Lukoil and renewable energy (fed with more than one oil).



Today (06.10.2020) Lukoil shares are traded with a discount of about 25% (compared to the maximum price of 6.717 rubles on January 20 of the same year).

There are many reasons for this — this is negative reporting for the second quarter, and oil prices, including the cancellation of a number of tax benefits from the Government.

TATNEFT suffered the most from the latter, although, as I see it, such a fall is more justified by uncertain market participants, who are driven by negative news and sell when someone buys, than by the news itself and its consequences.

Anyway, I love #Lukoil, and that’s why I bought it in my investment portfolio for a long time. The question was whether to do it now, with a discount, or to wait for a second bottom in the market (or at least a denouement with the US presidential election).

And in this post I would like to make out the latest financial statements and talk about what else I discovered on the Lukoil website.

It probably makes no sense to disassemble all the components of the company, since the amount of information will not be for one article — you can read all this yourself on the Lukoil website.

Therefore, I will briefly note that



Net loss

Capital expenditures:

Free cash flow:

In connection with the OPEC + agreement:

From May 1, 2020

In July 2020

The strong decline in revenues was influenced by a decrease in prices and a decrease in hydrocarbon production, volumes of trading in oil and oil products, as well as a decrease in gas production in Uzbekistan and a decrease in EBITDA of the West Qurna-2 project. And, of course, the sales volumes of petroleum products through gas stations, which fell during the quarantine period.

What can I say. Lukoil has enough problems. And they are all related to the measures taken in the first wave of the coronavirus (I prefer to call things by their proper names, but without evaluation). The question is how the second wave will unfold and what other damage will be caused to the economy.

Given that the world has not yet gotten off the oil needle, this area is influenced by many different factors, including political ones.

One of the reasons why I didn’t really want to buy Lukoil now is the possible victory of Biden in the US elections.

Biden is a clear opponent of oil and a supporter of green energy. So it will stifle one industry with taxes and sanctions and feed another (on «

By the way, we got to renewable energy.

Somehow, once, with someone in the comments we talked about renewable energy. I then suggested that such giants as Lukoil would not leave the market simply because some countries are switching to «green» energy. Rather, they will diversify and repurpose.

Lukoil also has a small share of this.

The total electric capacity of the Group’s organizations is 6.4 GW, of which 72% is commercial generation, 28% is supply.

With regard to commercial generation:

However, production figures have been declining since 2015:

A complete set of hydroelectric power plants, solar power plants and wind farms.

The impression is that while renewable energy for Lukoil is a small diversification with the ability to pay off part of the costs.

Land plots not involved in production will be used for development

The facility’s capacity will be 2.35 MW. Planned electricity generation — 3 million kWh per year.

As the message says,

The SPP launch is scheduled for 2022.

The facility’s capacity will be 20 MW, which will increase the total capacity of the SPP to 30 MW.

As in the construction of the first stage, the territory of the oil refinery that is not involved in the main production will be used to locate the power plant.

The commissioning of the second stage of the station will additionally generate more than 24 million kWh of «green» electricity per year.

All capacity will be supplied to the wholesale electricity and capacity market (WECM) at a special price under a 15-year contract.

The launch is scheduled for late 2021.

This year the gas turbine power plant was launched «

The GTPP with a capacity of 16 MW will use about 50 million cubic meters. m of APG per year from the Company’s fields in the Perm Territory.

The bulk of the generated electricity will be directed to Lukoil’s own production facilities, which will reduce electricity purchases.

It is also expected to supply electricity to the external network, which will close up to 2% of the total consumption of the Bereznikovsko-Solikamsk power center.

To transfer electricity to the network on «

The substation is distinguished by a high level of automation, its operation and information exchange between elements are digitalized.

Unlike many other companies, Lukoil has very good methods.

In addition to good dividends, Lukoil has also held the so-called

And this is perhaps the main reason why I (and many other private investors) like Lukoil shares so much. Not the growth of shares and # dividends, but the fact that the company values its own assets.

With the return of free cash flow (and other indicators) of Lukoil to pre-crisis levels, I expect continued growth and another buyback.

But I still take into account the possible risks. Therefore, I bought shares with a horizon of 3-5 years (and further, as appropriate).

The time to build up the oil sector in the portfolio, frankly, is not the most suitable time. All economic, political and market risks primarily relate to the oil and gas sector.

But, the discount is 25%. And this news is about the abolition of benefits on mineral extraction tax, from which Tatneft and Lukoil suffered the most. As a result, despite all the risks, the purchase price turned out to be «tasty».

What is #buyback (share buyback), why is it needed and what does this procedure give an investor —

Traditionally —