Russia's top two oil firms eye record year

By Tanya Mosolova

MOSCOW (Reuters) - Russia's top two oil companies reported their biggest ever quarterly profits on near-record oil prices, with state owned Rosneft's (ROSN.MM) outpacing that of LUKOIL which posted a hedging loss.

Both companies said on Friday they would go on to post record profits for this year even though oil prices have come under pressure and the rouble has risen against the dollar this year.

"We are now paying higher export duties because of the lag effect and selling at lower prices because global oil prices are falling, but we still expect a record year," Rosneft's Chief Financial Officer Peter O'Brien told Reuters by telephone.

Russia's top oil producer, state-controlled Rosneft (ROSN.MM), reported a better-than-expected net profit, which jumped 153.2 percent versus the same period of the previous year, and a 96 percent increase in revenues.

Results of Rosneft's closest peer, LUKOIL LKOH.N, showed a 63.9 percent rise in net income and 58 percent increase in sales, although LUKOIL undershot analyst expectations by half a billion dollars because of the hedging loss.

LUKOIL'S vice-president Leonid Fedun told a briefing he expected better financial results in the third quarter because of more efficient hedging operations, and he also said 2008 would be a record year for the company.

Rosneft posted net profit of $4.31 billion (2.36 billion pounds), revenues of $21.13 billion and earnings before interest, taxation, depreciation and amortisation (EBITDA) of $7.05 billion.

LUKOIL, in which U.S. oil major ConocoPhillips (COP.N) owns 20 percent, said second-quarter net profit was $4.13 billion, sales $31.94 billion and EBITDA $6.24 billion.