RusEnergy

04/03/2007 – Upstream onLine - Russian producer Surgutneftegaz posted a 33% drop in earnings last year and has been forced to cut its dividend after a difficult fourth quarter. Surgut reduced the dividend on its ordinary shares to 0.53 roubles ($0.02) from 0.80 roubles, and on its preferred stock to 0.71 roubles from 1.05 roubles, after its net profit under Russian accounting standards fell by one-third to come in at 77.1 billion roubles. Sales increased by 17% to 500.5 billion roubles, indicating a sharp contraction of net profit margins despite booming oil prices. Surgut said a combination of inflation, appreciation of the rouble and a higher tax load had "exerted a serious influence" on its financial performance, as did higher operating costs. "The results of the fourth quarter had a fundamental impact on the year's results," it said in a statement, adding that falling oil prices had slashed 30 billion roubles from revenues while export duties were ramped up by 6 billion roubles. Surgut does not publish results under international accounting standards and its ownership structure, in which management effectively controls a large tranche of treasury stock, has raised investor concerns about the company's earnings power. Analysts polled by Reuters last month had on average forecast that Surgut would pay a 0.64 rouble dividend on its ordinary shares and 0.92 roubles on its ordinaries. One brokerage had forecast that net profits for the year would total 100 billion roubles. Surgut's earnings for the first nine months of 2006 totalled 74.2 billion roubles, indicating the company barely turned a profit in the fourth quarter.