ANNUAL REPORT 2005 - Lukoil

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LIQUIDITY AND CAPITAL RESOURCES 2005 2004 2003 (million US dollars) Net cash provided by operating activities 6,097 4,180 2,936 Net cash used in investing activities (6,225) (3,741) (2,792) Net cash provided by (used in) financing activities 539 (650) (4) Net debt 3,354 2,620 3,376 Current ratio 2.14 1.89 1.50 ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Total debt to equity 19% 19% 28% Long term debt to long term debt and equity 13% 11% 12% Total net debt to cash flow from operations 0.55 0.63 1.15 Our primary source of cash flow is funds generated from our operations. During 2005 cash generated by operating activities was $6,097 million, an increase of $1,917 million compared to 2004. In 2005 cash inflow from operating activity was impacted by the following factors: increase in revenue increase in amount of income tax paid increase in volume of export sales and, consequently, prepayment of custom fees, export duties and transportation tariffs. Moreover, in 2005 our operating cash inflows were significantly affected by an increase of working capital (excluding effect of acquisitions) by $1,540 million compared to January 1, 2005. This was mainly caused by: an increase in trade accounts and notes receivable by $942 million, which was resulted from an increase in the price of crude oil and refined products and expansion of marketing activities an increase of inventory by $735 million, which was resulted from increased volumes of crude oil and refined products in stock and increased purchase prices. At the same time, this change in working capital was partly compensated by an increase in trade accounts and notes payable by $194 million, which was resulted from an increase in volumes of purchased crude oil and refined products and growth of related prices. During 2005 the Company spent $6,856 million on capital investments and acquisitions of interests in other companies, which was $3,131 million more than in 2004. In 2005 we paid $2,874 million (an increase of $2,397 million compared to 2004) mainly for the acquisitions of Nelson, OAO Primorieneftegaz, Oy Teboil Ab and Suomen Petrooli Oy, remaining interest in ZAO SeverTEK, equity interest in OOO Geoilbent and increase of our share in LUKOIL Neftochim Burgas. Cash flows from investing activities include $588 million of cash received primarily from the sale of interests in OOO Narianmarneftegaz, ZAO Globalstroy-Engineering and ZAO Arktikneft. In 2005 the result of our financing activity was an inflow of $539 million compared to an outflow of $650 million in 2004. This change is explained by the loan of $1,934 million we received for financing acquisition of Nelson. Also in 2005 we repaid short-term borrowings by $468 million more than in 2004. The Company made payments of $746 million, $661 million, and $467 million for dividends in 2005, 2004 and 2003, respectively. The Company has sufficient borrowing capacity to meet unanticipated cash requirements. As of December 31, 2005 the Company had available unutilized short-term credit facilities with a number of banks in the amount of $1,264 million. During 2005 the Group systematically worked at decreasing the level of secured debt, mainly represented by the pledge of export receivables and fixed assets. As of December 31, 2005 the level of secured debt was 35% of the total debt, while as of December 31, 2004 – 48%. 125
FINANCIAL ACCOUNTS Analysis of capital expenditures 2005 2004 2003 (millions of US dollars) Exploration and production Russia 2,487 2,100 1,537 International 431 189 247 Total exploration and production 2,918 2,289 1,784 Refining, marketing and distribution Russia 654 677 911 International 475 393 264 Total refining, marketing and distribution 1,129 1,070 1,175 Chemicals Russia 59 55 28 International 18 16 11 Total chemicals 77 71 39 Other 53 17 20 Total capital expenditures* 4,177 3,447 3,018 Acquisitions of subsidiaries ** Exploration and production Russia 778 23 989 International 1,959 143 - Total exploration and production 2,737 166 989 Refining, marketing and distribution Russia 27 1 23 International 229 305 257 Total refining, marketing and distribution 256 306 280 Chemicals Russia - - - International - - - Total chemicals _ _ _ Other _ 5 _ Less cash acquired (119) - (44) Total 2,874 477 1,225 * Including non-cash transactions. ** Including prepayments related to acquisitions of subsidiaries and minority shareholding interest. 126
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ANNUAL REPORT 2005
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ANNUAL REPORT, 2005 ADDRESS TO SHAR
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ANNUAL REPORT, 2005 LUKOIL signific
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LUKOIL IS ONE OF THE MAJOR INTERNAT
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The Company buys 15 filling station
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August The first stage of a coke ca
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LUKOIL completes eradication of the
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289 filling stations and 132 diesel
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ANNUAL REPORT, 2005 LUKOIL is reali
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ANNUAL REPORT, 2005 GEOLOGICAL EXPL
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ANNUAL REPORT, 2005 Russia Total ex
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ANNUAL REPORT, 2005 Western Siberia
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ANNUAL REPORT, 2005 In 2005 LUKOIL
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ANNUAL REPORT, 2005 Distribution of
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ANNUAL REPORT, 2005 LICENSING The C
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ANNUAL REPORT, 2005 increased by 1.
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ANNUAL REPORT, 2005 Creation of the
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ANNUAL REPORT, 2005 Gas Production
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KAZAKHSTAN Kumkol 50% LUKOIL INTERN
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ANNUAL REPORT, 2005 Main oil export
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47.6 REFINING, PETROCHEMICALS AND M
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Russia Growth of export duties in 2
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The catalytic reforming unit was ov
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GAS PROCESSING The Company's gas-pr
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up to 200,000 tonnes of caustic sod
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LUKOIL bought share stakes in 2005,
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Trading with third parties LITASCO
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ANNUAL REPORT, 2005 Effect from EOR
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TRADE BALANCE OF LUKOIL SUBSIDIARIE
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ANNUAL REPORT, 2005 Work by LUKOIL
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ANNUAL REPORT, 2005 management of t
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ANNUAL REPORT, 2005 as investments
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Page 69 and 70: CORPORATE GOVERNANCE The Company vi
Page 71 and 72: THE MARKET FOR COMPANY SECURITIES R
Page 73 and 74: than in the first quarter of the ye
Page 75 and 76: Alexander Shokhin Independent Direc
Page 77 and 78: Vagit Sharifov Vice-President, Head
Page 79 and 80: The general meeting of shareholders
Page 81 and 82: the Group's organizations and struc
Page 83 and 84: ANNUAL REPORT, 2005 Projects of LUK
Page 85 and 86: ANNUAL REPORT, 2005 Fields and lice
Page 87 and 88: ANNUAL REPORT, 2005 erves were not
Page 89 and 90: ANNUAL REPORT, 2005 The company's r
Page 91 and 92: FINANCIAL ACCOUNTS MANAGEMENT'S DIS
Page 93 and 94: FINANCIAL ACCOUNTS Strategic Partne
Page 95 and 96: FINANCIAL ACCOUNTS The table below
Page 97 and 98: FINANCIAL ACCOUNTS The mineral extr
Page 99 and 100: FINANCIAL ACCOUNTS lack refining ca
Page 101 and 102: FINANCIAL ACCOUNTS YEAR ENDED DECEM
Page 103 and 104: FINANCIAL ACCOUNTS 2005 2004 Realiz
Page 105 and 106: FINANCIAL ACCOUNTS Operating expens
Page 107 and 108: FINANCIAL ACCOUNTS Excise and expor
Page 109 and 110: FINANCIAL ACCOUNTS YEAR ENDED DECEM
Page 111 and 112: FINANCIAL ACCOUNTS Sales revenue Sa
Page 113 and 114: FINANCIAL ACCOUNTS Wholesale of ref
Page 115: FINANCIAL ACCOUNTS The increase in
Page 119 and 120: FINANCIAL ACCOUNTS GUARANTEES, OFF-
Page 121 and 122: FINANCIAL ACCOUNTS ing filed by the
Page 123 and 124: FINANCIAL ACCOUNTS CRITICAL ACCOUNT
Page 125 and 126: FINANCIAL ACCOUNTS CONSOLIDATED FIN
Page 127 and 128: FINANCIAL ACCOUNTS OAO LUKOIL Conso
Page 129 and 130: FINANCIAL ACCOUNTS OAO LUKOIL Conso
Page 131 and 132: FINANCIAL ACCOUNTS OAO LUKOIL Notes
Page 133 and 134: FINANCIAL ACCOUNTS Property, plant
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Page 137 and 138: FINANCIAL ACCOUNTS Investments in "
Page 139 and 140: FINANCIAL ACCOUNTS members of the G
Page 141 and 142: FINANCIAL ACCOUNTS Russian ruble bo
Page 143 and 144: FINANCIAL ACCOUNTS The following ta
Page 145 and 146: FINANCIAL ACCOUNTS The real returns
Page 147 and 148: FINANCIAL ACCOUNTS The Company's ne
Page 149 and 150: FINANCIAL ACCOUNTS In January 2005,
Page 151 and 152: FINANCIAL ACCOUNTS Environmental li
Page 153 and 154: FINANCIAL ACCOUNTS NOTE 22. COMPENS
Page 155 and 156: FINANCIAL ACCOUNTS Geographical seg
Page 157 and 158: FINANCIAL ACCOUNTS OAO LUKOIL Suppl
Page 159 and 160: FINANCIAL ACCOUNTS III. Results of
Page 161 and 162: FINANCIAL ACCOUNTS Estimated net pr
Page 163 and 164: FINANCIAL ACCOUNTS develop and prod
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FINANCIAL ACCOUNTS and the Governme
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FINANCIAL ACCOUNTS A corporate hold
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ANNUAL REPORT, 2005 REFERENCE INFOR
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ANNUAL REPORT 2005 - Lukoil

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