Alliance Oil up after annual accounts release

Alliance Oil Company ltd (STO: AOIL SDB) reported fourth quarter revenues of 825 million U.S. Dollars and EBITDA of 236 million. Net profit for the period was 119 million. All of the numbers were a large improvement vs. Q4 2010. This came from 5.7 mbbl of produced and 6.7 mbbl of refined oil (4.2 and 7.1 Q3 2011, 4.1 and 5.6 Q4 2010).

Full-year revenue topped 3 billion USD. Earnings came in at 690 million (EBITDA) and 328 million (Net). Proven and probable oil reserves grew slightly to 647 mbbl with reserve replacement ratio being 154%. Full-year upstream production volume was 17.9 mbbl and downsteam voume 26.9 mbbl.
The company’s production at the Timano-Pechora oil-field basin doubled following Kolvinskoye field launch in September 2011. Kolvinskoye contributed 3.0 mbbl into Q4 production. Capacity utilization in downstream refining operations remained high. Export and retail sales were up while domestic prices in Russia and Kazakhstan were down.

In 2012 the company aims to gradually increase oil production and grow resources. Upstream production guidance is an average daily production of 63,000-69,000 barrels (~23-25 mbbl per annum) and downstream volumes of 68,000-73,000 (~25-27 mbbl). Alliance oil feels that the reserve base supports long-term crude production growth. This together with efficiency measures at downsteam operations should allow for better cash-flow generation in the future. For 2011 the Board of Directors suggests no dividend to be paid.

Upstream CAPEX plan is between 380-450 MUSD for continued development of Kolvinskoye and for an intensive drilling program at Puglalymskoye field. Planned downstream capital expenditures are in 490-540 million range with the upgrade of Khabarovsk refinery and the connection to the East Siberia Pacific Ocean (ESPO) pipeline top the agenda.

Spanish giant Repsol and Alliance Oil form a MUSD 840 exploration and production joint venture. Repsl will contribute cash and gas assets in Siberia and Alliance Oil contributes its Volga-Urals assets. Alliance Oil thus enters Russian gas market. Alliance Oil will have a 51% share in the JV. The company has previously been called West Siberian Resources Ltd, and before that was known as Vostok Oil Ltd. The stock has been up slightly for the entire day in a weak market.

Heading to opposite directions to close out the week: PA Resources and Alliance Oil

Couple of oil company production updates gave investors pause for thought late this week. PA Resources (STO: PAR) backtracked 6.3% after its production report for second quarter was published. PA Resources produced an average of 8,500 barrels per day for second quarter from its operations in North Africa and West Africa. Production from the final production well of the company at the Azurite Field offshore Republic of Congo is below expected levels. The company says that evaluation of the field's production capacity is ongoing.

Alliance Oil (STO: AOIL SDB) gained close to 10% from midweek on after Thursday's announcement of its second quarter oil production contained raised downstream volume target. This news was followed by analysts' upped recommendations on Friday. Both upstream and downstream units of the vertically integrated player involved in plays in Russia and Kazakhstan are performing well.