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Tuesday, May 26, 2009

Sibir Energy accepts Gazprom Neft takeover offer

May 26, 2009 - Associated Press by Nataliya Vasilyeva - MOSCOW, London-listed Sibir Energy said Tuesday it had agreed to a takeover bid from Gazprom Neft, the oil arm of Russian gas monopoly Gazprom, in a deal which values the company at $3 billion. Gazprom Neft, Russia's fifth-largest oil producer, proposed a cash offer for the company's shares, except for the 40 percent owned by Bennfield Limited, the Central fuel company and the Bank of Moscow. Gazprom Neft, which increased its stake in Sibir to 27.5 percent last month, plans to pay 500 pence for every ordinary share, Sibir said in a statement. That is nearly three times what Sibir's shares last traded at in February, when trading was suspended after a steep selloff. The acquisition could potentially pave the way for state-controlled Gazprom Neft to obtain a controlling stake in Sibir. Under British law, any shareholder with a stake of more than 30 percent is obliged to launch a formal takeover bid. Gazprom Neft earlier drove its stake in the company up to 27.5 percent after trumping a bid from rival TNK-BP with its offer of 500 pence per share. The mid-sized Siberian oil producer was previously controlled by two Russian businessmen, Igor Kesayev and Shalva Chigirinsky, with a stake of around 47 percent split evenly between them. According to Russian media reports, Kesayev has already agreed to sell his 23.3 percent to Gazprom Neft. Sibir Energy, which runs the Moscow Refinery with Gazprom Neft and has an oil production venture with Royal Dutch Shell in Siberia, is mired in a legal dispute with Chigirinsky and former CEO Henry Cameron. Sibir is suing Chigirinsky to return funds he received as part of a failed and controversial deal to sell his Russian real estate portfolio to the company. The real estate deals and alleged share manipulation left the company in debt. Trading in Sibir's shares was suspended in February, when the price was down to 175 pence from a high of 814 pence last summer. Analysts said Gazprom Neft is tightening its grip on Sibir, which boasts attractive upstream assets in Russia. "It's almost certain that they will buy Chigirinsky and Kesayev's stake to drive their share to 80 percent," said Alexey Kokin, gas analyst with Metropol brokerage. "A large stake in Sibir will turn Gazprom Neft into a company of a higher standing. The Salym field is one of the most attractive oil assets in Western Siberia." Considering this, Sibir would be the right buy for Gazprom Neft, which is desperate to boost production, he said. Gazprom Neft would move closer to the country's fourth-largest oil company Surgutneftegaz if the deal comes through. Surgutneftegaz produced 62 million tons of oil last year while Gazpromneft pumped more than 40 million tons and is expected to pump some 45 billion tons this year. Sibir Energy is expected to produce 6 million tons this year. A larger stake in the Moscow refinery, which Gazprom Neft runs together with Sibir, will enable Gazprom's oil subsidiary expand its refining facilities considerably, observers said. Although shares in Sibir last summer cost 62 percent more than Gazprom Neft is offering now, the proposal will still look lucrative for many shareholders after the recent corporate scandals threatened to cripple the company. "A few months ago the situaiton was hopeless," Kokin said. "In this case most investors would want to sell (their stakes)."

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