OREANDA-NEWS. July 14, 2010. Surgutneftegaz initiated litigation against the Hungarian oil and gas group MOL to void a resolution on the refusal of Surgutneftegaz's registration into the shareholder register, Interfax reported yesterday. The first hearing on the matter is scheduled for 3 December. Surgutneftegaz bought 21.2% of MOL, for USD1.7bn last year from Austria's OMV, but MOL’s registrar declined to include the Russian company into the shareholder register on the grounds that its own ownership structure was unclear, reported the press-centre of OTKRITIE Financial Corporation.

View: We assume that the two companies still have no arrangements regarding a potential buyback price. According to some sources, the Hungarian government is looking to purchase the stake held by Surgutneftegaz. We believe that the two companies and Hungary’s government (one of MOL co-shareholders) will arrive at a mutually acceptable decision, particularly since a prolonged confrontation that would negatively impact both companies is in none of their interests.

Rating: We believe the news is neutral for the stock at this stage. We continue to rate Surgutneftegaz a SELL with a target price of USD0.80/share.