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Financial Times: Doubling of oil reserves lifts Imperial by 40%

By Catherine Belton

Published: March 7 2007 02:00 | Last updated: March 7 2007 02:00

Shares in the UK-listed Imperial Energy soared almost 40 per cent after the Siberia and Kazakhstan-based oil company said its probable reserves of oil had more than doubled to 803m barrels.

Its shares rose 353p to £12.45 after Imperial promised to push on with plans to boost production to 25,000 barrels per day by 2008 and 35,000 barrels per day by the end of 2009.

Imperial has licences to develop 15 fields across a vast swathe of the westSiberian region of Tomsk.

It cited the results of an audit by DeGolyer & MacNaughton that reserves in the region had increased 150 per cent.

That rise gives Imperial nearly double the reserves of Cairn Energy, which has 464 million barrels of probable (or 2P) reserves.

As Russian oil majors such as Lukoil grapple with slowing production growth and foreign oil majors face growing state pressure, the arrival of small independent oil companies such as Imperial has surprised some investors.

“This is very important – it shows you that a young company out of the UK owned by petroleum investors was able to build from zero,” saidSteven Dashevsky, head of research at Aton, theMoscow brokerage.

Imperial was founded just three years ago by Peter Levine, who is also chairman of Severfeld-Rowen, the steel firm. Mr Levine is the single largest shareholder in Imperial with a stake of about 8 per cent. The company says institutions and private investors hold the rest.

A handful of tiny independent producers such as Urals Energy and Sibir Energy have been making inroads into Russia’s oil industry.

Analysts noted, however, that Imperial’s growth could attract unwanted attention from the Russian authorities.

The government is pressuring large foreign oil majors such as Royal Dutch Shell and BP’s Russia venture TNK-BP as the state tightens its grip on the energy sector.

Imperial’s smaller scale has kept it off the radar so far. Mr Levine said Imperial intended to keep a lowprofile.

“We’re going to take things step by step – we have no pretensions in terms of stepping out of the box,” he said, noting the firm had built good relations with the regional administration in Tomsk. “We’re not an aggressive company. We have the building blocks. Now we have got to raise production.”

Copyright The Financial Times Limited 2007

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