Jan. 30 (Bloomberg) -- Preferred shares of OAO Surgutneftegas rallied to a six-year high as Citigroup Inc. named Russia’s fourth-largest oil producer a top pick and raised its price estimate.
Preferred shares surged as much as 5 percent before trading up 4.4 percent at 23.23 rubles by 12:23 p.m. in Moscow, the highest intraday level since February 2007. The amount of shares traded was about 27 million, equivalent to 1.1 times the three-month average.
Citigroup made the shares its top pick in Russia’s oil and gas sector, citing “strong” price growth, a “generous” dividend policy and expectations the stock will benefit from the introduction of a so-called T+2 settlement on the Moscow Exchange, according to today’s e-mailed note. Citigroup lifted its price estimate to 99 cents from 88 cents and reiterated its buy recommendation.
“Key” catalysts for the stock in the next three months include the debut of the Kirishi hydrocracker and the release of earnings under international accounting standards, Citigroup said. Starting T+2 trading settlement on the exchange will widen the investor base for the preferred shares, according to the note.
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