Eurasia Drilling Jumps After $200 Million Share Buyback PlanStephen Bierman
Eurasia Drilling Co., Russia’s largest oilfield services provider, rose as much as 10 percent in London trading after it announced a $200 million share buyback.
The global depositary receipts buyback will last for six months, beginning on April 2, the company said. Eurasia will fund the buyback from cash reserves and will not incur additional debt, according to a statement.
A weakening ruble and concerns less business will come from Russia’s largest oil producer, OAO Rosneft, led Eurasia shares to fall 42 percent this year, reached their lowest since June 2012 yesterday.
The plunge prompted Deutsche Bank AG to raise Eurasia shares to buy yesterday with a target price of $36 a share. Shares traded up 4.9 percent at $27.18 at 9:01 a.m. London time.
Russian oilfield services providers have been put on notice by Rosneft as it seeks to reduce costs by developing the company’s internal drilling business. The state-run company produces about 40 percent of Russia’s oil after last year’s $55 billion purchase of TNK-BP.
“Its encouraging to see that management have confidence in the company’s shares,” said Ildar Davletshin, an oil and gas analyst at Renaissance Capital.
The size of the buyback, less than 5 percent of market capitalization, may not be enough to totally offset market concerns over growth prospects due to Rosneft’s new drilling strategy, he said.
Russia’s ruble lost 8.1 percent against the dollar as of yesterday since the start of the year, according to data compiled by Bloomberg.
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