OREANDA-NEWS. October 27, 2009. Tatneft held a conference call for analysts and investors dedicated to its 2Q09 US GAAP financials. The main takeaways from the conference are as follows, reported the press-centre of OTKRITIE Financial Corporation:

In 2Q09, the IPCG investment fund delivered to Tatneft a 51% stake in Taneco Refinery (currently under construction now). This gives Tatneft a 91% stake in the refinery.

Tatneft anticipates its capex program in the next 3 years to amount to US3.2-4.9bn.

The company could commence its bitumen oil extraction project in the next 12 months, once the necessary imported equipment from its partners is delivered.

View: While the news about the consolidation of Taneco Refinery was expected, we believe that investors will applaud the company evolution into a vertically integrated company. According to our model, Tatneft’s annual capex in the next 3 years could amount to US 900m-1bn (the bitumen project is not still included in our DCF-model).

Valuation: Tatneft trades on a 2010 P/E of 4.5x, which is at a 35% discount to the rest of the energy sector.

Action: Although this news is only marginally positive for the stock, we have not ruled out revisions to our model, target price, and recommendation.