RusPetro's $250M IPO Sends 'Positive Signal' to O&G Markets
by Jon Mainwaring
Thursday, January 19, 2012
The announcement of the first IPO this year of an oil and gas company on the London Stock Exchange (LSE) has sent a "positive signal to oil and gas markets", according to oil sector analysts at investment bank Westhouse Securities.
Western Siberia-focused RusPetro announced to the LSE Wednesday that it had raised $250 million (£163 million) via an offer to investors of 121.5 million of its shares, which will be formally admitted to the stock market next Monday.
The share offering values RusPetro at $676 million (£441 million).
The funds will be used by RusPetro to drill more than 100 wells by 2014 and to build new infrastructure. This will include the building of a new 17-mile (27-kilometer) pipeline to connect operations at the firm's Krasnoleninsk field to Transneft – the largest oil pipeline system in the world that transports more than 90 percent of oil produced in Russia.
RusPetro operates three neighboring exploration and production licenses within the Krasnoleninsk field (located in the Khantiy-Mansiysk region of Western Siberia) that, combined, cover approximately 465 square miles (1,205 square kilometers).
Currently, RusPetro produces approximately 4,500 barrels of oil per day. The firm's management has highlighted key strengths as including certified reserves of 1.4 billion barrels of 2P oil and gas, as well as a potential for near-term production growth of more than 10,000 barrels of oil per day.
The announcement of the RusPetro IPO "sends a positive signal that the London market is open for oil and gas deals of the right kind" and that "in light of the low level of primary market activity in London during 2011, investors are prepared to support new offerings in the sector… at the right price and with visibility of material cash flow generation", Westhouse commented Thursday on the IPO.
The bank also pointed out that RusPetro's assets are located in "one of the most prolific regions" of Russian oil production.
"At a time when very few IPOs have been completed, our successful listing shows that investor demand is still there for high quality stories such as our own," said RusPetro Chief Executive Officer Donald Wolcott.
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