ONGC Videsh (OVL) launched a takeover bid for UK-listed, Russia-focused Imperial Energy at £1.4 billion (about $2.58bn).
The offer price comes to 1,250pence/ share. The acquisition represents an important asset addition to OVL’s existing asset base and it is believed that OVL’s financial strength and technical expertise will further enhance the attractive growth potential of the acquired business.
Imperial has oil producing blocks in Tomsk region of western Siberia in Russia and Kastanai in northcentral Kazakhstan.
It produced about 10,000bpd of oil in December 2007 and is targeting to raise the production to 80,000bpd (about 4mn tonnes a year) by the end of 2011.
As per the Russian Ministry of Natural Resources, Imperial’s Russian Registered Reserves amount to about 450mn barrels of hydrocarbons.
Independent assessment of the reserves by DeGolyer and McNaughton in December 2007 suggested in-place reserves of 920mn barrels of oil equivalent.
Imperial is yet to receive approval from the Russian government for this sell-off and a lot depends on Russia’s decision which is acting quite stringent nowadays. Nevertheless, it’s a remarkable move by a subsidiary of the Indian PSU that is aggressively looking at acquiring overseas assets.
We maintain ACCUMULATE on the stock, with a target price of Rs1,135.