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. Last Updated: 07/27/2016

LUKoil Q2 Profits Hit Record

LUKoil, the country's second-largest oil producer, said second-quarter profit rose 8.4 percent to a record, boosted by higher refinery sales and rising crude prices.

The company, in which U.S. oil major ConocoPhillips has 20 percent, said net income rose to $2.52 billion from $2.32 billion a year earlier.

"This is an absolute record in the company's history, despite less favorable price conditions," LUKoil CEO Vagit Alekperov said.

He cited higher transportation and power prices as well as the ruble appreciation against the dollar as the main negative factors during the quarter.

LUKoil's total revenues rose to $20.2 billion in the second quarter versus $18.38 billion in the same year-ago period. The firm's earnings before interest, taxation, depreciation and amortization were $3.92 billion, up from $3.66 billion in the second quarter of last year.

LUKoil vice president Leonid Fedun told reporters the firm produced 2.21 billion barrels of oil equivalent per day in the first half of 2007, up by 4.7 percent from the same six months of last year.

Alekperov said production would grow by around 300,000 barrels of oil equivalent per day within the next three years, with some 80 percent of the growth coming from new projects in Russia's north and the Caspian Sea.

LUKoil boosted capital expenditure by 42 percent to $2.11 billion from the second quarter of last year, increasing investments in exploration and production 54 percent to $1.67 billion as prices for services and equipment rose.

"Capital expenditures are exploding right now," said Dmitry Lukashov, an oil and gas analyst at Alfa Bank. "The market underestimates capital expenditure requirements."

Fedun also said the company was interested in buying Central European refinery companies but sees "protectionism" making takeovers impossible.

Fedun said the group would like to buy Poland's PKN and Lotos, Austria's OMV and Hungary's MOL.

"They talk about free trade, but no one is willing to let anyone in to buy their internal assets," he said.

Reuters, Bloomberg