RusEnergy

30.09.2005 12:48 MSK MosNews - Russia's largest oil company Lukoil has offered to buy Toronto-listed Nelson Resources, which holds rights to potentially huge Kazakh oil reserves, for $2 billion in cash. The price is a 15 percent discount on the market value of the firm, the Reuters agency reported on Friday, Sept. 30.
Nelson, with almost all its assets in the former ex-Soviet republic of Kazakhstan, said the price offered was equal to around 2.57 billion Canadian dollars, compared with Thursday's closing price of 2.96 billion Canadian dollars.
"The parties have agreed to negotiate the definitive agreements by Oct. 12," Nelson said in a statement, adding that it was keen to ensure that the offer would be for 100 percent of its shares.
Some analysts were surprised at the level of the offer. "It is 37 percent below our fair value, and the reasons for this discount are not clear," said Dmitry Lukashov from Aton Capital brokerage, quoted by the agency. "We will recommend to those of our clients, who are shareholders in Nelson, to vote against this deal," said Lukashov.
Lukoil is already heavily present in Kazakhstan and has said it wanted to further expand in the country, which is set to become one of the key global oil players in the next few decades as it sits on massive hydrocarbon reserves.
Nelson has stakes in several oil firms or separate fields in Kazakhstan, including Alibekmola, Kozhasai, Zhambai, North Buzachi, Karakuduk and Arman fields. The firm says its net proven and probable reserves are around 270 million barrels, but its reserves in place could be potentially as high as 2 billion barrels.