OREANDA-NEWS. The release of Alliance Oil’s 3Q09 IFRS financials is scheduled for 26 November, and we expect the company to record strong results in its downstream segment, reported the press-centre of OTKRITIE Financial Corporation.

View: According to a company press release, its oil production dipped 3% QoQ to 4m barrels (534,000 tons) in 3Q09, though refining volumes rose 16% QoQ to 6m barrels (808,000 tons). We expect the company’s revenue from upstream to fall 6% QoQ due to the decrease in production volumes (the latter fell due to the reduction of drilling volumes).

However, downstream segment revenue could rise by 32% QoQ, comprising 85% of total company revenue. Our forecast for Alliance’s 3Q09 total revenue is US466m (+28% QoQ), while the cost of sales could rise as much as 28% QoQ due to an increase in the price of crude. According to our estimates, the company’s net income could rise 28% QoQ to US 59m.       
        
Valuation: Alliance Oil’s 2010 P/E amounts to 5.2x, and the stock trades at more than a 25% discount on P/E to the rest of the energy sector.

Action: This news could be marginally positive for the company’s stock price.