TNK-BP said Monday that it was seeking acquisitions after posting a profit in the fourth quarter, following a year-earlier loss, as crude prices gained and new fields began producing. Net income was $1.28 billion and sales rose 25 percent to $10 billion, TNK-BP said. Compared with the third quarter, earnings and sales were down 24 percent and 2.5 percent respectively, the company said. With production rising and oil prices recovering, 2009 was a “very strong year,” chief operating officer Bill Schrader told reporters. Full-year profit fell 5.9 percent to $4.97 billion.
TNK-BP is seeking new production assets in Russia and the former Soviet Union, in particular mature fields, which the company specializes in developing, Schrader said. The oil firm may boost output by 1 percent to 2 percent this year, Schrader said, led by Verkhnechonskoye in eastern Siberia and the Uvat fields in western Siberia. TNK-BP also benefited from the weaker ruble and the lagging oil export duty last year, Chief Financial Officer Jonathan Muir said. The company raised oil and gas production 2.9 percent to 1.69 million barrels last year, while liquids output rose 2.4 percent, the company said. Mature oil fields in the Orenburg region boosted output by more than 6 percent last year and will deliver further growth in 2010, interim chief executive Mikhail Fridman said.
The company may raise between $700 million and $1 billion of debt this year, which will be sufficient to meet financial needs “absent any major transaction,” Muir said. TNK-BP sold $1 billion of dollar-denominated bonds last month. In 2009, the oil producer raised $1.8 billion in new debt, he said. TNK-BP reduced its net debt by about 6.2 percent last year to $5.97 billion, according to its presentation.
The producer is seeking economic incentives for developing fields in remote areas with poor infrastructure, as the government continues discussions on oil export duty exemptions for eastern Siberia. Developments in this region and in Yamal may slow down without economic support, prompting oil producers to wait for higher oil prices, Schrader said. TNK-BP said it replenished its hydrocarbon reserves in 2009 due to new discoveries and a rise in oil prices, while its full-year net income fell 5.7 percent.
TNK-BP said Monday that under the U.S. Securities and Exchange Commission's methodology, which uses the year-end spot price and applies to the economic life of a field, its reserves rose in 2009 to 8.6 billion barrels from 8.1 billion in 2008. Under the less stringent criteria of the Petroleum Resources Management System, formerly known as the Society of Petroleum Engineers, TNK-BP's reserves replacement ratio stood at 329 percent as reserves rose to 11.7 billion barrels last year. Analysts and investors pay close attention to the reserves replacement ratio of oil companies for signs that the firm is able to sustain production growth in the future.