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  • bardinja bardinja Feb 23, 2001 10:26 AM Flag

    Comprehensive report on Russian oil cos

    Here is the introductory paragraph from the report:

    "This report is intended to provide an introductory overview of the Russian oil and gas sector, in
    particular,and the structure of Russia�s capital markets in general.
    Its aim is to provide a summary of the most important companies operating in the sector in Russia
    and to explain the main factors which will drive industry investment,both internal and external,
    and profitability.
    Specifically,the issue of corporate governance is addressed on a company specific basis,as well
    as how the perception of this being a higher risk n Russia than elsewhere affects investment flows
    and valuations.For an industry which is used to investing in often hostile and unstable parts of
    the world,uncertainty over ownership rights and legal enforcement have acted as major obstacles
    to attracting foreign investment into Russia.
    Adjusted for emerging market standards,the value of quoted equities in Russia is estimated to be
    currently $52 bln less than �fair value� and the clearly dentifiable reason for this s investor concern
    over current corporate governance issues.The bulk of this $52 bln is accounted for by just four
    companies,ncluding Gazprom and LUKoil.
    The oil and gas sector has,in recent years,been the scene of most of the major battles over
    shareholder rights,such as BP�s dispute over SIDANCO and the restructuring of YUKOS.The
    resolution of the current issues concerning LUKoil�s unwillingness to release audited US GAAP
    financials and,particularly,the restructuring of Gazprom and the disclosure of its relationship
    with Itera,will not only drive the valuation of these stocks but also of investor attitudes towards
    the whole market.
    Investors have shown that,despite cheap valuations and obvious potential,even $1 invested in
    an environment which cannot guarantee protection on at least that $1 of value,is a risk which is
    unacceptable.
    And it is clear that Russia needs both capital investment and technology upgrades in its oil and
    gas industry.In the closing days of the Soviet empire,Russia was producing over 12 mbpd of oil.
    By the time of the 1998 financial crisis,this had collapsed to just a trickle over 6 mbpd.Russia�s
    plans to develop a broadly based economy over the next ten years are very dependent on the
    liquidity provided by oil and gas exports.This explains the push to raise production and exports
    and try to revive the PSA program.
    Russian enterprises are continuing to spend on production and export capacity,but to make a
    real difference,foreign participation will have to increase.This is the challenge facing the
    government and the industry right now."

    "This report is issued in conjunction with CERAWeek 2001,in Houston,Texas."
    http://www.troikadialog.ru/news/spp/oil_sect.pdf

 
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