OREANDA-NEWS. August 02, 2010. Surgutneftegaz reported RAS results that showed a 5.6x increase in 2Q10 net profit to RUB47.7bn (USD1.58bn) against RUB8.47bn for the same period a year ago. Net profit rose 5.7x compared to 1Q10, according to a company statement. Surgut posted unusually low net income of RUB8.37bn or USD0.28bn in 1Q10. In January-June 2010, net profit of Surgutneftegaz reached RUB56.05bn, which is 2.6x less than in 1H09 (last year Surgut’s income was distorted by a heavy 1Q09 forex gain), reported the press-centre of OTKRITIE Financial Corporation.

View: The relatively strong 2Q10 net income figure should be positive for Surgut since it somewhat improves the outlook on 2010 dividends, which are based on RAS income. Surgut is the only large Russian oil firm that prepares neither US GAAP nor IFRS statements.

Valuation and Action: Despite the increase in 2Q10 RAS income, we maintain our negative stance on the company, due to its production growth problems and suboptimal transparency.