26 April 2004 01:55
Sibneft rivalry THE LEX COLUMN:
Sibneft's aborted merger with Yukos is not yet properly unravelled, but
that has not deterred foreign buyers from casting covetous glances at the oil
group. The keenest bidder has always seemed likely to be ChevronTexaco, whose
production profile looks a little thin over the next three years. Total,
however, has also ranked high among the list of candidates.
A stake of only 25 per cent would certainly be less of a mouthful than the
half share of Sibneft most analysts have been expecting to be sold. At the
current market price - arguably only a limited reflection of Sibneft's
value, given that the free float is 8 per cent - a quarter stake would be
worth Dollars 3.9bn. A premium might be expected on top. But a discounted
cash flow valuation using a long-term oil price of Dollars 20 a barrel
suggests Sibneft's fair value is probably 10-15 per cent less than its
current market price.
Obviously, higher long-term oil prices would increase the DCF valuation, but
western oil companies use conservative assumptions. Meanwhile, future
increases in taxation would drag values lower. The Duma, Russia's lower
house, last week agreed new oil export duties which would grab the bulk of
any oil price appreciation above Dollars 25.
Other measures, including debt-adjusted cash flow multiples - a preferred oil
sector metric - also suggest Sibneft is fully valued. In terms of dollars per
barrel of reserves, Sibneft trades at almost twice the price BP paid in last
year's deal with TNK.
Even allowing for the higher quality of Sibneft's assets and its lower
average lifting cost per barrel, that would mean a stiff price for enlarging
Total's toehold in the Russian oil industry. An acquisition would mark a
change in the French group's strategy, which has focused more on
greenfield development than on corporate deals. Taking anything less than 50
per cent of a Russian oil company might be seen as a pretty bold gamble -
unless the buyer thinks it can simply reverse the deal if it changes its
mind, as Sibneft did with Yukos.
[LEX COLUMN] |
RUSSIA IN FACTS
