Letter from the President of PJSC LUKOIL Vagit Alekperov to the Annual General Shareholders Meeting
I hope that the unconventional format of the Annual General Shareholders Meeting to which we are impelled to adhere this year, as the menace of the pandemic persists, will neither impede the effort to successfully conduct the event nor hinder the resolutions on the agenda. For your convenience, I encourage you to take full advantage of the electronic voting system on the Company's official website.
A major challenge for many industries, the pandemic made no exception for the oil and gas sector, and in these trying times we have taken all the necessary actions to protect our employees and sustain continuity of business operations. During the most troubled period of the pandemic around a quarter of LUKOIL's employees were working remotely with all of the operating tasks being successfully performed.
Today, we are gradually getting back into the normal mode of operations. Quarantine restrictions in Russia and many other countries are lifted step-by-step, road and marine transportation is on the rise and air traffic is becoming busier. The demand for oil is also recovering. Coordinated response from oil-producing countries is accelerating the return to market balance resulting in the growth of oil prices after they collapsed to a twenty year low.
Needless to say, the dramatic deterioration of the economic environment negatively affected our financial performance. However, the Company's free cash flow in the first quarter of 2020 remained positive, proving LUKOIL's resilience in unfavorable market conditions.
The Company has a robust financial standing with net debt close to zero, while deep vertical integration provides for extra operational flexibility. In response to the global market slump, we made additional effort to cut costs and optimized our investment program without sacrificing any of our strategic targets. The measures we have introduced should bolster our 2020 financial results.
It is recommended that the General Meeting approves final dividend distribution based on the 2019 annual results in the amount of 350 rubles per ordinary share, which is fully in line with our effective dividend policy. Whatever the market situation might be, delivering on our commitments to shareholders remains our top priority.
I would like to note that the dividends will be paid from the Company's cash flows generated last year, which was very successful for LUKOIL. Most notably, we ramped up hydrocarbon production and improved the production structure towards bigger share of high-margin volumes. Our work on improving efficiency of operations led to a reduction in lifting costs per barrel and drilling costs alike.
Additionally, we ramped up refinery throughput volumes, increased the refining depth and share of light products, continued optimization programs at our refineries and increased sales of some premium products, such as motor oils. The Company has also improved its key environmental performance indicators including reduction of Scope 1 GHG emissions.
In conclusion, I would like to note that the current crisis represents another opportunity for us to further boost the efficiency of every one of our businesses, as well as of the Company's management system in general. We continue to focus on the long-term, sustainable development of LUKOIL.
Thank you for your confidence in LUKOIL.
PJSC "LUKOIL" ensures shareholders rights among which are the right to participate in the Company’s decision-making regarding the most important issues considered at the Shareholders Meeting, right to receive dividend payments, and right to obtain information about Company's activities.
Shareholders exercise their right to participate in the management of the Company in course of preparation for and conduct of a general shareholders meeting of the Company by casting their votes, making proposals on introducing items to the agenda of the Meeting, as well as submitting proposal on the candidates to the governing bodies of the Company. The procedural issues involved in the preparations for and conduct of a general shareholders meeting of the Company set forth in the Regulations on the Procedure for Preparing and Holding the General Shareholders Meeting of PJSC "LUKOIL".
The dividend amount and payment procedure are defined in the Regulations on the Dividend Policy of PJSC "LUKOIL".
Information policy of the Company and the procedure for provision of information to shareholders are prescribed by the Regulations on Information Policy of PJSC “LUKOIL” and by the Regulations on Provision of Information to Shareholders of PJSC "LUKOIL".
The General Shareholders Meeting is the supreme management body of PJSC “LUKOIL”, and acts within its authorities, as defined by the legislation of the Russian Federation, the Charter of PJSC “LUKOIL” and by the Regulations on the procedure for preparing and holding the General shareholders meeting of PJSC "LUKOIL".
According to Clause 3.1. of the Regulations on the Procedure for Preparing and Holding the General Shareholders Meeting of PJSC "LUKOIL" a Shareholders Meeting (when held in the form of a joint attendance of shareholders) shall be arranged at the geographic location of the Company or at another location designated by the Board of Directors.
Press Release 21.04.2021: LUKOIL BOARD OF DIRECTORS RESOLVES ON ANNUAL GENERALSHAREHOLDERS MEETING AND RECOMMENDS DIVIDEND DISTRIBUTION BASED ON THE 2020 ANNUAL RESULTS