OAO Novatek rallied to a one-week high on investor optimism Russia’s biggest non-state natural gas producer’s acquisition of a 49 percent stake in ZAO Nortgas will increase gas production.
Novatek rose 2.3 percent to 332.91 rubles by 1:59 p.m. in Moscow, the highest intraday level since Nov. 1. The amount of shares traded was 1.18 million, equivalent to 78 percent of the three-month average. The 10-day volatility on the Moscow-traded shares jumped to 54.3, the highest since May 12.
Novatek said yesterday it agreed to buy a stake in Nortgas from Farkhad Akhmedov’s REDI Holdings for $1.375 billion, and expects to close the deal by the end of the year. OAO Gazprom holds the remaining 51 percent in Nortgas.
“We see the news as positive for Novatek, as it confirms the company’s growth prospects,” UralSib Capital analysts led by Alexei Kokin said in an e-mailed note. “We note the proximity of the acquired assets to existent infrastructure, which should lead to some production and development benefits.”
UralSib expects the stake acquisition to boost Novatek’s gas production by 3 percent and its total reserves by 9 percent next year, according to the report. UralSib reiterated its buy recommendation.
Novatek’s global depositary receipts gained 2.6 percent to $108.70 in London, the highest intraday since Oct. 31. The volume of shares traded was equivalent to 31 percent of the three-month daily average.