24 Dec 2009 14:21

Gazprom Neft board to revisit 2010 business plan in a month - source

MOSCOW. Dec 24 (Interfax) - The board of directors of Gazprom Neft plan to approve the final version of the business plan for 2010 within a month, a source familiar with the situation told Interfax.

The board of directors approved the main points of the business plan at a meeting on December 23. However, they sent the document back to management to finalize certain items.

A Gazprom Neft spokesman confirmed that the board of directors met on December 23 and approved the basic business plan for 2010.

Sources at Gazprom Neft and parent company Gazprom reported earlier that Gazprom Neft planned to invest 130 billion-140 billion in 2010. The plan calls for continuing those projects already underway and beginning development of assets acquired more recently. The company also plans to begin developing for the first time an oil field that was transferred from Gazprom: Novoportovskoye.

Gazprom Neft's budget for 2010 assumes oil prices at $55-$82 per barrel in four scenarios: optimistic, pessimistic, realistic and forecast, company head Alexander Dyukov said on Tuesday.

Gazprom Neft's investment program for 2009 was originally slated to total roughly 90 billion rubles. But that figure grew substantially due to a number of acquisitions.

Sources said Gazprom Neft will have difficulty implementing its plans for 2010 using only borrowed funds, all the more so since that resource is being exhausted. Standard & Poor's downgraded Gazprom Neft's rating outlook from stable to negative in mid-December on concerns the company's rating could fall to "BB" from "BB+" in the next 12-18 months.

The ambitious plans to raise oil production to 100 million tonnes a year by 2020 that was set by Gazprom remains in force. As a result, it is entirely possible Gazprom Neft will have to conduct a secondary public offering (SPO) of shares.

However, Gazprom itself hasn't taken an unambiguous stand on a possible SPO, one of the sources told Interfax. Another source said that Gazprom hasn't taken up the SPO issue yet.

But the sources agreed no decision on an SPO will come before mid-2010 and that given the preparations required, the actual SPO could take place no sooner than 2011-2012.

Analysts at a number of investment companies and banks told Interfax previously they expected Gazprom Neft to conduct an SPO in 2010-2011 (assuming Gazprom gives the go-ahead). They said 15%-20% of equity would be the ideal volume for the SPO.