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Story of Lukoil's Success: Company's Shares are Growing for the Third Year in a Row
December 19, 2019 20:09

The largest Russian private oil company Lukoil F 1 is growing rapidly for the third year in a row - the rally that started in mid-2017 continues. Since then, Lukoil’s shares have grown 2.3 times, to 6,159.5 rubles (as of December 2, 2019).

What is the success secret? The company constantly feeds investors with good news. At the end of August 2018, Lukoil announced the commencement of the purchase of its shares from the market for $ 3 billion. The repurchase ended ahead of schedule in August 2019, and in March it announced a change in the dividend policy in connection with this repurchase: since then, shares owned by the companies of the group Lukoil are not taken into account in the calculation of dividends. This supported the growth of quotes - for seven months (from August 28, 2018 to April 2, 2019), stocks grew by 30%, to 5958 rubles. 

Lukoil stopped the correction that began after reaching the peak in mid-May, announcing its intention to redeem 35 million shares (4.66% of all issued). On the day the message was released, May 16, the stock rose 4% and the company's capitalization increased by 150 billion rubles.
In 2019, the main news came on October 16, when the Board of Directors of Lukoil approved the new principles of the dividend policy: now the total amount of dividends on shares is at least 100% of the company's cash flow (minus the capital costs, interest paid, repaid lease obligations and share purchase costs). Previously, Lukoil shareholders could count on 25% of net profit - according to this principle, dividends were paid from October 28, 2016. Lukoil became the first Russian oil company to tie dividends to cash flow.

At the same meeting, it was proposed to pay interim dividends, calculated in a new way,  192 rubles per share. This is much more than in previous years: in 2018, interim dividends amounted to 95 rubles, in 2017 - 85 rubles. Then the directors decided to hold the next buy-back, another $ 3 billion, and redeem an additional 25 million shares. On this news, Lukoil set a new record after April 2 —  on October 24, quotes reached 6150 rubles. Growth was hampered by rumors about the upcoming sale of the company to Surgutneftegas, but on October 28, Lukoil president Vagit Alekperov made a rebuttal, and the market calmed down.

Author: Anna Dorozhkina

Tags: Russian business Russian economy Russian companies Lukoil Surgutneftegas 

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