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. Last Updated: 07/27/2016

Surgut Cuts 2006 Dividend After Net Drops

Surgutneftegas, the country's No.4 oil company, posted a one-third drop in earnings last year and cut its dividend after a difficult fourth quarter, the company said Tuesday.

Surgut reduced the dividend on its ordinary shares to 0.53 rubles ($0.02) from 0.80 rubles, and on its preferred stock to 0.71 rubles from 1.05 rubles, after its net profit to Russian accounting standards fell 33 percent to 77.1 billion rubles.

Sales grew by 17 percent to 500.5 billion rubles ($19.3 billion), indicating a sharp contraction of net profit margins despite booming oil prices.

"The reported result assumes fourth-quarter net income of 2.95 billion rubles a very disappointing result and significantly below both our and the market's expectations," Alfa Bank's Dmitry Loukashov said in a note on the results.

Surgut said a combination of inflation, appreciation of the ruble and an increased tax load had "exerted a serious influence" on its financial performance, as did higher operating costs.

"The results of the fourth quarter had a fundamental impact on the year's results," it said in a statement, adding that falling oil prices had slashed 30 billion rubles from revenues while export duties were ramped up by 6 billion rubles.

Surgut is one of the country's most secretive firms and a subject of incessant speculation, with some investors expecting that its $15 billion cash pile, loyalty to the Kremlin and strength in the greenfield region of East Siberia will yield huge profits in the future.

Others suspect the company will be caught up in the Kremlin's drive to increase state control over the energy sector, either taken over by a state firm or held in reserve as an ace card, ready to do the Kremlin's bidding.