Interim report for the quarter ended 31 March 2012

Alliance Oil Company Ltd 

22.05.2012 07:30
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  -- Revenue of MUSD 815.1, up 20% from Q1 2011.
  -- EBITDA of MUSD 217.8, up 39% from Q1 2011.
  -- Profit before tax of MUSD 177.4, up 57% from Q1 2011.
  -- Foreign currency swap revaluation gain of MUSD 11.8 and currency exchange
     gain of MUSD 18.9 positively affected profit before tax.
  -- Profit for the period of MUSD 139.7, up 55% from Q1 2011.



                                 Quarter ended  Quarter ended
                                 31 March 2012  31 March 2011
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Crude oil production, bopd              56,389         45,905
Refining volume, bopd                   74,970         67,962
Revenue, MUSD                            815.1          678.7
EBITDA, MUSD                             217.8          156.3
Profit before tax, MUSD                  177.4          113.1
Profit for the period, MUSD              139.7           90.0
Basic earnings per share, USD             0.80           0.51
Diluted earnings per share, USD           0.74           0.47



Dear Shareholders,

The first quarter of 2012 was positive both in terms of the macro environment
and the performance of the Company's upstream and downstream segments. The
price of Urals increased by 7.5% quarter-on-quarter. The Russian Rouble
strengthened against the US Dollar by 3.1%. 

Alliance Oil Company's average daily oil production amounted to 56,400 barrels
in the first quarter of 2012. The refinery had a daily run-rate of around
75,000 barrels. The consolidated EBITDA margin amounted to 27% in the reporting
period. Net income and diluted earnings per share increased by 17% and 18%
respectively compared to the fourth quarter of 2011. Cash flow was in line with
the fourth quarter of 2011 while capital expenditures decreased by 40%
quarter-on-quarter primarily as a result of lower upstream spending in the
Timano-Pechora region and lower downstream capital expenditures associated with
the modernization of the Khabarovsk refinery. 

In the upstream segment, higher oil prices compensated a decline in sales
volumes and resulted in crude oil revenue growth. Segment EBITDA improved
further. The Company drilled a total of 18 new wells in the first quarter of
2012, including 3 wells at the Kolvinskoye oil field. At the Kolvinskoye oil
field, production gradually declined in the first four months this year. The
ongoing well workover program and the recent addition of new production wells
at Kolvinskoye are intended to address further reductions in production. 

In the downstream segment, oil product revenues were almost flat
quarter-on-quarter despite lower sales volumes. Net export prices increased by
23% compared to the previous quarter. Segment EBITDA decreased primarily due to
increased domestic crude oil prices, oil products purchased from third parties
and higher excise taxes. Construction works at the Khabarovsk oil refinery
progressed further towards the launch of the modernized refinery next year. 

The balance sheet position of the Company remained solid. The total debt to
EBITDA ratio further improved to 2.3 compared to 2.4 in the previous quarter. 

Outlook

In the upstream segment, our main priorities are to address decline rates and
the non-performance of certain wells at the Kolvinskoye field while adding new
production wells. We are in the process of reviewing the Kolvinskoye field
model, including the expected long term production profile. The modeling
includes the evaluation of the currently producing Devonian formation and
additional reserves and resources in the Perm and Silurian formations and has
been expanded to cover all of the license area. The updated models will form
the basis for a revised drilling and development plan with updated capital
expenditures and production programs for the field applying relevant technical
improvements and an optimized pressure maintenance system. 

In our joint venture with Repsol, we plan to integrate  the new gas acquisition
EUROTEK into our operations this year. While broadening the scope of our
strategic partnership, Repsol and Alliance are considering additional
opportunities in Russia. 

As drilling plans are revised, 2012 upstream capital expenditures are
forecasted at the lower end of the 380-450 MUSD budget range. 2012 downstream
capital expenditures are also projected at the lower end of the 490-540 MUSD
budget range with some of the investments shifted to the first quarter 2013. 

The upstream production guidance for 2012 is an average daily production of
55,000-60,000 barrels. The downstream volume guidance remains to refine an
average of 68,000-73,000 barrels per day in 2012. 

The Company's strategic objectives are to facilitate long-term crude production
and reserve growth and to further strengthen the position in the Russian Far
East oil products markets. We remain committed to reaching these objectives
through the development of the upstream asset base, the joint venture with
Repsol and the upgrading of our downstream assets and market position. 

Arsen Idrisov, Managing Director



For further information:

Arsen Idrisov, Managing Director, Alliance Oil Company Ltd, telephone +7 (495)
777 18 08. 

Eric Forss, Chairman of the Board, telephone +46 8 611 49 90.



Conference call

Date: Tuesday, 22 May 2012
Time: 10.00 CET

To participate in the conference call you may choose one of the following
options: 

Telephone
Dial one of the following numbers a few minutes before the conference starts:

Location                               Local Number                       
Toll-Free 
Russia                                  +7 495 580 9543
Sweden                                +46 8505 20101                    0200
125 791 
United Kingdom                    +44 207 153 2027                  0800 358
2337 

Conference ID: 4540518

Alliance Oil Company Ltd is a leading independent oil company with vertically
integrated operations in Russia and Kazakhstan. Alliance Oil has proved and
probable oil reserves of 648 million barrels and downstream operations that
include the Khabarovsk refinery and a leading network of gas stations and
wholesale oil products terminals in the Russian Far East. Alliance Oil's
depository receipts are traded on the NASDAQ OMX Nordic under the symbol AOIL.
News Source: NASDAQ OMX



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Language:     English
Company:      Alliance Oil Company Ltd
              
               
              Sweden
Phone:        
Fax:          
E-mail:       
Internet:     
ISIN:         SE0000739286
WKN:          
 
End of Announcement                             DGAP News-Service
 
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