OREANDA-NEWS. October 23, 2009. TNK-BP Holding’s capex could amount to US3bn in 2009 and reach US 3.5-4bn in 2010 told TNK-BP CFO Jonathan Muir. He also emphasized that the company could invest primarily in the upstream sector in order to maintain an annual oil production growth rate of at least 1-2%, reported the press-centre of OTKRITIE Financial Corporation.

View: While our capex estimates (US 3bn in 2009, US 3.8bn in 2010) were roughly in line with company guidance, we expect higher incremental production (3% annually in the next 10 years). We assume that TNK-BP’s CEO was talking about aggregate oil production in TNK-BP, which would include contributions from Slavneft (whose oil production is falling). TNK-BP Holding could invest the bulk of capex in the development of greenfield projects (the Uvat Group, the Verkhnechonskoye and Kamennoye oil fields).    

Valuation: TNK-BP Holding’s common stocks trade on P/E at a 20% discount to the rest of the energy sector.

Action: We view this news as neutral for TNK-BP Holding’s stocks.