Translated material
The Spaniards came to Siberia
Repsol bought 10% of West Siberian Resources
The Spanish-Argentinean Repsol unexpectedly became interested in the Russian oil industry. Yesterday it became known that it is ready to invest $90 million in a small company, West Siberian Resources (WSR), which is developing Russian oil and gas fields. In return, Repsol will receive 10% in WSR with the right to double its stake. According to experts, the deal will provide WSR with access to additional project financing, as well as management and technical know-how. Now it will be easier for WSR to expand its portfolio of assets.Repsol operates in the markets of about 30 countries, being a leader in the oil and gas industry in Spain, Argentina, Peru and Ecuador. In its sector, it is the largest private company in Latin America. The owner of a controlling stake in Repsol is the Spanish savings bank La Caixa. The holding's net profit for the nine months of 2005 amounted to 2.6 billion euros. Oil and gas production - 1.2 million barrels of oil equivalent per day. A year ago, the company began reassessing its reserves and in January announced a 25% reduction to 1.25 billion barrels of oil equivalent.
WSR is a Swedish oil company whose assets are located in Russia. Net profit for the nine months of 2005 amounted to $7.3 million. Due to new acquisitions, the company tripled production last year, to 2.9 million barrels (about 395 thousand tons). Next year, production is expected to double - to 5.9 million barrels (805 thousand tons). WSR's proven and probable reserves are estimated at more than 230 million barrels (about 30 million tons). At the end of January, WSR reached an agreement to acquire for $140 million the Samara Oil Company (Saneco), which operates in the Volga-Ural region and produces 2.1 million barrels of oil per year. Half of the amount will be paid in WSR shares.
As noted in the WSR statement, Repsol will acquire at least 10% of the WSR shares received through an additional issue at SEK 6.13 per share, which is higher than the average price over the last 20 days (as of February 3). Yesterday, West Siberian shares rose almost 10% to 8.2 crowns.
After completion of the transaction (as expected, this will happen before the end of the month), the capital structure of WSR will be as follows: Repsol will receive 10%, Alltech, controlled by WSR CEO Maxim Barsky, will have about 15% of the shares, Investors Life Insurance Corp. fund. will own approximately 8%, portfolio investors - 22.5%, 10% will be owned by the former owners of Saneco - a group of Moscow and Samara businessmen. The remaining 33.5% of shares are distributed among 10 thousand individuals.
As Mr. Barsky told Vremya Novostey, Repsol would like to buy the entire company, but Russian shareholders “are not ready for this yet,” although they do not rule out a similar step in the future. As a result, it was agreed that Repsol would not increase its share in West Siberian capital beyond 20% without approval from Alltech. At the same time, both shareholders will have a priority right to buy back shares from each other if one of them decides to sell part of his stake. Commenting on the choice of partner, a source at WSR told Vremya Novostey: “Repsol works in Latin America, so it’s easy for them to understand how they work in Russia.”
According to Aton analysts, Repsol will most likely exercise the right to increase its stake in WSR. “This deal, in our opinion, is only the first step towards cooperation with Repsol,” experts say. "The presence of one of the world's largest oil companies as a strategic minority shareholder will undoubtedly significantly enhance WSR's status in the capital markets and in the eyes of portfolio investors."
However, Repsol itself may soon change owners. According to the Spanish newspaper El Mundo, the Italian Eni and the British BP intend to make offers to buy out the shares of the Spanish concern. According to the publication, buyers will try to take advantage of the decline in Repsol share prices after the recalculation of reserves.