OREANDA-NEWS. May 4, 2007. The Board of Directors of OJSC “Surgutneftegaz” held its meeting in Surgut.

At the meeting, the Board of Directors addressed the issues related to the Annual General Shareholders’ Meeting, reviewed and gave preliminary approval for the annual report, annual accounting statements and distribution of the Company’s profit (loss) for 2006, including recommended dividend amounts and payment.

 The Board of Directors reviewed the financial statements for 2006 and noted that sales revenue grew by 17% to RUR 500.5 bn against the previous year boosted by high world prices for crude oil and petroleum products and increased sales.

 However, the company’s financial performance was affected by a number of negative factors such as a 9% inflation rate, stronger national currency, and increased tax payments.

 In 2006, export duty on crude oil and petroleum products soared by 55% and 61%, respectively, whereas the Mineral Extraction Tax (MET) went up by 24%. Total taxes and duties grew by RUR 94 bn.

 The cost of goods, works, and services sold rose by 29% and exceeded RUR 342.3 bn in 2006 driven by a 16% increase in depreciation costs for investment programs and a 25% increase in labor and social costs, as well as higher MET, tariffs and prices for material resources and electricity.

 Commercial expenses pushed up by rising transport tariffs for export crude (a 14% increase at year end) also demonstrated significant growth, which reached 18%.

 The annual performance was tainted in the fourth quarter when falling oil and petroleum product prices slashed sales revenues by RUR 30 bn while export duties rose by RUR 6 bn against the previous quarter.

 As a result, undistributed net profit in 2006 decreased by 33% against the previous year to RUR 77.1 bn.

 Therefore, the Board of Directors adopted a resolution to recommend the Annual General Shareholders’ Meeting to declare the following dividend payment for 2006: RUR 0.71 per preferred share and RUR 0.53 per ordinary share.

 The Board of Directors also reviewed and approved resolutions to be proposed at the Annual General Shareholders’ Meeting, as well as forms and texts of ballot papers.