August 22, 2012
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№ 6 (June 2009)

TNK-BP Investor Presentation Touts Reserve Replacement and Transparency

Russian-British oil giant TNK-BP issued it’s first-ever investor relations presentation on Wednesday, using the document to boast it’s 130 percent reserve recovery ratio (RRR), its new push for corporate governance transparency, and a rating increase from Standard & Poor’s Investor Services. Although still not investment grade according to S&P, Moody’s and Fitch have rated TNK-BP debt investment grade since 2007.

 

By Ben Dow

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Russian-British oil giant TNK-BP issued it’s first-ever investor relations presentation on Wednesday, using the document to boast it’s 130 percent reserve recovery ratio (RRR), its new push for corporate governance transparency, and a rating increase from Standard & Poor’s Investor Services. Although still not investment grade according to S&P, Moody’s and Fitch have rated TNK-BP debt investment grade since 2007.

 

TNK-BP often appears in headlines for the years-long battle for corporate leadership between its Russian (Alfa Group, Access Capital, and Renova Group) and British (BP) stakeholders. Mikhail Fridman, chairman of Alfa Group, is currently serving as the interim CEO of TNK-BP after American Robert Dudley resigned last year.

 

Although tenth on the list oil-producers by volume in 2008, on a list that did not include NOCs like Saudi Aramco or PdVsa, TNK-BP’s RRR average from 2006 to 2008 stood at 130 percent, tops for all of the companies included in the report, including parent company BP, Shell, Exxon Mobil, Chevron, and others. The next closest RRR belonged to Rosneft at 120 percent.

 

The company underlined two major goals, one upstream and one downstream, as targets for its USD 3 billion capital expenditure campaign in 2009: more domestic refining capacity to take advantage of Russia’s tax discount on exporting refined products vs. crude, and strengthening the system of retail outlets in Russia and Ukraine with filling station new builds, expansions, and refurbishments. The USD 3 billion figure represents a 25 percent drop from 2008 spending but will undoubtedly represent a higher share of EBITDA than 2008 due to the lower crude price and lower retail sales volumes.

 

With a strong business model of vertical integration and high proven reserves, TNK-BP seems eager to address questions of corporate governance, and get the third of the major rating agencies, S&P, to bump its score of TNK-BP credit from BB+ to a something in the investment-grade range.

 

TNK-BP places a strong emphasis in cash-on-hand, and has about USD 2 billion in its safe, which it will use to survive the poor economic times. While the presentation shows it has spent cash on strategic acquisitions in 2009, it has also just sold its oilfield services division to Weatherford International for a reported sum of USD 490 million.

The presentation can be found at :
http://www.tnk-bp.com/press/news/2009/7/1491/

 

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