Lukoil's Net Income Rises 91.1%

Lukoil has published its consolidated US GAAP financial accounts for the first half of 2008.

Lukoil net income excluding hedging and impairment loss reached $8,168 in the first half of 2008, which is an increase of 103.5% y-o-y. Reported net income amounted to $7,293 million in the first half of 2008, which is an increase of 91.1% y-o-y. EBITDA was $11,082 million, which is 74.5% higher y-o-y. Revenue from sales rose by 59.0%, to $56,890 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. Exports of petroleum products reached 12.9 mln tons representing an increase of 6.3% y-o-y thanks to the increase in refinery throughputs. Crude oil exports in the corresponding period amounted to 19.20 mln tons, which is a decrease of 11.9% y-o-y. 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 $18.9 billion, up 57.0% y-o-y.

Production of marketable hydrocarbons (including share in production by affiliates) decreased by 1.5% y-o-y, to 2,176 th. boe per day in the first half of 2008. However in July 2008 production of marketable hydrocarbons reached 2,228 th. boe per day representing an increase of 2.3% compared to the level of 2007. This allows to make up for the current decrease in production of marketable hydrocarbons. In June 2008 first stage production at the Yuzhnaya Khylchuya field, which is the biggest field in Nenets autonomous district, started in test regime (commercial production began in August 2008).

LUKOIL sold 65.3 million tons of crude oil and petroleum products in the first half of 2008, representing no change y-o-y. The Company decreased oil sales and considerably increased sales of petroleum products. Retail sales of petroleum products increased by 17.2% y-o-y, to 6.7 million tons.