23rd Aug 2016 15:07
LONDON (Alliance News) - Exploration company Urals Energy PCL announced it has agreed to purchase Arctic Oil Company Ltd from a subsidiary of JSC Zarubezhneft, a Russian state-owned oil company.
Urals Energy will pay a cash consideration of RUB100.0 million, or around USD1.6 million, for the company which booked an audited pretax loss of RUB56.0 million in the financial year to the end of 2015. Urals Energy said costs would be reduced with the combination of the companies' assets.
Arctic Oil's total asset at the end of December 2015 stood at approximately RUB360.0 million, with non-current assets around RUB138.0 million
Urals Energy said it will finance the purchase with a short-term loan from Kamchatcomagroprombank, with interest on a 17% annualised basis, secured against Arctic Oil's crude oil production. It also said it will seek a longer-term corporate development loan to finance the combined operation.
"With the cost savings that we will be able to make, the combination will be cash generative and the acquisition cost should be recovered in up to 18 months at current price for oil, taxes and the exchange rate between the US dollar and the Russian rouble. We anticipate that cash flow through the year will also be improved. The big prize, though, will be the ability to exploit our increased proven undeveloped reserves as part of a combined development plan" said chairman Andrew Shrager.
Shares in Urals Energy were up 25% at 2.65 pence Tuesday.
By Adam Clark; [email protected]
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