The domestic rating agency АК&М rated NK "RussNeft" triple-A credit rating.

NК "RussNeft" is one of the largest vertically-integrated oil companies of Russia. It comprises 30 extractive enterprises, 3 refineries and its own distribution system of gasoline filling stations, which includes about 100 refuelling complexes. The company ranks № 8 by the extent of production and ranks № 7 by the refining output among the oil companies of the Russian Federation. "RussNeft" accounts for about 3% of the total extent of oil production and condensate volume in Russia, and 3.2% of oil refining.

The company develops 174 deposits. RussNeft hydrocarbon proved reserves as of January 1, 2008 prepared by the company Miller and Lents (USA), one of the leading auditors of reserves, amount to 1713.3 mln barrels of oil equivalent, including 1562.5 mln barrels (213.2 mln/t) of oil and 905 bln CF (25 bln CM) of gas. Total recoverable reserves of the oil fields belonging to RussNeft make 441 mln/t of oil and 43.5 bln CM of gas.

The increase of the crude oil output in 2008 can be called a positive factor characterizing the business of the company. In spite of the general decline of oil production in Russia, RussNeft is among those three companies, together with NK "Rosneft" and OAO "Tatneft", which increased oil production following the results of 9 months in 2008. Crude oil output of NК "RussNeft" made 10.7 mln/t, that is 1.5% more against the same period in 2007. According to the results of 2008 oil production made about 14.02 mln/t.

Another factor, positively affecting the financial results of the company, is a steady balanced state of oil production and refining. Refining up to 50% of the produced oil, the company strives for diversification, which allows to stabilize the earnings amidst low oil prices.

The financial situation of the company improved in 2008, that is worked out at the growth of income and improvement of some financial ratios. The overall revenue of RussNeft for January-September increased by 68.4% and made 214.1 bln Rubles. The overall net profit made 16.1 bln Rubles, that is 79% more, than it was made against the same period in 2007.

At the same time the debt load level of the company remains high, that is one of the key factors, limiting the ranking score. Provided that, in 2008 the accruals go down. For 9 month of 2008 the bulk volume of borrowed funds of NK "RussNeft", according to the consolidated statements, shrinked by more than 5%, whereas the earnings and proprietary funds increased.

The structure of the company debt is of high quality: considerable proportion is occupied by the long-term obligations, that reduces the debt load in the short-term period. Besides, the essential part of debt is represented by the depreciable loans, that stabilizes the flow of money and, consequently, simplifies the process of refunding.

According to the consolidated statements as of September 30, 2008 the long-term credits and loans ratio in the debt profile accounts for 55.3% of the bulk volume of obligations, short term credits and loans account for 17.7%, and the loan payable ratio accounts for 25.8%.

On December 18, 2008 NК "RussNeft" has entirely fulfilled obligations on bonds acquisition, presented for redemption under the debut bonded loan "RussNeft-1" in the amount of 6992.3 mln Rubles. Thus, the total outpayments of the company over a period of the circulation of bonds made 8943.3 mln Rubles, which includes December 2008 with an allowance for the 6th and a part of the 7th bond interest coupons - 7329.1 mln Rubles. The revenues, provided at present, predetermine fulfillment of obligations in the future.

Positive factor in the business of the company is the positive solution of a problem on the letters of claim from the taxation bodies. The company has discharged obligations on the tax claims to the amount of about 20 bln Rubles for 2003-2005. On October 28, 2008 the General Committee of the Supreme Arbitration Court of the Russian Federation sustained a claim of NК "RussNeft" to the Federal Tax Service about VAT and penalty tax refund from the budget to the amount of 12.2 bln Rubles; the present amount was credited to an account of the company. As of September 18, 2008, according to the inquiry from the Federal Tax Service, RussNeft doesn't have unfulfilled tax liabilities.

Among the risk factors it's necessary to name the dependence of the company from the oil market conditions. Fall in oil prices predetermines the probable decrease of the future cash flows, that can lead to worsening of the ability to service (inclusive of refinance) an existing debt. Amid the global financial crisis the influence of the present factor is essential.

Another risk factor is a high foreign exchange earnings ratio in the cash flows of the company. Adverse changes in foreign exchange rates can be reflected in the revenues of RussNeft. It's also necessary to mention an excessive regimentation of oil industry. The companies of the sector bear substantial legal and other risks connected with the changes in legislation, the level of tax burden, licensing requirements and so on.

The rating agency АК&М is a leading independent domestic rating agency in Russia. The start of the rating activity was in 1993.

The rating agency АК&M was accredited by SRO National Securities Market Association.