Several years ago I purchased shares in an oil company, which brought me significant profit. Since then, I have decided to invest money in the securities of only such organizations. Thanks to this, I receive a small but stable profit.
During my time working with such assets, I came to the conclusion that it is best to buy shares of companies that are not often featured in the media. It is easier and more profitable to buy securities of such companies. One of such enterprises is Bashneft. What kind of company this is, who owns it and how to purchase its shares - I will tell you about all this in this article.
About company
Public Joint Stock Company Bashneft is a Russian oil company headquartered in Ufa. The company's foundation dates back to 1946. The enterprise arose on the basis of the Bashneftekhimkombinat. In 1976, the organization was renamed into a production association.
The company received the status of a joint stock company in 1995, and in 2015 the company became a public joint stock company.
The company's securities are listed on the Moscow Stock Exchange. Both legal entities and individuals can purchase assets.
The business structure includes the following enterprises:
- 6 companies specializing in oil exploration and production;
- 5 organizations involved in oil refining and petrochemicals;
- 2 enterprises for logistics and product sales.
Owners and shareholders
The oil market of Bashkiria includes several enterprises specializing in the production, processing and sale of oil, and one of them is Bashneft. In 1995, the enterprise received the status of a joint stock company, and from that moment the gradual privatization of large assets of the company began.
The procedure dragged on until 2000. Together with Bashneft, other similar companies in the region also became joint-stock companies. The shares of all enterprises related to oil were purchased first by the Petrochemical Company of Bashkiria, and then by the Bashkir Fuel Company.
As a result, the securities of oil companies began to belong to the family of Murtaza Rakhimov, the former president of Bashkiria.
Formally, 71% of Bashneft shares were acquired by the Sistema organization. However, an audit was carried out in 2003. As a result, numerous irregularities in the acquisition of the company's assets were discovered. At the same time, the state suffered unprecedented losses.
In 2014, the privatization of the company was challenged in court. As a result, the former owner of the enterprise transferred all assets to the state. 50.08% of the securities went to the Federal Property Management Agency, and 25% remained under the jurisdiction of Bashkortostan. After this, the assets returned to their former positions. Recently they have been distinguished by stability and reliability.
In 2021, Russian President Vladimir Putin issued a Decree according to which Bashneft was excluded from the list of enterprises of strategic importance. Almost immediately after this, Dmitry Medvedev included the enterprise in the privatization plan.
In the same year, the Russian Government instructed Rosneft to purchase securities that were transferred to the state as a result of deprivatization. As a result, the deal took place. Its amount averaged 330,000,000,000 rubles. As a result, Rosneft became the main shareholder of Bashneft and today this situation has not changed.
Is it worth taking Bashneft shares for dividends?
In my opinion, as a dividend history, Bashneft is a rather dubious company. There are plenty of disadvantages here:
- the virtual absence of a dividend policy, which allows management to set dividends literally out of their heads;
- the dominant influence of Rosneft and the relatively low influence of the second major owner - Bashkiria;
- the dependence of the company’s profitability on oil prices, of which there is a clear surplus in the world (prices may take 2-3, or even 4 years to return to their previous level).
In addition, a low free float creates the effect of increased volatility in the stock at any sneeze. Such stocks are good for speculation on news, but not so much in the long term.
Regarding the future prospects of the company. If you look at Bashneft’s report for the 1st quarter of 2021, you can see a catastrophic drop in profit:
- revenue amounted to 175 billion rubles compared to 220 billion rubles in the 1st quarter of 2021;
- net profit collapsed to 3.8 billion rubles compared to 23.2 billion rubles in the 1st quarter of last year.
And this despite the fact that production during the reporting period increased by 0.9% to 4.76 million tons. That is, the reduction in net profit was due to a sharp drop in the price of oil and the collapse of the economy due to the pandemic.
A significant part of the profit was formed by currency revaluation: +13 billion rubles. If not for her, the net profit would have gone into the negative zone. I do not rule out that at the end of the 2nd quarter of 2021 we will see a negative financial result.
What does all of this mean?
I doubt that at the end of 2021 (that is, in 2021) Bashneft will pay dividends. If there is no net profit, how do you pay, gentlemen? Borrow? What's the point? This is not a situation where it is absolutely necessary to pay dividends - for Bashkortostan, it is not profitable to have a company that is heavily debt-ridden, and Rosneft does not need debtors on its balance sheet. Moreover, in 2021 they have already “allowed” Bashneft not to pay dividends. It is possible that the situation will repeat itself.
If the situation does not change, the company could earn approximately 15-20 billion rubles in net profit in 2021. Let's evaluate the dividends. Let’s assume that 25% of the net profit will be distributed, let’s say that from 20 billion rubles is 5 billion rubles. Total number of Bashneft shares (common + preferred): 177,634,501. Divide and get 28 rubles per share of each type. This, of course, is a very rough calculation, but I think the essence is clear.
You should count on good dividends from Bashneft only after the crisis is completely over and oil prices return to the area of 55-60 dollars per barrel. Otherwise, profitability will not be maintained.
On the other hand, now prices for Bashneft shares have dropped extremely, and they can be added to the portfolio for the future. But if you are only willing to wait – and wait indefinitely.
What do you think about Bashneft? Worth buying?
- No, not worth it 43%, 26 votes
26 votes 43%26 votes - 43% of all votes
- Yes, for the future 28%, 17 votes
17 votes 28%
17 votes - 28% of all votes
- Yes, for the sake of dividends 20%, 12 votes
12 votes 20%
12 votes - 20% of all votes
- And I'm actively buying 7%, 4 votes
4 votes 7%
4 votes - 7% of all votes
- I've sold everything! 2%, 1 vote
1 vote 2%
1 vote - 2% of all votes
Total votes: 60
22.06.2020
And here’s another interesting article: Public Investment Portfolio Report for April 2021
Personally, I have Bashneft in my portfolio - but this is caused by purely “patriotic” feelings: I come from Bashkiria
