| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | n/a | n/a |
| Intrinsic value (DCF) | n/a | |
| Graham-Dodd Method | 3.30 | 408 |
| Graham Formula | 1.20 | 85 |
Surgutneftegas Public Joint Stock Company (SGGD.L) is a major Russian integrated oil and gas company engaged in exploration, production, refining, and marketing of hydrocarbons. Headquartered in Surgut, Russia, the company operates primarily in Western Siberia, Eastern Siberia, and Timan-Pechora provinces, key regions for Russia's energy sector. Surgutneftegas refines and produces a wide range of petroleum products, including motor fuels, diesel, jet fuel, bitumen, and roofing materials, while also managing wholesale and retail distribution through its gas stations. Founded in 1964, the company plays a crucial role in Russia's energy landscape, contributing significantly to domestic and international oil supply chains. Despite geopolitical challenges, Surgutneftegas maintains a strong operational footprint, supported by substantial reserves and refining capabilities. The company's vertically integrated model ensures control over the entire value chain, from extraction to end-user sales, enhancing efficiency and profitability in a volatile energy market.
Surgutneftegas presents a mixed investment profile. On one hand, the company boasts strong financials, including robust revenue ($2.22 trillion RUB) and net income ($1.33 trillion RUB) for FY 2023, alongside a healthy operating cash flow ($400.7 billion RUB) and minimal debt ($8.54 billion RUB). Its low beta (0.441) suggests relative stability compared to the broader market. However, geopolitical risks stemming from Russia's international standing, coupled with a lack of dividend payouts, may deter income-focused investors. The company's heavy reliance on the Russian market and limited global diversification further heightens exposure to regional economic and political volatility. While Surgutneftegas's operational efficiency and reserves position it well for long-term energy demand, investors must weigh these strengths against significant external risks.
Surgutneftegas operates in a highly competitive and geopolitically sensitive sector, where scale, reserve quality, and operational efficiency are critical. The company's competitive advantage lies in its vertically integrated structure, which allows it to control costs and optimize margins across the value chain. Its extensive reserves in Western Siberia provide a stable production base, though it lacks the international diversification of larger peers like Rosneft or Lukoil. Surgutneftegas's refining capabilities are a strength, enabling it to capture downstream value, but its retail and marketing presence is less dominant compared to global integrated majors. The company's financial conservatism, evidenced by low debt and substantial cash reserves, offers resilience but may limit aggressive expansion. In the current environment, Surgutneftegas's reliance on the Russian market is a double-edged sword—providing steady domestic demand but exposing it to sanctions and trade restrictions. Competitively, it lags behind global giants in technology and sustainability initiatives, which could become a liability as energy transitions accelerate.