Gazprom PJSC ADR OGZPY - equity, debt and subsidiaries

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Gazprom PJSC ADR  OGZPY

Summary (from latest annual and quarterly report – 2017)

  • Total equity: 193.02 billion USD
  • Market Cap is 49.2 billion USD (the last price of the stock is 4.45 USD)
  • Gazprom PJSC together with its subsidiaries is engaged in the exploration, production, transportation, and sale of gas in the Russian Federation and other countries
  • Equity of total company increased from 147.24 billion USD in 2014 to 193.02 billion in 2017
  • Company has 8.4 billion USD in cash on account (from latest quarterly report)
  • Total equity – cash on account = 193.02 billion USD – 8.4 billion USD = 184.62 billion USD
  • Company has 3.9 billion USD treasury stocks
  • In 2017 company has 40.93 billion USD long-term debt, short-term debt is 12.07 billion USD                                                                                               (In 2014 company had 6.97 billion USD short-term debt, long-term debt was 33.36 billion USD)
  • Company's revenue increased in 2016 to 103.27 billion USD from 102.6 billion in 2015
  • Net income in 2016 was 16.08 billion USD, Net income in 2015 was 13.3 billion USD
  • In 2016 company paid 3.14 billion USD dividend to its shareholders

 

Opinion about the company

Fundamentally it is a good company and in the future we can expect its growth (Total debt is 53 billion USD, company has 8.4 billion USD in cash on account, ROE is around 7 %).

Gazprom PJSC ADR  OGZPY

Gazprom PJSC together with its subsidiaries, is engaged in the exploration, production, transportation, and sale of gas in the Russian Federation and other countries. Gazprom was created in 1989 when the Soviet Ministry of Gas Industry was converted to a corporation, retaining all of its assets. Although it is a private company, the Russian Government holds a majority stake in the company. Gazprom is involved in the Russian Government's diplomatic efforts; distortions of gas prices, and access to pipelines.

Gazprom's production fields are located around the Gulf of Ob in Western Siberia. Plans have also been made to mine the Yamal Peninsula. Gazprom's gas transport system includes 158,200 kilometres of gas trunk lines. Projects include Nord Stream and South Stream.

The five main business segments:

  • The Pipeline assets are biggest in asset size
  • Gas/Crude Oil productions are second in size, which includes Gazprom Neft oil production assets
  • Refining assets are third which includes the compressor stations aforementioned as well as oil refining from Gazprom Neft and Slavneft
  • Gazprom also has a Power Plant segment, which includes MCX:OGKB (1 billion market cap) and Mosenergo MCX: MSNG (2 billion market cap) . The Power Plant segment is the second smallest segment of Gazprom
  • Gas storage is last in asset size

 

Important dates for the company

  • In June 2005, Gazprombank, Gazpromivest Holding, Gazfond and Gazprom Finance B. V., subsidiaries of Gazprom, sold a 10.7399% share of their stock for $7 billion toRosneftegaz, a state-owned company. Some analysts said the amount paid by Rosneftegaz for the stock was too low. The sale was completed by 25 December 2005. With the purchased stock and the thirty-eight percent share held by the State Property Committee, the Government of Russia gained control of Gazprom. The Government of Russia revoked the Gazprom twenty percent foreign ownership rule and the company became open to foreign investment
  • On 23 June 2007, the governments of Russia and Italy signed a memorandum of understanding towards a joint venture between Gazprom and Eni SpA to construct a 558-mile (900 km) gas pipeline to carry 1.05 trillion cubic feet (30 km3) gas per year from Russia to Europe
  • On 21 May 2014, in Shanghai, Gazprom and the China National Petroleum Corporation made a contract worth $400 billion over thirty years. The contract was for Gazprom to deliver 38 billion cubic meters of natural gas per year to China beginning in 2018
  • On 19 October 2015, Russian President Vladimir Putin and Israeli Prime Minister Benjamin Netanyahu agreed to allow Gazprom to develop the Leviathan gas fields with major concessions from Israel

 

Gazprom owns the largest pipeline system in the world with a little more than 108,000 miles of pipeline. It produces the largest amount of natural gas in the world and it has the largest amount of natural gas reserves, and has a vast asset base to service its pipeline customers primarily in Russia and Europe which includes 250+ compressor stations which pump pressure to natural gas in order for it to flow through the pipelines, has underground storage facilities, and 10+ downstream gas processing plants which separates out the natural gas impurities in it's raw state to produce pipeline natural gas. The company owns 72% of Russia's natural gas reserves - which accounts for 17% of the world's natural gas reserves. The Russian government has a 50.232% ownership stake in the firm, which should ensure that Gazprom's dominance over the domestic market is assured going forward. Gazprom delivers gas to 25 European countries, the only major exceptions being Spain and Portugal. If we are to look at the longer term demand trend for Gazprom's gas in Europe, we can see that there is a definite long-term demand growth trend. According to analysts, that trend is set to continue. Gazprom is the largest joint-stock company in Russia. The total number of bank accounts holding 23,673,512,900 shares of Gazprom exceeds 470 thousand.

 

Gazprom  standalone subsidiaries and acquisitions :

  • Gazprom has several hundred subsidiaries in Russia and abroad which are owned and controlled directly or indirectly by the company
  • The company has subsidiaries in industrial sectors including finance, media and aviation
  • In April 2001, Gazprom acquired NTV, Russia's only nationwide state-independent television station from Vladimir Gusinsky's company, Media-Most holdings. In 2002, the Gazprom subsidiary Gazprom Media acquired all of Gusinsky's shares in companies held by Media-Most – worth 1 billion USD
  • In September 2005, Gazprom bought 72.633 percent of the oil company Sibneft for 13.01 billion USD. Sibneft was renamed Gazprom Neft. The purchase was aided by a $12 billion loan. GazpromNeft has had robust earnings growth within the last 5 years and Gazprom currently owns 95% of GazpromNeft worth around 18 billion USD
  • In December 2006, Gazprom signed an agreement with Royal Dutch Shell, Mitsui and Mitsubishi, to take over fifty percent plus one share of Sakhalin Energy for 7.5 billion USD
  • In June 2007, TNK-BP, a subsidiary of BP plc, agreed to sell its stake in Kovykta field in Siberia to Gazprom for 770 million USD after the Government of Russia questioned BP's right to export gas from Russia
  • In late November 2013, Gazprom expanded its media interests by acquiring Profmedia from Vladimir Potanin – worth 760 million USD (ProfMedia’s value was 1.8 billion dollars in 2007)
  • In December 2014 the Group became the owner of 100 % of the interest in South Stream Transport B.V., the company responsible for the offshore part of the South Stream project. Until 29 December 2014, South Stream Transport B.V. was a joint project held by the Group (50 %), ENI International B.V. (20 %), EDF International S.A.S. (15 %) and Wintershall Holding GmbH (15 %). On 29 December 2014, the Group acquired the remaining 50 % of the shares of South Stream Transport B.V. from the minority shareholders for consideration of  750 million USD paid in cash
  • In 2015 Gazprom acquired Russia 2 TV channel frequency from VGTRK for 160 million USD
  • Gazprom has 35.5% of Gazprombank ordinary shares, the authorized capital of Bank GPB (JSC) amounts to RUB 190,234,277,000, and it is divided into 490,645,540 registered ordinary shares with RUB 50 par value. Gazprombank did 465 million USD in profit in the first half of 2017
  • Gazprom subsidiaries in finance, media and aviation are worth 6 billion USD
  • Gazprom also has ownership in Slavneft (50%, worth around 2 billion USD) which is also jointly owned by oil giant Rosneft. Gazprom partially owns Novatek (9.50%) which is also jointly owned by Total, and Novatek is a growing LNG company. According to analysts the sale of Novatek could bring 4 billion USD cash to Gazprom
  • Investments in associates and joint ventures in last four years was more than 20 billion USD
  • Gazprom invested 2 billion USD on new headquarters in St. Petersburg
  • Gazprom also has a Power Plant segment, which includes MCX: OGKB (1 billion USD market cap) and Mosenergo MCX: MSNG (2 billion USD market cap)

 

Total = 65.94 billion usd

 

  • In June 2014, Gazprom negotiated with the International Petroleum Investment Company (IPIC of Abu Dhabi) over a 24.9 percent stake in the Austrian oil and gas firm OMV
  • Capital expenditures are currently extremely high, and to service the debt for these projects. Currently, a bulk of the capital expenditures is going into building out new pipelines: Power of Siberia ($55 billion capex), TurkStream ($13 billion capex), Nord Stream 2 ($11.5 billion capex). The build-out of 3 pipeline projects will do a lot to gain gas exports in Europe, as well as in China. Higher oil prices mean higher natural gas prices, it is impossible to know for sure what oil prices will do in the future, but most fundamental data points currently point to a favorable situation for Gazprom in this regard
  • Gazprom will continue to have geopolitical problems and the operational inefficiencies present, but without these two problems it probably would be one of the valuable companies, as it is equally as profitable as Exxon Mobil which will earn roughly $15 billion USD for the full year 2017
  • It should also be mentioned that in response to the Ukraine crisis, Gazprom also inked a deal with China to build a pipeline that will carry 38 Bcm from Russia to China. Fact is however that at the time of the signing of the deal, which back then was valued at $400 billion, for 38 Bcm delivered annually for a period of 30 years was priced more or less in line with the average price that Gazprom was getting from Europe back in 2014 when the deal was made. When including the volume of gas that Gazprom is set to sell to China under that deal by the beginning of next decade, we are looking at as much as 50-60 Bcm in extra export capacity, even if we were to assume that the transit of gas through Ukraine were to cease completely, which is unlikely to happen. In 2015, Ukraine received $1.7 billion in transit fees, for allowing 64 Bcm through its territory and infrastructure