No end of year results 2014. No quarterly update 2015. No information regarding business strategy. Management and board members that are essentially invisible. And the complete inability to publish a reserves update that has been ready for over a year.
10 Apr '15
march production report down?
SP on HL site down 10p? Why has production fallen off from 18k to 16k per day?
16 Mar '15
Goldman Sachs via ZeroHedge
http://oilprice.com/Energy/Crude-Oil/Goldman-Sachs-Busts-Myth-Of-Impending-Russian-Oil-Collapse.html Yesterday's Russian downgrade pulled yet another raft of "smartest people in the room" to tell investors how screwed Russia is by low oil prices (and yet the US Shale industry is fine and will manage through this). However, Goldman Sachs prefers facts in its analysis of the Russian oil sector and concludes, investor concerns about the health of Russia's oil industry should remain more myth than reality. Two factors contribute to the low sensitivity of Russian upstream cash flow to oil prices. The first is upstream industry taxation: the per-barrel tax rate decreases as oil prices fall, shifting most of the upside/downside due to changes in the oil price from the oil producers to the state. The second factor is a ruble-denominated cost structure. Russian oil producers' opex and capex mainly consist of ruble-denominated contracts, as the services industry is localized. These factors offset the negative impact of oil price declines on upstream earnings. Effectively, at US$110/bbl oil and 33 RUB/USD, Russian upstream free cash flow (FCF) for the companies we cover is roughly the same as under US$60 oil and 60 RUB/USD. Hence, we do not expect to see a slowdown in upstream activity. Moreover, the Russian government is likely to incentivize output growth in order to mitigate the impact of lower oil prices on budget revenues. Given that Russia has one of the lowest cash costs of production in the world, it would make sense in the current oil price environment for Russia to maintain its market share. We therefore expect production to reach 532 million tons in 2015 from 527 in 2014. In most countries, lower oil prices negatively affect the upstream industry while positively impacting refining due to feedstock cost reduction. In Russia, however, the tax system is designed in such a way that changes in oil prices have no major upstream implications but strongly influence refining profits. Even if the operating environment turns more negative- assuming RUB/USD of 70, a 20% decline in capex volume, and no dividend payments - the companies' strong starting positions would allow them to navigate 2015 at an oil price as low as $40/bbl (below our commodity research team's forecasts). In sum, provided that the ruble continues to adjust to the shock of weaker oil prices, investor concerns about the health of Russia's oil industry should remain more myth than reality.
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