Board of Directors of Gazprom Neft approves acquisition of stake in ZAO Gazprom Neft Orenburg

Press-release

The Board of Directors of Gazprom Neft has approved entering into a sale and purchase agreement with OAO Gazprom for shares in ZAO Gazprom Neft Orenburg, which holds a license to develop the Eastern part of the Orenburg Oil and Gas Condensate Field (Orenburg Region). Under the deal, Gazprom Neft will be able to acquire 61.8% of the share capital of Gazprom Neft Orenburg for RUB 3.576 billion. A market valuation of the asset was conducted by ZAO International Business Centre: Consulting, Investments, Valuation. The remaining shares in Gazprom Neft Orenburg (which are owned by OOO Gazprom Dobycha Orenburg) and part of the field's infrastructure (belonging to OAO Gazprom) will be acquired after the necessary corporate procedures have been completed.

Gazprom Neft has also reached an understanding on the purchase of 86.38% of OAO Yuzhuralneftegaz, which owns a license for the Kapitonovskoye field, located in the Orenburg Region. The field's recoverable reserves are estimated at 5.8 million tonnes of oil and 2.8 billion cubic meters of gas (category ABC1 + C2). The deal is expected to be completed by the end of 2011. The remaining shares in Yuzhuralneftegaz belong to the government of the Orenburg Region, with which Gazprom Neft entered into a socioeconomic partnership agreement on 16 September.

The Kapitonovskoye field is situated 30 km from the first asset that Gazprom Neft acquired in the Orenburg Region earlier in September – the Tsarichanskoye field. Utilising the infrastructure of the Kapitonovskoye field will make it possible to achieve a significant synergetic effect when developing the Tsarichanskoye site. Both sites are located next to the Eastern part of the Orenburg field.

"Gazprom Neft is steadily creating a new production cluster in the Orenburg Region. By completing the acquisition of the Eastern part of the Orenburg field and the adjacent sites, the company will form a powerful resource base in the region and will then commence the full-scale development of this territory, taking full advantage of the achieved synergetic effect. Over the medium term, the Orenburg Region will become a significant growth point for us: Over the next five years, we intend to triple hydrocarbon production, raising it to 5 million tones of oil equivalenta year. This will help the company achieve its strategic goals, which call for doubling our production volumes by 2020," commented Vadim Yakovlev, First Deputy CEO of Gazprom Neft.

Reference

The category ABC1 + C2 reserves of the Eastern part of the Orenburg field total 96 million tonnes of oil, 2 million tonnes of condensate and 53 billion cubic meters of natural gas. In 2010, 551,500 tonnes of oil were produced at the license area. Together with gas, the total production figure was 1.257 million tonnes of oil equivalent. The recovery rate of associated petroleum gas at the Eastern section of the Orenburg field is nearly 100%.

The recoverable hydrocarbon reserves of the Tsarichanskoye field, according to Gazprom Neft's estimates, are as high as 25 million tonnes. The field is currently at the pilot production stage.

At the Kapitonovskoye field, 335,000 tonnes of oil were produced in 2010.