Lukoil first-quarter profit slides 60% following crude drop

STEPHEN BIERMAN

MOSCOW (Bloomberg) -- OAO Lukoil, Russia’s largest non-state oil producer, said first-quarter profit dropped 60% after crude prices slumped.

Net income fell to $690 million from $1.73 billion a year earlier, the Moscow-based company said Wednesday in a statement. That missed the $1.04 billion average estimate of seven analysts surveyed by Bloomberg.

Oil companies have been hurt by tumbling prices for output amid a global supply glut. Brent, the benchmark for more than half the world’s crude, has slumped 40% in the past year after the Organization of Petroleum Exporting Countries chose to maintain production to defend market share.

Oil’s partial recovery since January helped Lukoil post a profit after reporting a loss in the fourth quarter of 2014. Results were also buoyed by a weaker ruble, which reduced costs, and spending cuts. Russian peers OAO Gazprom Neft and OAO Novatek also returned to profit in the first quarter following losses in the fourth.

Lukoil signed an agreement on the sale of 50% of Caspian Investment Resources Ltd. to China Petrochemical Corp., or Sinopec, for $1.07 billion. The agreement will halt arbitration, which the Russian company began in London this February, Lukoil said in the statement.

Lukoil’s oil and natural-gas output rose 7% from a year earlier to 2.37 MMboed, it said. The company pumped 2.03 MMbbl of oil and liquids a day as it ramped up an Iraqi project.

Refining throughput in Russia fell 12% due to a decrease in margins as a result of tax legislation.

First-quarter capital spending fell 25% to $2.43 billion from a year earlier, it said.

Lukoil pared an earlier gain of as much as 1.6% to trade 0.5% higher at $46.99 by 11:31 a.m. in London.