Yukos and Sibneft Agree in Principle to Merge
Yukos and Sibneft core shareholders announced that they have agreed in principle to combine the two businesses in the largest-ever industrial transaction in Russia. The combined oil & gas group will not only be the largest in Russia but will also rank as world's fourth largest private oil producer. The combined group (including Slavneft reserves) would have total reserves of around 19.4 billion barrels of oil and gas equivalent, based upon year-end 2001 reserves calculated in accordance with SPE methodology. Daily crude oil production is approximately 2.3 million barrels including Sibneft's share of Slavneft.
The combined entity will be named YukosSibneft Oil Company. It is expected that Yukos' Mikhail Khodorkovsky will be responsible for the executive management of the new group, while Sibneft's Eugene Shvidler will be proposed as chairman of the board of directors. The core shareholders intend that independent directors will constitute a majority of the board. Mikhail Khodorkovsky of Yukos said: "By combining with Sibneft, we'll maximize our competitive advantages thanks to the synergy gained by uniting excellent management teams, highly professional labor forces and the profitable industrial assets of the two companies. The new industrial giant with its huge industrial and financial potential will reach even higher business efficiencies moving closer to our strategic goal of becoming a leader of the global energy market".
Eugene Shvidler of Sibneft described the Yukos-Sibneft link-up as "a superb alliance of progressive and like minded companies with complementary strategic and management strengths which effectively creates a new super-major that will enhance value to its shareholders and better serve its millions of customers".
The core shareholders of Sibneft will sell a 20% shareholding in Sibneft for US$ 3 billion in cash and subsequently exchange their remaining shareholding in Sibneft at a ratio of 0.36125% of YukosSibneft for each 1% shareholding in Sibneft. YukosSibneft will make a fair offer to the minority shareholders of Sibneft after receiving a fairness opinion from an internationally recognized investment bank. Prior to completing the transaction, Yukos intends to increase its leverage and is considering, among other things, cash distributions to its shareholders in the form of dividends and share buybacks. It is expected that after such capital restructuring and the completion of the transaction, YukosSibneft will have a moderate level of leverage and a strong working capital position. Subject to shareholder approval, all requisite regulatory consents and due diligence, the completion of the transaction is targeted for the end of 2003.
A New International Super-Major
The combined group would have total reserves of around 19.4 billion barrels of oil and gas equivalent, based upon year-end 2001 reserves calculated in accordance with Society of Petroleum Engineers methodology.
- Proved oil reserves (SPE basis) of 18.4 billion barrels
- Proved gas reserves (SPE basis) of 5.9 trillion cubic feet
Daily crude oil production of approximately 2.3 million barrels including Sibneft's share of Slavneft production would make the combined entity by far the largest producer of crude oil in Russia.
- About 29% of Russian crude oil production
- Total production of 103.2 million metric tons (754.2 million barrels) in 2002
Refining & Marketing
The combined entity is expected to include 6 principal refineries in Russia (Omsk, Achinsk, Angarsk and three in the Samara region), the Mazeikiu Nafta complex in Lithuania, and additional interest in the Moscow and Yaroslavl refinery in Russia and Mozyr in Belarus arising from the purchase of Slavneft earlier this year.
- A total of 57.7 million tons (421.8 million barrels) of oil refined in 2002
- More than 2,500 filling stations – by far the largest chain in Russia
- Dutch Court Overturns $50B Yukos Award Against Russia (Apr 20)
- Rosneft Hires 10 Banks for $2B Debt Refinancing (Feb 04)
- Rosneft to Cut $9.2B of Debt with Yukos Sale Proceeds (Jun 27)
Company: Sibneft more info
- Moving into Russian Upstream, Eni Acquires Yukos Assets for $5.83B (Apr 04)
- Sibneft Names New Vice President for Production (Feb 02)
- Sibneft Wins Auction for Elleisky Block in Tomsk Region (Dec 21)