» beat ExxonMobil Corp. and Royal Dutch Shell Plc, becoming the world's only publicly traded oil company to deliver positive returns to investors following OPEC's November decision to defend its market share and subsequent price collapse, Bloomberg reported. Over the past 15 months, the dividend yield of the company's securities amounted to 18.5%, the agency calculated, while the shares have fallen in price by 14% since November. Thus, the return to shareholders amounted to a total of 6.4%, taking into account dividends reinvested in the securities, the agency indicates. Exxon shares fell 9.4%, but dividend payments softened the decline to 5.4%. Losses on Shell securities amounted to 31%, and the dividend yield was 5.6%, according to Bloomberg data. The rest of the majors are also in the red: Chevron shares have fallen in price by 29% since November 2014, and the dividend yield was 3.75%; Total lost 16.7% of its quote value, and the dividend yield brought investors only 5.8%. Chinese PetroChina lost 47.6% of its share price, and its dividend yield was 2.4%.
Company reserve
Surgutneftegaz bought a 21.2% stake in the Hungarian company MOL only once, and unexpectedly for everyone, in 2009, but sold the stake two years later. “You don’t need to buy me anything. We have everything!<....>It's worse when there is no money. Then you don’t know where to run, where to borrow, at what interest rate,” said the company’s general director Vladimir Bogdanov in 2012.
The reason for the success of Surgutneftegaz is obvious: the company has huge dollar deposits (more than $30 billion - Vedomosti), says GL Financial Group portfolio manager Sergei Vakhrameev. In 2014, Surgutneftegaz earned 846 billion rubles from exchange rate differences; profit according to IFRS increased 3 times to 885 billion rubles. As a result, Surgutneftegaz paid record dividends: 63.2 billion rubles. for preferred and 23 billion rubles. for ordinary shares, recalls Vakhrameev. Dividends on preferred shares increased by 3.5 times, on ordinary shares - by 8%. Other Russian oil companies do not have such a safety net; as a result, they went into the red in terms of stock returns, like the world's majors. Taking into account dividends, Lukoil lost 27%, Rosneft - 35%, Gazprom - 44%, Vakhrameev calculated.
“Surgutneftegas” is the leader in Russia both in terms of dividend yield and TSR (total shareholder return), says Aton analyst Alexander Kornilov. The dividend yield of Surgutneftegaz preferred shares since June 2014, when oil prices began to fall, amounted to 37.8%, and TSR – 96%, and for other Russian companies these figures are 4–14.3 and 1.1–53 .9% respectively, he points out.
Bloomberg reveals the owners of 22% of preferred shares of Surgutneftegaz (in total, preferred securities make up 18% of the capital). Among them are Grantham Mayo Van Otterloo & Co, JPMorgan Chase & Co, Blackrock Fund Advisors, etc. “But the beneficiaries of the company are unknown, and I, as an investor, have a question: how long are shareholders willing to share such dividends with minority shareholders? In the event of a further fall in oil prices and devaluation of the ruble, the risk of a revision of the dividend policy also increases,” argues Vakhrameev. In addition, the company has already found itself in a situation where dividends ($1.5 billion) exceeded annual cash flow (about $1 billion in 2015), the expert points out. Before the fall in oil prices, the company generated $2-3 billion a year, he estimates. But Surgutneftegaz will not have problems with paying dividends: the company can cut investments, withdraw money from deposits, and increase debt, the expert lists. On the other hand, if oil prices start to rise, Surgutneftegaz will record a large loss due to exchange rate differences, so it’s time to sell the company’s preferred shares now, advises Raiffeisenbank analyst Andrey Polishchuk.
The fall in the ruble exchange rate against the dollar played into the hands of Surgut shareholders. “Due to the significant effect from the revaluation of foreign currency assets, the net profit of Surgutneftegaz increased almost 3.5 times and amounted to 891.7 billion rubles,” Bogdanov said. As a result, dividends on preferred shares, directly tied to net profit, also increased by almost 3.5 times compared to last year, to RUB 8.21. per share (for ordinary shares the growth was only 8% - up to 65 kopecks). In total, the board of directors recommended that shareholders allocate more than 86 billion rubles for dividends. This recommendation, as well as other technical issues (approval of the annual report, re-election of the board of directors, etc.), was approved by Surgut shareholders almost unanimously.
One got the feeling that they came to the meeting only to make sure that they would be paid dividends. During the meeting, the employee-shareholders did not ask questions about the company’s activities, but during the break they began to disperse without waiting for the results of the meeting. “I have already voted on all issues, I understood that dividends will be paid on July 16. “Can I go home already?” asked a woman minority shareholder of Surgut with experience to a representative man in a suit, mistaking him for an employee of Surgutneftegaz. He kindly allowed her to leave. Another holder of oil company securities asked Bogdanov for a trip to the sea, he instructed the HR director to resolve the issue.
Bogdanov promised to launch one of the largest new fields named after him in the third quarter. V.I. Shpilman in Western Siberia, the key region of Surgut’s production (it accounts for 87% of Surgut’s production). Last year and the first half of 2015, development work was carried out on it (a road, pipelines and a booster pumping station were built). After reaching its design capacity, this field will provide production of 2.5-3 million tons of oil per year, according to Surgut’s annual report. The head of the company clarified that by the end of the year, production at the Shpilmana field is expected to reach 50 thousand tons.
Four much more mature fields in Western Siberia - East Elovoe, Yukyavinskoye, Rodnikovoe and Suryeganskoye - "Surgutneftegas" wants to offer the government for pilot zones of the financial result tax (FRT), Bogdanov said, answering a question from RBC. The idea of such an experiment was recently supported by Deputy Prime Minister Arkady Dvorkovich.
The top manager did not comment on the first results of the tax maneuver that has been in effect in the industry since the beginning of 2015. “[Now] it’s hard to talk, because you see the volatility [in the market] and what’s happening with [oil] prices. [Summarizing the results now], we will only raise foam,” Bogdanov concluded and disappeared behind the powerful backs of his two guards.
OJSC Surgutneftegaz, Russia's fourth-largest oil producer, is consolidating its position as the country's richest company, raising $44 billion in cash and bank deposits despite the risk of new US sanctions. The Siberian oil producer increased its cash position by 6% in dollar terms last year, according to a company report published Saturday. Surgutneftegas did not provide a breakdown by currency in its 2017 report by international standards. For at least the last six years, it has held most of its cash in US dollars.
Investors are keeping a close eye on Surgut's accounts after the U.S. Treasury Department designated chief executive Vladimir Bogdanov as a sanctioned investor earlier this month. This has raised concerns in Russia that Surgut could also be subject to sanctions. Fines can mean a company is stuck with dollars it can't easily use to pay banks, contractors and customers. Similar fines against Russian billionaire Oleg Deripaska and his company Rusal have already caused market convulsions as contractors and banks froze deals with the aluminum giant.
If Surgut faces sanctions similar to Rusal, the company could have problems using dollars since all such transactions are controlled by the United States, said Alexey Panich, a partner at the international law firm Herbert Smith Freehills. Russian banks will continue to hold dollar deposits (companies) under existing contracts, but Surgut may face difficulties in extending terms (deposits) and increasing the amount of cash.
The lion's share of the company's funds is concentrated in long-term deposits in the state-owned PJSC Sberbank, according to a source close to the oil company. In 2012, the bank held 44% of Surgut's deposits. Most of the remainder was held by VTB OJSC, Gazprombank OJSC and the Russian subsidiary of the Italian bank UniCredit SpA.
Surgutneftegaz, Sberbank and UniCredit declined to comment to Bloomberg. Others did not respond to the request.
Surgut was included in the list of US sanctions imposed in 2014 for Russia's role in the conflict in eastern Ukraine. These restrictions relate to the provision of certain technologies and access to foreign capital markets. But they are not vital for the company and did not affect its activities. Surgut is not borrowing because it has accumulated enough cash to avoid a takeover. The owners of the company are a mystery. According to Bogdanov, one of the last so-called red directors, or former Soviet managers, he still controls the company. It is owned primarily by its employees, according to public statements by government officials.
Who owns the money
Bogdanov, 66, consolidated his grip on Surgutneftegaz in the mid-1990s when the weak government that emerged after the collapse of the Soviet Union auctioned off the prized industrial plant. The Surgut pension fund acquired 40% of the company, which a few years later was divided between two dozen legal entities with interdependent owners registered in the city of Surgut, according to bankers working with the manufacturer and its managers.
According to the Russian legal database Spark-Interfax, these companies and their successors in the long term invested about 1 trillion rubles at the end of 2016, providing more than 75%. None of them have more than 5%, meaning the company is not required to disclose the names of its shareholders. Bogdanov, who officially owns less than 1%, said the cash pot would help the company through the crisis. “He knows that he cannot use this money personally,” Alexander Ryazanov, the former deputy head of gas exporter PJSC Gazprom, who has known Bogdanov for more than 20 years, said in an interview three years ago.
Two and a half months ago, Vladimir Putin received a letter. It is worth noting that this was not just a letter from someone. No, the “Who’s Who” of the Russian economy got together and wrote this letter.
Current legislation, the letter's signatories complained, is such that it makes no distinction between small shareholders and strategic investors and gives both equal access to information about the firm. Therefore, they say, companies in Russia are poorly protected from abuse.
If many of the signatories were guided solely by the desire to initiate the adoption of new laws that would help business more, then in Surgutneftegaz, whose head Vladimir Bogdanov also signed this letter, there was also a desire that no one would ever receive any access to the most important information.
This person keeps a number of company secrets. The biggest: how did he manage to accumulate the largest cash reserves for one Russian company - or one world-class oil concern? 34 billion dollars (29.8 billion euros) rest in the accounts of this company.
Complex network of 23 firms
But who actually owns the third largest oil concern in the country? This secret has been kept for decades. And in the foreseeable future, this will probably not change. They constantly assure - even at the highest positions - that most of the shares are held by employees and by the head of the concern, Bogdanov. However, according to the company report, Bogdanov and a number of elderly gentlemen from the board or supervisory board own no more than 0.7% of the shares.
The true ownership structure is hidden under a complex network of 23 firms, whose financial investments are proportionately converted into the market capitalization of Surgutneftegaz, as Russian media discovered several years ago.
Context
Rely on oil, but don't make a mistake yourself
Al Riyadh 07/03/2017Why are oil prices falling?
The Wall Street Journal 06/22/2017Russia wants to free the ruble from oil
The Sydney Morning Herald 06/09/2017Bogdanov never confirmed this. But the rumor persists that Putin’s entourage and, perhaps, even he himself is princely served by this very concern. Six years ago, one critic of the system reported that Putin owned exactly one-third of this company.
This has never been confirmed, but what is striking is that Surgutneftegaz has never had problems with government agencies, while this has become commonplace for other concerns.
Against this background, of course, it is very interesting that a concern that provides 11% of Russian oil production and 7% of all Russian oil refining has so much money.
Bogdanov, who became the head of this concern during perestroika in 1984 and remained in charge after its privatization in 1993 (his contract was recently extended until 2021), stores almost 30 billion euros in foreign currency accounts.
However, due to the rise in the ruble exchange rate last year, Surgutneftegaz recorded losses of 104.8 billion rubles (at the current exchange rate of 1.52 billion rubles) for the first time in many years, because the value of positions held in dollars, euros or pounds
For comparison: in 2015, profit amounted to 761.6 billion rubles. In general, it is believed that for Surgutneftegaz, with its more than 114 thousand employees, the ruble exchange rate is more important than the price of oil.
Bogdanov, now 66 and worth $1.64 billion according to Forbes, and dubbed the “Siberian hermit” because he is reluctant to leave the western Siberian oil city of Surgut, is considered very frugal. And so this company, despite losses last year, remains faithful to the tradition of paying dividends.
No interest in additional purchases
On June 29, at a meeting of shareholders, it was decided to pay dividends in the amount of 26.6 billion rubles. It is this payment that has always been the reason for the popularity of preferred shares. True, there are no longer dividend guarantees.
That is, time does not stand still in Surgutneftegaz. The only thing that puzzles observers is the fact that this concern does not use its billion-dollar reserves for additional purchases.
So, last year there was a lot of speculation about whether Surgutneftegaz, with its huge financial cushion, would participate in the partial privatization of industry leader Rosneft or in acquiring a smaller competitor, Bashneft.
Due to the fall in oil prices, the state urgently needed money, and Bogdanov was considered absolutely loyal to the Kremlin. The manager shrugged it off - probably with Putin's consent - and thus remained true to his strategy: acquire almost nothing and instead be content with developing his own fields.
Stable production for many years
In his main business, Bogdanov can point out that he has the highest oil recovery factor in the country.
In individual fields, this oil recovery factor can reach 0.58 to 0.68, while the national average does not exceed 0.27, as Kirill Molodtsov, Deputy Minister of Energy, explained a year and a half ago.
Of course, Surgetneftegaz also has problems. More specifically, this company, like its competitors, faces the problem that deposits in Western Siberia are being depleted.
And that newly discovered reserves are 30% unprofitable, as the chief geologist of this concern, Vyacheslav Chirkov, said: in general, all newly discovered deposits are difficult to access and cannot be developed without new technologies.
No criticism from Putin
Therefore, for many years, Surgutneftegas production has remained at a stable level of 61 million tons per year. According to Bogdanov, this should not change in the medium term. In the next five years, 19 new fields are planned to be put into operation in the west and east of Siberia, Bogdanov said a year ago.
But this does not mean that production will increase. The concern aims to further increase the oil recovery factor and more rational use of deposits.
So the richest concern in Russia is probably not inclined to expansion. It is believed that they are quite happy with the oil price of $50 per barrel. Stability is better than big adventures, Bogdanov tells himself. Putin, who is usually quite harsh in his dealings with the captains of the Russian economy, never criticized him for this.
In a review of British newspapers:
"Mystery No. 1 in the Russian oil industry"
Financial Times Moscow correspondent Charles Clover is trying to solve the mystery of Siberian oil. He writes that the confusing structure of Surgutneftegaz's owners makes it impossible to try to establish who actually owns the company.
The owners of shares in Russia's fourth largest oil company are more than 20 different organizations, companies, trusts, as well as the Surgutneftegaz employees themselves. The problem is that it is very difficult to establish who owns these small companies located in or near Surgut, writes Clover.
Even the mayor of Surgut, Dmitry Popov, admits that he does not know who owns the energy company that covers 70% of the city's budget. The company's ownership structure is like a “military secret,” which, according to the mayor, should scare off competitors who are thinking about buying it.
Surgutneftegaz has never provided information about who owns its shares, or why its structure resembles a chain reaction, with one company owning a second, a second a third, and so on, the FT notes.
The last time General Director Vladimir Bogdanov answered a question about the owners of the company was back in 2008. He said then that he himself did not know who owned the majority of the company's shares. He himself, Bogdanov explained, has less than 2% of the shares, and therefore he does not even have access to the register of shareholders.
Bogdanov himself, writes a Financial Times correspondent, is considered a very secretive and modest person. “Wherever he appears, it’s already an event,” Surgut PR agent Vladimir Bedekh tells Charles Clover. “We don’t often see him in public.”
Liberal politician Vladimir Milov, who was Russia's deputy energy minister until 2002, says the circular and labyrinthine system was deliberately created to hide well-known shareholder politicians, perhaps even from the highest echelons of power in the Kremlin.
“Who actually owns Surgutneftegaz is mystery No. 1 in the Russian oil industry,” Milov said.
Surgutneftegaz has never provided information about who owns its shares, or why its structure resembles a chain reaction, with one company owning a second, a second a third, and so on Financial Times
Clover draws attention to some rather interesting investment projects of the company - it allocated money for the repair of a nuclear submarine base in Kamchatka, for which Vladimir Putin himself personally thanked her in a newspaper article.
“Just as many state-owned companies behave as if they are private, Surgutneftegaz is a private company that behaves like a state-owned company,” says local journalist Taras Samborsky.
Surgutneftegaz, continues the Financial Times, was privatized in 1994-96. If other large energy companies - for example, YUKOS or TNK - fell into the hands of bankers and oligarchs, then Surgutneftegaz remained one of the few that was managed by a “labor collective of workers,” and at the head of this “collective” was already Vladimir Bogdanov. But since then, new owners have appeared on the horizon.
The FT writes that the company is closely linked to a circle of businessmen who began to flourish after Vladimir Putin came to power in 2000. Surgutneftegaz shows extraordinary loyalty to one person - Gennady Timchenko, who is considered one of Putin's close associates.
From the time of privatization until 2003, Surgutneftegaz sold oil through the Kinex company, one of the owners of which was Timchenko. When Timchenko left his partners and opened a new company - Gunvor, Surgutneftegaz began selling its products through it.
Gennady Timchenko himself denies that he has a large stake in Surgutneftegaz, and a representative of the businessman told the Financial Times that he has less than 0.01% of the company's shares.
Arctic Sunrise activists are no longer pirates
The Moscow correspondent of the Guardian newspaper writes that investigators have reclassified the criminal case against the crew of the Arctic Sunrise from the article “piracy” to the article “hooliganism”. Now 28 activists and two journalists who were detained in the Barents Sea a month ago face up to seven years in prison. The maximum sentence for piracy is 15 years, recalls Sean Walker.
I'm Slowly Dying in My Cell Alexandra Harris, Greenpeace activist
On September 8, four Greenpeace activists tried to climb the Prirazlomnaya oil platform of the Gazprom Neft Shelf company to protest against oil production in the Arctic. A few hours later, Russian border guards seized the ship carrying environmentalists and took the ship to the port of Murmansk, where everyone on board was arrested.
“They are not pirates, but they are not hooligans either,” the Guardian quotes Greenpeace Russia spokesman Vladimir Chuprov as saying. “These new accusations are also untrue. This is nothing more than a blow to the principle of peaceful protests.”
Among those detained are six Britons. The Guardian has seen the text of a letter written by 27-year-old Alexandra Harris to her parents. “I am slowly dying in my cell,” she writes.
Alexandra's father, Cliff Harris, commented on the reclassification of the charges: "At first I was relieved that this is a less serious charge, but it is too early to draw any conclusions. However, I believe that this is a step in the right direction."
It is quite difficult to explain why the “piracy” article was used against them, because everyone understands that the activists did not want to seize Prirazlomnaya. Quite often, discussions at court hearings in Murmansk turned into absurdity when the parties tried to understand the question: “Can the Prirazlomnaya platform be called a ship or not?” After all, without the presence of a vessel, the article on piracy becomes irrelevant.
According to Russian legislation, the concept of “hooliganism” is also quite broad. The Guardian correspondent recalls that members of the punk group Pusy Riot were found guilty of “hooliganism motivated by religious hatred” and imprisoned for two years.
Greenpeace says it will not leave its activists in the lurch and will fight to the last.
Obama must stop angering Merkel
The Guardian's front page features German Chancellor Angela Merkel talking on her mobile phone and the headline: "Merkel calls Obama - are you listening to my phone calls?"
But there is nothing more humiliating than when the head of state of an ally calls you and demands to know why his mobile phone is being tapped. It’s moments like this that the US President should think about the fact that losing friends is not beneficial to anyone Guardian
On Wednesday evening, Merkel called the US President and demanded clarification from him in connection with information that had appeared that American intelligence services had tapped her mobile phone.
Merkel is the latest heroine of the diplomatic scandal that hit the White House after the publication of documents leaked by Edward Snowden. It follows from them that the intelligence services monitor not only their enemies, but also, as it has now become known, their partners.
Guardian correspondent Julian Borger asks what does it mean to be a US ally?
Many US allies have criticized the actions of American intelligence agencies, and each new batch of revelations tarnishes the US image on the world stage.
At the summit level, the Guardian writes, heads of state try to find solutions to problems in face-to-face conversations. Now that under President Obama the United States has recognized that it cannot go it alone on the world stage, relationships among the leaders of its most powerful nations are becoming increasingly important.
A good example of this is the constant controversy surrounding the Syrian issue at the UN.
But there is nothing more humiliating than when an ally's head of state calls you and demands to know why his cell phone is being tapped, Borger writes. It is at such moments that the President of the United States should think about the fact that losing friends is not beneficial to anyone. He must also answer the question himself: who is your ally in the 21st century?
The heir to the throne didn't even make a peep
He appeared smiling, left the hall smiling and smiled throughout the ceremony, as befits a true monarch Daily Mail
Of course, the main topic of British newspapers is the christening of Prince George, which took place on Wednesday in the Royal Chapel of St. James's Palace.
The Daily Mail tabloid writes that this was only the second public appearance of the son of the Duke and Duchess of Cambridge, who was born on July 22.
The heir to the throne completed his task simply brilliantly, the publication claims. He observed royal etiquette in everything.
Prince George wore a lace christening gown, exactly the same as the robe worn by Queen Victoria's eldest daughter, who was christened in 1841.
A royal family spokesman who attended the ceremony said the future king "didn't even make a peep."
“He appeared smiling, left the hall smiling and smiled throughout the ceremony, as befits a true monarch,” the source told the Daily Mail.
George's father, Prince William, admitted after the ceremony that this was the first time the baby had been so calm all day.
Review prepared by Andrey Kravets, bbcrussian.com
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