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. Last Updated: 07/27/2016

LUKoil's 2001 Profits Fall to $2.8Bln

Top oil producer LUKoil on Monday posted a 9.2 percent fall in 2001 profits on the back of lower oil prices and said it would slash costs by $330 million in 2002 to improve profitability.

The company said net profits according to Russian accounting standards fell to 87.52 billion rubles ($2.77 billion) compared with a revised 96.43 billion rubles in 2000.

Shares in the company were last trading up 3.3 percent at $18.25 on a firmer Russian market.

"Despite an 18 percent drop in the price of oil we kept our financial results in positive territory in 2001," LUKoil vice president Leonid Fedun said after a meeting of the company's board.

Net sales rose to 434.39 billion rubles from 422.59 billion rubles the year before, while operating profit was stable at 127.26 billion rubles compared with 127.27 billion rubles.

LUKoil said in a statement it would recommend a dividend of 15 rubles a share at its annual shareholders meeting, which translates into 12.7 billion rubles. The company paid 8 rubles a share in 2000.

The board also discussed improving operating efficiency Monday, the statement said. LUKoil said in April it planned to boost profits by half a billion dollars a year by slashing subsidiaries and staff.

Fedun said at the news conference that LUKoil aimed to cut costs by $330 million in 2002, a measure that would include cutting oil extraction costs.

"In the second quarter, for example, [oil extraction] costs, excluding tax and amortization, were around 774 rubles a ton. We plan to cut that figure to 650 rubles," he said.

The statement said LUKoil's hydrocarbon reserves had risen by 11 percent in 2001 to 16.6 billion barrels in oil equivalent, mainly because of new finds in the Caspian Sea.

"We had an incredible year because the discovered amount was larger than our annual output," Anatoly Novikov, another LUKoil vice president, told the news conference.

The United Financial Group brokerage on Monday upgraded LUKoil to "buy" from "hold," saying that it looked the most undervalued among Russia's blue-chip oil stocks.