UPDATE: Lukoil Rises On Possible Conoco Share Buyback

(Adds stock price, analyst comment, detail.)

 
   By Jacob Gronholt-Pedersen 
   Of DOW JONES NEWSWIRES 
 

MOSCOW -(Dow Jones)- Shares in Russian oil producer OAO Lukoil Holdings (LKOH.RS) rose by more than 2% on Thursday, after the company hinted it may buy back shares from U.S. oil major ConocoPhillips (COP).

Chairman of the board at Lukoil, Valery Grayfer, said the company would find it necessary to buy back shares held by ConocoPhillips should the U.S. oil firm put part of its 20% stake in Lukoil up for sale, the Interfax news agency reported earlier Thursday.

At 1306 GMT, Lukoil's shares were outperforming a 0.6% gain on Moscow's Micex exchange, as it traded up 1.5% at 1716.1 rubles ($58.8) each.

In October, ConocoPhillips said it would sell around $10 billion worth of assets over the next two years as part of a restructuring plan to shore up its finances.

The company said then that it would keep its stake in Lukoil, but news reports this week suggested ConocoPhillips is ready to divest half of its shares within the next three years.

Analysts said ConocoPhillips is unlikely to sell the stocks on the open market--a move that would be seen as a potential negative development for Lukoil's share price.

"As a potentially positive outcome, Lukoil could buy out the 10% stake," said Lev Snykov. However, financing such a deal could be a concern, he added, as Lukoil holds only around $1.5 billion in cash.

Lukoil declined to comment.

Company Web site: www.lukoil.com

-By Jacob Gronholt-Pedersen, Dow Jones Newswires; +7 495 232 9197; jacob.pedersen@dowjones.com

(END) Dow Jones Newswires

March 18, 2010 09:56 ET (13:56 GMT)

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