OREANDA-NEWS. September 16, 2009. TNK-BP Holding released 1H09 US GAAP financials, demonstrating a strong revenue/cost performance and a positive free cash flow, reported the press-centre of OTKRITIE FC.

View: The company’s 1H09 revenue fell 37% HoH to US12.7bn, while COGS decreased 45% to US 10bn. Taking together, this resulted in a 35% HoH rise in operating income to US 2.7bn. Net income rose 41% HoH to US 2.3bn. The key drivers for the HoH decrease in revenue were lower oil and petroleum prices.

However, lower crude prices caused corresponding declines in export duties and MET costs, as these taxes are directly tied to crude price performance. In addition, ruble devaluation in 1H09 resulted in a 33% HoH drop in the company’s operating expenses. TNK-BP Holding’s 1H09 free cash flow was low (US 82m) compared with its US 820m cash flow in the year-earlier period, due to a 36% decrease in the company’s operating cash flow. TNK-BP Holding’s D/E decreased from 60% to 41% in 1H09, while debt/EBITDA dipped from 4x to 2.3x.

Valuation: TNK-BP Holding’s P/E is equal to 7.9x, and the stock trades on P/E at a 25% discount to the rest of the energy sector. 

Action: We view this news as neutral for TNK-BP Holding’s stock price, since the previously announced 1H09 financials of parent company TNK-BP International had already provided clues as to the upcoming results of its subsidiary. We have no a rating and a target price for the stock.