OREANDA-NEWS. August 16, 2010. Rosneft successfully drilled two exploration oil wells at its giant Yurubcheno-Tokhomskoye oil field in East Siberia, reported the press-centre of OTKRITIE Financial Corporation.

The wells flows at a rate of 142 cubic meters and 191 cubic meters of oil per day, respectively, which are three times the rate of the company’s West Siberian oil field. Rosneft said earlier that it estimated Yurubcheno-Tokhomskoye’s reserves at 513.4MMT, and that it intended to start production on it in 2013. The assumed plateau is at 10MMT of crude oil. Rosneft plans to invest RUB25bn (USD0.82bn) in the Yurubcheno-Tohomskoe deposit in 2010.

View: We believe this news is positive for Rosneft shares, confirmation that the company is systematically and efficiently replacing its depleting deposits with new prospective assets. Moreover, the Yurubcheno-Tokhomskoye field is one of 22 deposits in East Siberia that pay reduced export duties, an incentive introduced by the government to encourage just such investment. Indeed, development of such a deposit could be as beneficial as Vankor.

Valuation and Action: We reiterate our BUY rating for Rosneft and a target price of USD11/share. The stock trades on a 2010EV/EBITDA of 4.4x, which implies a 25-30% discount to emerging market peers.