OAO Lukoil’s West Qurna-2 project in Iraq is beginning to pay back, adding $1.25 billion to earnings in the third quarter, according to the company.
The addition helped prop up earnings before interest, taxation, depreciation and amortization, which fell 2.4 percent to $5.34 billion after oil prices weakened, the Moscow-based company said in an e-mailed statement today. Net income dropped 48 percent to $1.62 billion.
“Ebitda turned out stronger because of higher sales in Iraq,” Alexander Kornilov, an oil and gas analyst at Alfa Bank, said by e-mail. The Iraqi project contributed 22 percent to Ebitda, he said. Revenue rose 6.2 percent to $39 billion.
The ramp up at West Qurna-2, where output begun this year, solidifies Lukoil’s leading position as the Russian oil producer with the most overseas projects. The company has invested abroad as Russian legislation limits access to resources, such as Arctic offshore zones, to state-led companies at home.
Lukoil listed 158,000 barrels a day in output as compensation oil from Iraq in the third quarter after reaching levels that triggered cost recovery for the operating contract in June. Overall oil and gas output increased 7.4 percent to 2.35 million barrels a day, Lukoil said.
The payoff in Iraq didn’t extend to Lukoil’s projects in Africa. The company wrote off $140 million on dry wells in Ghana in the third quarter after writing off $95 million on dry wells in the Ivory Coast in the first quarter.
The company also wrote down $45 million in signing bonuses related to projects in Ghana in the third quarter after writing down $67 million of such bonuses in Sierra Leone and the Ivory Coast in the first quarter, it said in the statement.
Lukoil, which has fallen under sanctions from the U.S. and its allies over Russia’s support for a Ukrainian separatists, said it raised a 63 billion-ruble ($1.34 billion) 3-year loan from Sberbank yesterday. The loan comes as Russian companies have limited access to debt markets and when the yield on its dollar notes due in 2020 is approaching a three-year high.