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. Last Updated: 07/27/2016

Sibneft Picks New Board With Eye on West's Cash




Looking hungrily at Western capital markets, Sibneft reshuffled it's board and gave three out of the nine seats to nonexecutive directors at its annual shareholders meeting Tuesday.


Shareholders elected to the board Michael Hunter, head of Dart Management; Natalya Rusina, partner of the legal company ALM; and George Martin Pearce, a former president of Leaf Group.


Roman Abramovich, who is believed to have close ties with the Kremlin, was omitted from the original list of candidates to the board in what one company official called "a notorious omission."


Later his name was added in a separate letter sent to shareholders and he moved in Tuesday to also take one of the seats on the board.


Yevgeny Schvidler was elected president of the company and Sibneft vice president Konstantin Potapov was named chairman of the board.


Having ended a dispute with minority shareholders, Sibneft said it is now looking at the secondary market as a top priority for the next year. Dart Management had led a group of shareholders in accusing Sibneft of "poor corporate governance."


"We want to become oil company No. 3 on the Russian market," a Sibneft spokesman said.


The company is already ranked No. 3 in current trade, but the numbers are almost meaningless since the market is so weak, said James Fenkner, an equity strategist with Troika Dialog.


Still, the shares have doubled in value from $0.20 in May to a high of $0.405 in recent days. The stock traded for $0.34 on Tuesday.


In terms of volume on the domestic market, Sibneft even left No. 1 oil giant LUKoil in the dust on Friday.


"If you look at the efforts applied by Sibneft to develop its secondary market, it might have already left LUKoil behind," said Alexander Agibalov, oil and gas analyst with Aton.


Sibneft is already the fifth largest Russian company with a market capitalization of $1.6 billion, three times less than gas monopoly Gazprom.


A high market price coupled with low liquidity leaves little upside for the company. But a well-connected Sibneft source said that to improve liquidity on the ADR market, the oil major is considering selling off a stake worth $10 million to $12 million to foreign shareholders.


A sale would not bring any significant changes to the shareholder structure of the company, which is controlled by the obscure Financial Oil Corp. (48.58 percent), Company SINS (18.01 percent), Refine Oil (14.29 percent) and Runicom (10.62 percent). Abramovich is said to control all of those companies.