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. Last Updated: 07/27/2016

Surgut Says 2001 Profit Falls 21%

Surgutneftegaz's net profits plunged 21 percent year on year in 2001, according to U.S. GAAP results published Wednesday. The No. 3 oil major netted $1.57 billion in 2001, compared to $1.98 billion a year earlier.

The decline resulted from a range of market conditions as well as the company's investments into exploration and development, Surgutneftegaz CFO Vladislav Barankov said during a teleconference Wednesday.

In June the company released its first ever results to generally accepted accounting principles, covering 1999 and 2000.

While the drop in the net profits matched analysts' and market expectations, some of the figures left observers concerned. Surgutneftegaz closed 1.99 percent lower at $0.3450 per share following the release of 2001 figures.

The oil major incurred a 16 percent year-on-year hike in direct oil production costs, reaching $2.9 per barrel. Barankov, however, noted that the level has not changed during first nine months of 2002. The figure is also comparable with other oil majors, where direct oil production costs range from $1.70 to $1.80 for Yukos and Sibneft to LUKoil's $3.20.

Proven oil reserves also fell. The explored and acquired 148 million barrels were significantly less than the oil major's 2001 output of 316 millions barrels. Barankov said the overall 4 percent reduction in reserves was partly caused by economic factors such as oil prices and extraction costs.

On a more positive note, all of Surgutneftegaz's GAAP results closely correlated with Russian accounting standards figures, said Timerbulat Karimov, an oil and gas analyst with Aton brokerage.

The oil major also stood up to its reputation as a cash-rich enterprise, with about $4 billion at its disposal. The money could be useful in light of the upcoming auction of a 74.95 percent stake in oil company Slavneft, which the government plans to sell on Dec.18.

Barankov refused to give a definitive answer on whether Surgutneftegaz will participate in Slavneft's auction, saying that the oil major was still carefully studying the situation. He said that among other things, the company is in the process of evaluating the cost of Slavneft's consolidation. Surgutneftegaz, however, also set its eye on the approximately 11 percent stake in Slavneft owned by the Belarussian government, Interfax reported.

Barankov said the 2002 U.S. GAAP results will be ready by mid-summer 2003, adding that the company will provide international accounting standards results at least every half year.