Petrom Acquires Exploration Projects in Russia
Petrom has signed an agreement for the acquisition of a 74.9% majority stake of Ring Oil Holding & Trading Ltd., a company based in Cyprus with Russian and international owners having many years of experience in Russia and in the CIS States in the exploration and production of oil as well as the trading of petroleum products and the drilling of wells. The company holds 100% of six Russian companies, which in turn hold a prospective exploration portfolio in that country. The Russian companies' management is located in Moscow and together have 60 employees, including on-site. The relevant contracts were signed on September 25, 2006, and the purchase price remains confidential. The closing of the transaction is subject to the approval of the Russian competition authorities. It is expected that this approval will be granted in the fourth quarter of 2006.
Petrom CEO Mariana Gheorghe said: "The entry into the Russian E&P business is an important step and emphasizes Petrom's significance in OMV's growth strategy. These Russian E&P assets strengthen the company's position and are extremely important for the future growth of the entire OMV Group."
Werner Ladwein, Petrom Head of Exploration & Production said: "The acquisition of eight exploration licenses and of one exploration and production license in this area of Russia, which is rich in oil, fits well with our strategy to establish Russia and the Caspian region as core region for E&P. This entry into Russia and the envisaged close cooperation with our partners who have significant expertise regarding exploration projects offer a solid platform for expansion in one of the world's richest countries in oil and gas."
The steering committee of the company, the Board of Directors, will consist of four members nominated by Petrom and two members nominated by the minority shareholder.
The acquired portfolio consists of eight exploration licenses in the area of Saratov, located approx. 1,000 km southeast of Moscow, and of one exploration and production license in the area of Komi, located approx. 1,200 km northeast of Moscow. The C1-reserves (proved reserves according to Russian standards) amount to 13 mn barrels. Additionally, Petrom and OMV experts anticipate substantial potential for oil discoveries in the exploration blocks. By 2011, Petrom plans to acquire approx. 20,000 km of 2D- and approx. 3,000 km² of 3D-Seismic. By 2013, it is planned to have completed about 40 exploration wells. Petrom's and OMV's special technologies in exploring oil and in optimizing recovery from oil deposits will ensure the maximum possible usage of the licenses. In addition to acquiring these licenses, it is intended to carry out further acquisitions of production assets and to participate in license rounds in Russia. These activities should result in an accelerated establishment of a noteworthy exploration and production portfolio.
Overall, the new projects are characterized by their attractive geographical position, which permit year-round activity. Moreover, the projects are located in the proximity of existing infrastructure, such as oil pipelines with free capacities and easy access to transport routes for exploration activities.
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