Ukrnafta Off To Hot Start In 1Q06.

Yesterday Ukrnafta (UNAF: HOLD) announced its 1Q 2006 operating results. The company’s oil and condensate output grew by 6.8% yoy, to 790.3 ths mt (3.9% above the company’s plan); gas output – by 10.2%, to 852 mln cm (6.1% ahead of the plan). The company put eight new oil wells and one gas well into opertation (three wells more than planned). In 1Q 2006 UNAF produced 41.8 ths mt of liquefied gas and 53.7 ths mt of stable gasoline. By the end of the year, Ukrnafta plans to produce 3100 ths mt of oil and condensate (-0.7% yoy), 3200 mln cm of gas (-2.2%yoy) and to increase its rig count by 49 wells (-2). Gas product output is planned to remain at last year’s level: 170.7 ths mt of liquefied gas and 239 ths mt of stable gasoline. Concorde Capital: Although it would be too optimistic to expect 1Q’s high pace continue all year, the company’s solid growth in the 1Q supports our view that Ukrnafta will eventually outperform its plan for 2006.