OREANDA-NEWS. October 15, 2009. Tatneft is scheduled to release its 2Q09 US GAAP financials before the weekend, reported the press-centre of OTKRITIE FC.

View: We anticipate Tatneft’s revenue to rise 25% QoQ to US 2.86bn in 2Q09, though COGS could increase only 21% QoQ to US 2.26bn. We attribute such a robust revenue-cost performance to increased domestic and export crude oil prices. In 2Q09 Tatneft’s oil production was 2% higher QoQ, another likely catalyst for the rise in revenue.

We also expect a 15% increase in Nizhnekamskshina’s revenue, which is consolidated into Tatneft’s US GAAP financial statement. In accordance with our forecasts, Tatneft’s 2Q09 EBITDA could reach US 748m (41% higher YoY), while net income could surge 121% QoQ to US 527m, helped by lower COGS and an increase in non-operating incomes. We anticipate a US 111m non-operating income in 2Q09 for Tatneft, versus the - US 31m non-operating loss posted in 1Q09.  

Valuation: Tatneft’s common stocks trade at a 24% discount on P/E to the rest of the energy sector.

Action: We expect Tatneft’s 2Q09 financials to be neutral for the company’s stock prices as the company is the last among oil majors to release its Q2 figures. Our long-term target price for Tatneft’s common shares is US 5.6, and we reiterate our BUY recommendation.