Lotos held conference call for analysts yesterday afternoon. We were let known that
1) the trial production on the B-8 deposit gave additional 12.1kt resulting the overall crude oil production of 65.3kt in 1Q06. This production level is expected be sustainable till the end of the year.
2) Management admitted that there were some difficulties in the financing of PKRT project, but these were not critical. Therefore the project is not expected to be delayed.
3) Management also expects the improvements in refining margins in 2Q06, which gives positive outlook for the next quarter results. This is in line with our expectations on some 30-50% downstream margin improvement in 2Q06 on a q/q basis.
We see the yesterday’s drop in the share price as creating a good buy opportunity. maintain our Buy recommendation on the stock with a price target of PLN 63.4.