S A ADVISORY August - September 2000
Russian Portfolio


S.A. Advisory
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Salt Lake City, Utah 84117

Russian Briefs

VIP - leading wireless teleco in Russia, operating under "Bee Line" family of brand names. As of the end of the March quarter, Vip has 573,700 subscribers. Revenues for the first quarter were approximately $65.8 million vs. $57.9 million - losses $2.8 million vs. $4.8 million.

On July 28, VIP announced completion of $225.4 million securities offering - company sold 4.5 million ADS @ $21 5/8 and $173 million converted notes and 2.4 million ADS @ $21 5/8 to its strategic partner Telenor East Invest AS. Obviously, a very bullish development and shows confidence in the ever changing Russia.

Lukoil - LUKOY - Russia's biggest oil producer reported pre-tax profits to domestic standards of 40.34 billion rubles, up from 2.03 billion in 98. For 2000 estimated significant growth in revenues and earnings - anticipate 20 - 25% growth rate. LUKOY currently trades at around 5x 00 earnings estimate.

LUKOY intends on listing itself within the NYSE during August - September 00. The Russian Government intends to sell a 5% stake of its position. This would be a very bullish scenario for LUKOY, as well as the other major Russian oils, TNT, SGTZY and SBKYY.

Surgutneftegaz - SGTZY - Revenue and earnings growth estimated @ 20 - 25% for 2000. Currently SGTZY trades @ 4 x 00 estimates. Currently SGTZY trades at around $15. Current quote, visit www.Bloomberg.com or ADR.com. We are very bullish towards SGTZY short and long term.

Sibneft - SBKYY - Using U.S. generally accepted accounting principles, profits zoomed to $315.1 million in 99 from $36.1 million on 1998. The market valuation of Russian Oil companies/barrel of known resources is .35/barrel. Sibneft has pledged to double or triple investments and introduce new dividend policy. Sibneft shares suffer in price because of continued uncertainty that management is really being controlled by powerful tycoons and are using Sibneft funds for personal gains.

Sibneft plans to more than triple upstream capital expenditures to $226 million and hike investment in refining and marketing.

Sibneft reported revenues of $1.75 billion in 99 vs. $1.78 billion, with operating costs down 24% to $1.2 billion, from $1.57 in 98.

Sibneft's strong financial performance results from rise in crude and refined product prices on global markets. 1999 crude output was 322,000 barrels. The 2000 target is 330,000.

One ADR equals 10 local shares.

Siftnet plans to issue level 3 ADR's and raise the company's free float by 10% to 15% from the current 12% of market cap.


Russia is risky, but the reward potential is mind-blowing. We are extremely bullish towards the major oils. We own all three in our personal account. Long term it is possible that LUKOY, SBKYY and SGTZY could trade 10x their current levels. Most of the Russian Oil in the ground costs around .35 - .40. Most international oil trades around 15x earnings - Russian oil trades in the low single digits.

Have a shot of Vodka - it will become crystal clear!!!

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