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Lukoil Second-Quarter Profit Up 14% as Iraqi Oil Output Starts

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Aug. 29 (Bloomberg) -- OAO Lukoil, Russia’s second-largest oil producer, said profit rose 14 percent in the second quarter after it began output in Iraq.

Net income increased to $2.39 billion from $2.1 billion a year earlier, the Moscow-based company said in a statement on its website. That missed the $2.65 billion average of 11 analyst estimates compiled by Bloomberg. Sales expanded 9 percent to $38.2 billion. Earnings before interest, taxes, depreciation and amortization gained 24.7 percent to $5.44 billion.

Lukoil loaded its first tanker of oil at the southern Iraqi port of Basra July 30 after starting output in March at the West Qurna-2 deposit, its largest. It’s also working to start fields in the Caspian Sea and Siberia to increase production. Capital spending in the first half rose 11 percent to $7.7 billion. West Qurna-2 added $1.02 billion to Ebitda in the second quarter.

“Delivery on West Qurna-2 is a supportive factor for Lukoil’s shares as we believe that few investors attribute any value to the asset,” Dmitry Loukashov, an oil and gas analyst at VTB Capital, said in a research note published yesterday.

Oil and natural-gas output rose 5.5 percent to 2.31 million barrels of oil equivalent a day in the quarter. Oil climbed to 2 million barrels a day, and gas fell to 311,000 barrels a day.

Risks related to armed unrest in Iraq haven’t hurt Lukoil’s financial situation, while the company doesn’t see potential losses resulting from conflict in Ukraine, it said.

To contact the reporter on this story: Stephen Bierman in Moscow at sbierman1@bloomberg.net

To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net Alex Devine, Tony Barrett

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