MOL submitted a binding bid December 1, for the purchase of a 100% stake in an oil producing asset in "one of the main oil regions of Russia with good pipeline connections," the company announced in a statement yesterday. The asset, which MOL declined to identify, has more than 60 MMbbl of proven and probable reserves, according to a reserve audit provided by one of the leading petroleum engineering firms, the company said. The present level of production at the field is 1,800 barrels per day, which has significant growth potential according to the field development plans of MOL, the statement notes.
Our view: According to Russian press the possible price could be US$ 50-120m, which implies US$ 1-2 per barrel reserve valuation, much lower than the typical valuation of US$ 2.5-4 per barrel in Russia. This indicates to us that substantial investments are needed on the field. The current gearing of MOL (net cash) easily enables the company to manage such a deal with this size. Yesterday, however, the market did not react to the news as it was afraid of share overhang in the following weeks due to the partly unsuccessful public offering.