Russia’s No. 2 oil producer reported net income of 46.6 billion rubles ($786 million), compared with a loss of 65 billion rubles a year earlier. That beat the 45 billion-ruble average estimate of seven analysts surveyed by Bloomberg. Revenue held steady at 1.4 trillion rubles.

Oil prices have recovered from the sub-$30 lows of January last year after the market rout forced out high-cost producers. In Russia, drillers also benefited from a weak ruble, which curbed costs, and a progressive tax system that eased the impact of lower prices, according to Bloomberg.

Lukoil’s oil production shrank 8.4 percent to 1.875 million barrels a day in 2016, the Moscow-based company said in a statement, citing a decline in so-called compensation oil from Iraq and lower Siberian output. The drop was partially offset by the ramp-up of the Caspian Sea’s Filanovsky field, where tax exemptions boost profitability.

Free cash flow fell to 54.6 billion rubles in the fourth quarter, roughly half the third-quarter level. Full-year cash flow rose 2.7 percent to 255.1 billion rubles.

The increasing free cash flow as Lukoil completes investments, including a refinery-modernization project, will be “mirrored in dividends increasing every year,” said Alexander Kornilov, a Moscow-based oil and gas analyst at Aton. The bank retains Lukoil as its top pick in the Russian oil and gas sector, he said.

The results also showed a capital spending that fell to 511.5 billion rubles in 2016 from 607.2 billion rubles a year earlier.

Fourth-quarter earnings before interest, taxes, depreciation and amortization totaled 183.3 billion rubles.

In a separate statement Tuesday, Lukoil said it has pumped more than 600,000 tons of oil and gas condensate from the Pyakyakhinskoye deposit in West Siberia since starting output there in October. Pyakyakhinskoye also receives tax exemptions.