MOL reported yesterday that the Russian competition authority has approved it's purchase of NWOG-MOL, a Siberian exploration venture. As a result of the transaction, the exploration license of the Surgut-7 block in Western-Siberia is now the sole property of MOL. The exploration period is four years, which may be followed by an 18-year production period.
Our view: The Surgut-7 block is located some 10 km from MOL’s ZMB oil field, and thus the necessary infrastructure. Total purchase price of US$ 15.5m seems to be reasonable for the small-sized but promising field. Although it might contain some 50-100m barrels of sour crude reserves, only a small part of the field was examined by seismic tests and we should not expect the first trial drillings before 2009. We consider the news as neutral to the share price.