Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

TNK Triples Profit After BP Merger

TNK International said on Wednesday its merger with BP and higher oil prices helped it improve first-half revenues and profits.

Analysts also praised TNK's efforts to improve operations, but said the company still lagged several years behind the Russian oil industry's leader, YukosSibneft, in terms of efficiency and cost-cutting.

TNK posted first-half operating profit under generally accepted accounting principles of $1.25 billion. Net income was $1.08 billion, and earnings before interest, tax, depreciation and amortization (EBITDA) were $1.71 billion.

TNK could not provide any comparative figures for a year ago but said the results represented a strong improvement.

Analysts said that since its initial February agreement with BP, under which the British oil major took 50 percent in TNK, the company had hired many foreign specialists who helped improve the efficiency of its upstream operations and boost its output.

"It's clear they are now starting to run the company much more in that mode that Yukos is being run, given production increases and inner costs are coming way down," Paul Collison, an energy analyst at Brunswick UBS, told Reuters.

"There is a very rapid change. We more or less expect that to continue."

Under the merger deal, OAO Sidanco became part of TNK International in the second quarter of 2003. It was previously TNK's small affiliate in which BP held a 25 percent stake.

This was the first report in which Sidanco's results were consolidated into those of TNK.

"Besides the effect of Sidanco's integration, the increase in revenue and profit is mostly due to crude oil production growth and increases in average prices for oil and refined products," TNK said.

TNK said its crude oil output averaged 1.23 million barrels per day in the first half of 2003. That compared with 1.08 million bpd in the same period last year -- 734,000 bpd of TNK International production and 350,000 bpd of Sidanco's output.

"The increase in oil production for both TNK International and Sidanco was mainly due to enhanced recovery techniques," the company's statement said.