tariffs and growth of the tax burden. The Company's tax expenses totaled $31.1 billion, up 60.4% y-o-y.

Lifting costs per boe of production in the third quarter of 2008 decreased to $4.29 compared to $4.31 in the second quarter of 2008. Lifting costs per boe of production in the first nine months of 2008 amounted to $4.16.
Capital expenditures including non-cash transactions in the third quarter of 2008 were $2.7 billion, which represents almost no increase from the level of the second quarter of 2008. Capital expenditures in the first nine months of 2008 amounted to $7.8 billion.

Production of marketable hydrocarbons (including share in production by affiliates) increased by 0.4% y-o-y, to 2,189 th. boe per day. Launch of commercial production at the Yuzhnaya Khylchuya field in August 2008 offset the Company's oil production decrease in traditional regions. Successful development of Uzbek project Kandym – Khauzak – Shady provided the most of the gas production growth.

Lukoil is developing measures aimed at increasing efficiency of its activities and securing positive cash flow amidst the world financial crisis.


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