OREANDA-NEWS. June 21, 2010. Rosneft lost more than 5% market capitalization during yesterday’s trading session on the back of market talk about a potential sale of a 1.3% stake by BP to the secondary market. BP spent approximately USD1bn to acquire 1.3% of Rosneft during an IPO in 2006, and this stake is currently worth approximately USD 0.9bn. Market participants believe that BP might be interested in selling its stake in Rosneft in view of the USD 10bn assets disposal program discussed in conjunction with the large oil spill in the Gulf of Mexico, reported the press-centre of OTKRITIE Financial Corporation.         

View: We believe Rosneft’s share price correction was not totally warranted, since: 1) BP has not confirmed plans to sell its stake in Rosneft; 2) Deputy PM Sechin told news agencies yesterday that the Russian state would be interested in buying the 1.3% Rosneft stake, should BP decide to sell. Rosneft trades at attractive valuation levels, and we expect the government to fix the issue of reduced export duties for Eastern Siberia in the next few days.  

Valuation and Action: Rosneft currently trades on a 2010E EV/EBITDA of 4.1x, and at 6.1x on its P/E. We reiterate our positive view on the stock and our BUY rating.