Bashneft buys Siberian producer for more than $1 bn

3/27/2014

Bashneft buys Siberian producer for more than $1 bn

MOSCOW -- Bashneft Group has gained control over a 100% stake in LLC Burneftegaz, a company conducting exploration and producing oil in the Tyumen district, Russia.

LLC Burneftegaz owns the rights to exploration and development of the Sorovskoye field (the Vostochno-Vuemskiy licence area) and the Tortasinskoye field (the Tortasinskiy licence area) via its wholly-owned subsidiaries. Total С1 and С2 oil reserves of the fields amount to 53.4 million tonnes. Commercial production was launched at the Sorovskoye field in 2013.

LLC Tortasinskneft, a wholly-owned subsidiary of Burneftegaz, also holds licences for geological exploration at the Severo-Ityakhskiy 3 and Vostochno-Unlorskiy subsoil areas.

The value of the transaction approved by Bashneft’s Board of Directors exceeded $ 1 billion, including debt. Sources of funding for the transaction included borrowings.

"The acquisition of Burneftegaz fully meets the requirements of our strategy for the upstream segment, which involves expanding the resource base and acquiring promising assets which have considerable production potential," commented Bashneft’s President Alexander Korsik. "This transaction will enable considerable expansion of the Company’s footprint in the Tyumen District, where we are already implementing a number of successful upstream projects."

The Sorovskoye and Tortasinskoye fields are located 150 km to the southwest of Nefteyugansk and 137 km to the north of Khanty-Mansiysk respectively. Licences for these fields are valid until 2032. In 2013 oil production at the Sorovskoye field totalled approximately 300 thousand tonnes. 33 production wells have been drilled at the field, and infrastructure required for preparing and transporting oil to the system of OJSC Transneft is functioning.

To date, 2D seismic surveys covering 575 linear km and 3D seismic surveys covering 234 sq km have been conducted, 7 prospecting and exploration wells have been drilled, a pilot production project has been approved, and production drilling has started at the Tortasinskoye field.

The Severo-Ityakhskiy 3 and Vostochno-Unlorskiy subsoil areas are located 152 km to the north of Khanty-Mansiysk and 228 km to the southwest of Surgut, respectively. Under the terms of the licence, at the Severo-Ityakhskiy 3 subsoil area, 2D seismic surveys covering 578 linear km have been conducted, and exploration drilling has started. At the Vostochno-Unlorskiy subsoil area, 2D seismic surveys covering 592 linear km have been conducted, and drilling of the first exploration well is scheduled for 2015.

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