Russia's TNK-BP net profit falls 13 percent on higher taxes
MOSCOW (Reuters) - Russian crude producer TNK-BP TNBP.MM, which is being taken over by state oil company Rosneft (ROSN.MM), posted a 13 percent drop in 2012 net income on Thursday due to higher taxes.
Rosneft is buying TNK-BP from British oil company BP (BP.L) and the AAR consortium of Soviet-born tycoons for a total of $55 billion in cash and shares, in a deal that will create the world's largest listed oil producer.
TNK-BP said on Thursday its net income fell to $7.58 billion last year due mainly to an increase in export duty. Its operating cash flow, however, rose 22 percent to $13.24 billion.
Rosneft needs around $40 billion in cash to fund the deal and has already secured most of the financing via loans from banks and agreements with trading companies. The company has said it may also use TNK-BP cash for the deal.
TNK-BP's Chief Financial Officer Jonathan Muir said the company's board had given the green light for management to discuss integration with Rosneft.
"Preliminary agreement for a framework under which management will potentially work with Rosneft was agreed," Muir said about last week's board meeting, while declining to disclose details and his personal plans.
"We started dialogue with our counterparts in Rosneft," he added.
The completion of the deal would bring TNK-BP out of the management limbo it has been in since October when the deal was announced, and allow Rosneft to reassure customers and employees about contracts and start working through cost savings.
Shares in TNK-BP closed up 4.5 percent, compared with a broadly unchanged wider Moscow market .
Rosneft is expected to get the nod from regulators for the deal soon, making it possible to close it in the first quarter, sources have said.
TNK-BP said its revenues last year rose slightly to $60.45 billion from $60.20 billion in 2011.
Earnings before interest, tax, depreciation and amortization (EBITDA) were 7 percent lower at $13.35 billion, mainly due to the increase in export duties and other taxes, as well as one-off impairments related to its Ukraine business, the firm said.
TNK-BP said it had replaced 210 percent of its reserves in 2012 under the U.S. Securities and Exchange Commission's LOF (life of field) standards, or SEC-LOF.
(Reporting by Vladimir Soldatkin; Writing by Lidia Kelly; Editing by Mark Potter)
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