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The Times: Imperial poised to reveal huge oil reserves in Russia

Steve Hawkes

One of the biggest oil explorers on the Alternative Investment Market (AIM) is poised to disclose that it is sitting on reserves of more than three billion barrels in Russia, The Times has learnt.

An independent report by DeGolyer & MacNaughton, the American energy expert, will hand Imperial Energy a material reserves upgrade across ten of its fields in west Siberia.

The report is understood to classify total reserves in place for the first time at three billion barrels, just under the amount that Cairn Energy, the FTSE 100 group, has discovered in Rajasthan, northwest India.

At least 600 million barrels will be given a lucrative “2P” proved and probable tag, which carries a 50 per cent chance of recovery, double the amount currently on Imperial’s books.

About 100 million barrels are thought to be classed as “1P”, with a 90 per cent chance of being pumped out of the ground.

The eagerly awaited report could be published as early as today and will confirm Imperial’s status as one of the rising stars in the oil sector.

It is the 2P reserves figure that will be of most interest to the market. One analyst said: “People have been expecting a reserves upgrade and a 2P number starting with a 4. If it’s bigger than that, they will get excited.”

After floating on AIM at 25p in 2004, Imperial’s share price rose to almost £11 before the oil sector’s bubble burst last spring. The shares closed last night down 22p at 892p.

Acquisitions in the Russian oil sector — such as Lukoil’s purchase of SeverTEK — have seen companies pay an average of four times their takeover target’s 2P reserves. On this basis, Imperial could have a potential price tag of $2.4 billion (£1.23 billion) — nearly three times its current market capitalisation of £460 million.

The group would only say: “We told the City this year that we would be announcing a complete reserves update by the start of March. We can’t say anything else at this stage.” But one source told The Times: “It’s big. The reserves in place will be around three billion.” News of the report comes just before Imperial is to join the main market next month. It is one of half a dozen UK-listed explorers scouring Russia for oil and gas, despite worries about the role foreign-owned groups will be allowed to play.

The biggest, Sibir Energy, yesterday made its first acquisition since losing its share in Siberia’s $2 billion Priobskoye field to Roman Abramovich’s Sib-neft empire five years ago.

Sibir is spending £30 million on eight exploration blocks in west Siberia with an esimated 970 million barrels of oil.

Stuard Detmer, a Sibir director, said that, despite recent high-profile setbacks to foreign groups such as Shell, Russia still offered huge opportunities.

“Our deal proves you can do business in Russia,” he said.

“We keep having to tell people that we can operate without interference.”

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One Comment

  1. Edwarde Peter Zanussi says:

    I wonder what the highest estimate of unproven oil reserves is in Russia.

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