OAO Rosneft is trading at the smallest discount in four months to the world’s most valuable energy stocks as the Russian company’s planned takeover puts it in line to become the biggest global crude producer.
State-controlled Rosneft’s 9.5 percent climb since its Oct. 22 agreement to buy BP Plc’s Russian joint venture TNK-BP, and the MSCI World Energy Index’s 3.2 percent drop in the same period, narrowed the Moscow-based producer’s discount to 30 percent from as wide as 42 percent on Aug. 31. The Bloomberg Russia-US 14 Equity Index of the most-traded Russian companies in the U.S. sank for a second day yesterday as crude oil capped the longest stretch of declines since May.
The acquisition that would boost Rosneft’s output to about 4.5 million barrels a day has propelled Rosneft’s valuation to 8.1 times earnings, the most expensive level since March 2011, data compiled by Bloomberg show. Companies on MSCI’s gauge of developed-nation energy stocks, which includes Exxon Mobil Corp., the world’s largest energy company by market value, and Chevron Corp., trade at an average multiple of 11.5.
“Rosneft is a blue-chip stock,” Adam Mattessich, head of international trading at Cantor Fitzgerald LP said by phone in New York yesterday. “People with exposure to oil and gas, or to Russia, are taking a closer look at it or have invested.”
Russian equity futures expiring in December on the dollar-denominated RTS Index fell 0.7 percent to 144,700 in New York. The RTS Volatility Index, which measures expected swings in the index futures, rose 4.4 percent to 27.09.
Russia ETF Drops
The Bloomberg Russia-US 14 Index retreated 1.5 percent to 95.35 while the Market Vectors Russia ETF, the largest exchange-traded fund of Russian shares, dropped for a second day, losing 0.5 percent to $28.27.
Rosneft gained 3.9 percent yesterday in Moscow to 234.54 rubles, or $7.49, while its global depositary receipts traded in London advanced 4.6 percent to $7.50.
Russia’s biggest oil producer agreed this week to pay BP $17.1 billion along with 12.8 percent of its shares to buy 50 percent of TNK-BP. Rosneft also agreed to acquire the other half of the venture from its billionaire shareholders for $28 billion in cash, according to a statement on Oct. 22.
The deal would bring Rosneft’s output to equal that of Exxon Mobil. Under the terms of the deal, BP will become a pivotal Rosneft partner, with a nearly 20 percent stake in the Russian company and two board seats.
Standard & Poor’s revised the CreditWatch status on Rosneft’s BBB- rating to positive from negative yesterday, reflecting the possibility of a one-level upgrade.
Exxon Mobil, which trades for 11.4 times earnings, fell 0.3 percent yesterday in New York to $89.88. San Ramon, California-based Chevron gained 0.3 percent to $109.71, and trades for 8.4 times earnings.
Oil, which together with natural gas accounted for half of Russia’s budget revenue in 2011, lost 1.1 percent yesterday to $85.73 a barrel on the New York Mercantile Exchange, the lowest settlement price since July 10.
Brent oil for December settlement dropped 0.4 percent to $107.85 a barrel on the London-based ICE Futures Europe exchange. Urals crude, Russia’s chief export blend, declined for a seventh day, the longest losing stretch since July 2009, and fell 0.4 percent to $106.56 a barrel yesterday.
CTC Media Inc., the Nasdaq-listed Russian media company, slumped 4.1 percent to $8.87, the most since July 3, after Igor Semenov, an analyst at Deutsche Bank AG in Moscow downgraded the shares to hold from buy.
Futures contracts on the ruble expiring in December weakened 0.1 percent to 31.53 per dollar.
The Standard & Poor’s 500 Index fell to the lowest level since Sept. 5, slipping 0.3 percent to 1,408.75 as the U.S. Federal Reserve said the world’s largest economy is still growing modestly and unemployment remains elevated. The Fed said it plans to continue its monthly purchases of $40 billion in mortgage-backed securities in an effort to spur growth.
The RTS Index in Moscow dropped 0.3 percent to 1,457.96 while the 30-stock Micex Index also retreated 0.3 percent to 1,451.61, a one-week low.
The Micex has gained 3.5 percent in 2012 and trades for 5.7 times analysts’ earnings estimates for member companies. That compares with a 0.7 percent gain for Brazil’s Bovespa index, which is valued at 14.9 times estimated earnings, according to data compiled by Bloomberg. The Shanghai Composite Index trades at 10 times estimated profit, and the BSE India Sensitive Index has a ratio of 14.9.
United Co. Rusal, the world’s largest aluminum producer, dropped 0.9 percent to HK$4.49 in Hong Kong trading as of 10:48 a.m. local time. The MSCI Asia Pacific Index gained 0.4 percent.