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. Last Updated: 07/27/2016

LUKoil to Acquire Komitek Oil Firm




KOGALYM, Western Siberia -- LUKoil, Russia's largest oil company, announced Tuesday that the last hurdle had been cleared in its bid to acquire No. 12 oil firm Komitek after shareholders approved a share issue to leverage the deal.


Under the plan, which LUKoil first announced earlier this month, the oil major will trade one of its preferred shares for every 25.2 shares in Komitek, a Far North oil holding company.


Shareholders gave their go-ahead Tuesday to the emission of 11.5 million preferred shares that will be swapped for the Komitek shares.


LUKoil plans to initially take some 85 percent of Komitek's 166.1 million ordinary shares and secure about 86 percent of its total crude production, LUKoil president Vagit Alekperov said.


The crude acquisitions will include swaps for 100 percent stakes in seven joint ventures including Nobel Oil and Komiarktikoil.


The major barrier that was overcome at the shareholders meeting was the approval for the share issue by the government, which as a major LUKoil shareholder with a 26.6 percent stake could see its holding diluted.


The government had announced last week that it would sell off 9 percent of LUKoil from its stake.


LUKoil will issue the 11.5 million preferred shares and convert them into 69 million voting shares after the government sells the 9 percent stake, said LUKoil vice president Leonid Fedun.


He said the tender for the stake, which will require the winner to invest into LUKoil, is expected to be held in September.


One of the most likely bidders for the stake is the state-owned Indian Oil Co., which last year expressed an interest in the oil company. Both companies had previously signed a long-term contract to deliver 10 million tons of LUKoil crude and about 4.5 million tons of oil products to India a year.


Fedun said he expected the government to set a starting price of about $300 million for the 9 percent stake, valuing the company at $4 to $5 a share. LUKoil shares were trading for about $9.80 on the secondary market this week.


The tender will also attract funds for LUKoil's exploration project on the shelf at the north of the Caspian Sea and for the oil company production expenditures cut measures, Fedun said.The oil company secured the shelf area at an oil and gas reserves tender last year and has since invested about $200 million exploring the project, he said. A first appraisal well is expected to be drilled this year.


Last year, LUKoil produced 64.2 million tons of crude.


Komitek had an output of only 3.5 million tons of oil, not counting its joint ventures.