November 3, 2010 / 9:54 AM / 9 years ago

UPDATE 2-Russia's Gazprom Neft beats Q3 profit forecasts

* Q3 net rose to $865 mln vs $826 mln in Reuters poll

* EBITDA increased due to rise in refining and sales

* To pay $1.5 bln with Novatek for SeverEnergia

* Shares fall in rising market

(Adds details after conference call, analyst comment)

By Vladimir Soldatkin

MOSCOW, Nov 3 (Reuters) - Gazprom Neft (SIBN.MM), the oil arm of Russia’s gas giant Gazprom (GAZP.MM), on Wednesday produced a 2 percent rise in third quarter net profit, defying analysts’ predictions for a decline.

The company also put a $1.5 billion price tag on its purchase of 51 percent of SeverEnergia which it is buying from Gazprom jointly with Russia’s second largest gas producer Novatek NOTK.MM. [ID:nLDE6A21H8]

This deal, announced in September, will give the two firms upstream assets in the Arctic Yamal Nenets region.

Gazprom Neft, which controls a refinery in the Moscow area, said refining reached more than 10 million tonnes in the third quarter, an all-time high, while sales of crude and oil products also increased.

Gazprom Neft’s stronger-than-expected performance follows results from rivals Rosneft (ROSN.MM), Russia’s biggest oil producer, and BP’s (BP.L) Russian venture, TNK-BP TNBPI.RTS which both showed rapid growth in output. [ID:nLDE69P122]

The group’s third-quarter net profit rose by more than 2 percent to $865 million. Analysts, polled by Reuters, had expected net income to edge down to $826 million on the back of declining oil production. [ID:nLDE6A00IT]

But, despite the strong results, its Moscow-traded shares closed down by 0.71 percent underperforming the market’s oil and gas segment .MCXOG, which ended trading flat.

“I think people are just locking in profits,” Alexei Kokin from UralSib told Reuters. He said the results exceeded the market consensus and his firm’s estimates.

“The company has executed a prudent policy of directing the crude flows as they load their refining capacity to a maximum, producing high-yielding light oil products,” he added.

ARCTIC ASSETS

Gazprom Neft’s chief financial officer Vadim Yakovlev said Gazprom Neft and Novatek would acquire acquire $250 million of debts from the SeverEnergia deal.

Gazprom had bought a 51 percent stake in SeverEnergia in 2009 from Eni (ENI.MI) and Enel (ENEI.MI) for $1.6 billion, leaving the Italian companies with the remaining 49 percent.

Yakovlev said during a conference call that the company was able to finance the deal using its own funds and existing credit lines. He also said the group had some $2 billion of cash on hand.

Last week, Standard & Poor’s Ratings revised Gazprom Neft’s outlook to negative, saying the deal would put pressure on its liquidity, cash flows, and future investment needs. [ID:nWLA6514]

Gazprom Neft’s third quarter revenues grew to $8.39 billion from the $7.09 billion reported in the year-ago period.

Earnings before interest, income tax, depreciation and amortization (EBITDA) reached $2.01 billion compared with $1.47 billion in the third quarter of 2009.

“EBITDA growth was achieved through an increase of refining and sales of petroleum products on the domestic market,” the company said in a statement.

Reporting by Vladimir Soldatkin; editing by Toni Vorobyova and Jane Merriman

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