Investment Company FINAM was the target price of ordinary shares of OAO Rosneft at the end of 2010 at $ 7.97 apiece. Recommendations on these securities - Buy. According to analysts, a unique business structure, Rosneft, concentrated in Russia, allowed the company to reach a crisis in the industry leaders in operating profitability. Despite the shortcomings and the factors affecting growth, Rosneft was more prepared for the development of adverse events compared with competitors.

Rosneft is a world leader in oil reserves among the companies whose shares are traded on the exchange. In addition, it is also the largest oil producer in Russia. Proved oil companies make up more than 2.4 billion tons of standard PRMS, and proved reserves exceed 22.3 billion barrels of oil equivalent. In addition, Rosneft is one of the largest independent producer of natural gas in Russia , - says in an analytical note on FINAM.

Rosneft has a good potential for production growth. The largest of the subsidiaries of the company - Yuganskneftegaz, which accounts for 60% of oil production - remains a significant potential for further growth in production of at least 2% a year, says analyst IK FINAM Alexander Eremin: In general, the resource Database of Rosneft is much less depleted compared with the average rate. This, in turn, reflected in lower than those of competitors, the cost of production, which make up for the company around $ 2.2 per barrel. Among the most promising projects Rosneft in production, Mr. Yeremin allocates Vankorskoe field in Eastern Siberia. By 2015 the share of oil production from the field should reach 17%. The field also should be given substantial tax breaks, - says the study.

In a crisis, Rosneft apply good business strategy. In particular, it is extremely conservative with regard to new acquisitions. This is due, above all, a high debt load - believed Mr. Yeremin. - However, such a policy has allowed Rosneft to build a business structure, has proven to be very stable in a crisis situation. Almost 90% of production costs, the company denominated in rubles that allows it to receive substantial benefits from the devaluation of the ruble, which occurred during the crisis.

Despite the fact that the debt load of Rosneft is one of the highest in the industry (a ratio debt /equity is around 56%), analysts' FINAM appreciated the strategy of funding the company. She has good policies on repayment of its debt - said Mr. Yeremin. - The company generates enough free cash flow to service quickly and repay its debt obligations. Even during the crisis in 2009 the ratio of debt /EBITDA does not exceed three. A sufficient financial resistance gives a long-term loan by $ 15 billion owed to China.

The main risks in investing in Rosneft analytics investment company called the dependence on the state and political decision-making to the detriment of shareholders. In the manufacturing segment, we see the risks of failure of plans for gas production because of constraints in transportation. Also, we do not exclude the possibility of dilution value of the company's shares 9.4% with the implementation of treasury shares in the future, - said Mr. Yeremin.

Department of Public Relations and Media Investment Holdings FINAM.
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