LUKOIL: Charting a Steady Course

We resume coverage of LUKOIL’s local shares and GDRs with BUY ratings and target prices of RUB3,260/local share, and $56.40/GDR. The company is one of our top picks in the sector, as discussed in our 11 Mar Russian Equity Strategy Review – Jam Tomorrow. LUKOIL is able to benefit from the ongoing modifications of the Russian oil industry’s taxation structure by commissioning new fields that enjoy various tax breaks and preferences. Low debt, positive free cash flow and a stable dividend policy are some of the stock’s key attractions.

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