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Russian oil firms' price outlook cut by Credit Suisse
Price estimates for Russia's biggest oil producers were cut by Credit Suisse AG as lower crude prices and rising costs restrain earnings.
- Bloomberg
- Published: 00:43 October 7, 2008
Moscow: Price estimates for Russia's biggest oil producers were cut by Credit Suisse AG as lower crude prices and rising costs restrain earnings.
Russian oil companies face "considerable headwinds", the Zurich-based lender said on Monday in an e-mailed research note.
Besides Rosneft, the bank lowered price estimates for Lukoil and Surgutneftegaz, as well as for gas exporter Gazprom and pipeline operator Transneft.
"Global macroeconomic and domestic liquidity pressures potentially jeopardise further tax cuts for the sector," analysts said in the report.
Russia's oil production fell for the ninth straight month in September as producers struggled with rising costs and maturing fields, bringing the world's second-biggest crude exporter closer to its first annual drop in output since 1998.
Russia's government has promised to reduce taxes on oil companies to help reverse that decline.
Credit Suisse cut Rosneft, Russia's largest oil producer, to "underperform" from "outperform", and dropped its target share price to $8.70 from $12. It lowered Lukoil to "neutral" from "outperform", cutting the target to $75 from $120.
Rosneft fell 12.2 per cent to 125.72 roubles as of 12:35pm in Moscow. Lukoil declined 12.6 per cent to 1,217 roubles, Gazprom declined 12.1 per cent to 159.01 roubles and Transneft fell 15.6 per cent to 12,750 roubles.
The price target on Gazprom, the state-controlled gas exporter, was cut to $11 from $18, while keeping an "outperform" rating.
Rising domestic natural gas prices should bolster medium-term earnings growth, the bank said.
The bank cut its price target for Transneft to $780 from $2,700, dropping its recommendation to "underperform" from "outperform".
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