Sweden-listed oil firm West Siberian Resources has announced plans to merge with Russia-based Alliance Oil and create a vertically integrated oil company with a stable supply of crude oil, substantial refining capacity and important assets in the distribution and marketing of petroleum products.
West Siberian Resources stated that the combined entity will have proved and probable oil reserves of 430 million barrels, production of close to 51,000 barrels per day, refining capacity of 70,000 barrels per day, 255 gas stations, and 24 proprietary oil products terminals in the Russian Far East.
The combined market capitalization of the companies amounts to approximately $2.5 billion and combined pro forma revenues for the first nine months of 2007 amounted to around $1.4 billion. Combined earnings before interest, taxes, depreciation and amortization amounted to $228 million in the period.
West Siberian Resources and Alliance Oil signed a memorandum of understanding that creates an independent vertically integrated oil company, with a mix of upstream and downstream businesses that operate in key oil regions of Russia.
The parties intend to enter into and execute definitive merger agreements that will see Alliance Oil become a wholly owned subsidiary of West Siberian Resources in exchange for West Siberian Resources issuing to Alliance Oil shareholders ordinary shares representing 60% of its total issued share capital post-issue.