LUKOIL has announced its 1996 financial results on the basis of consolidated accounts of the Company and its 23 subsidiaries. The results show significant improvements from previous results announced on the basis of preliminary results at the end of last year. All indicators are presented according to Russian accounting rules.

LUKOIL posted net revenues of 44 trillion rubles ($8.59 billion) for 1996, 2 times up from 1995. Its assets grew by over 1.5 times. Net profits came to over 3.8 trillion rubles, 60% up from 1995. Net profit climbed 43% in dollar terms from $528 million to $756 million. LUKOIL's market capitalization almost doubled from $3.6 billion to $7.52 billion. Net profit per share rose from $0.74 to $1.06.

LUKOIL paid off its debt to the federal budget in 1996 and sharply cut its other budget debts. The Company's share in total tax payments in Russia almost doubled, and it increased its contribution to the solution of Russia's severe social and economic problems.

The improvement in LUKOIL's financial results is based on LUKOIL's steady growth in production potential and favourable conditions on the world market for oil and petroleum products. Miller & Lents put LUKOIL's total proven reserves of oil and gas at 10.7 billion barrels. LUKOIL raised practically all production indicators in 1996, as it did in 1995, including by over 2% for oil output and refining. Oil recovery, product yield from crude and utilisation of refining capacity all increased, allowing the Company to export 94% more oil products. It actively developed its filling station network.

LUKOIL increased its production potential in difficult economic circumstances. The investment climate remains unfavourable, the cost of producing oil from complex reserves continues to rise, free export sales quotas are still declining, the tax burden remains extremely high and credit rates are excessive. LUKOIL mobilized to the maximum its internal resources and improved the quality of management to overcome these problems.

"The Company is on the rise and we hope that the economic growth noted in Russia will help us to increase the dynamic of steady improvement of production and financial results," LUKOIL President Vahit Alekperov said.

The LUKOIL Board of Directors in March 1997 approved a strategic concept of development to the year 2010. The Company plans to significantly improve on its 1997 results. Directors set down the principles of forming a Company budget and structural policy and ways to further raise management quality.

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