Troika Dialog Research Russia Oil and Gas Desknote Onaco asset swap Yesterday, TNK and Sibneft issued a joint statement confirming conversion of the latterís 38% stake in Orenburgneft and 3% stake in Onaco into TNK Intl stock. According to the agreement, Sibneft will receive an 8.6% stake in TNK Intl, together with an option to sell this stake to TNK Intl shareholders (at an undisclosed price), a guaranteed level of dividends and a seat on the board. The details on price and guarantees, unveiled yesterday, make the deal attractive for Sibneft. However, the deal is negative for other minority shareholders of Orenburgneft and Onaco, making the likelihood and timing of a buyout offer from TNK uncertain.
TNK Intl is the fourth largest oil company in Russia, with total proven reserves of 7,898 mln boe (including 7,258 mln bbl of oil reserves) and output last year of 692 kbpd. It owns a 97% stake in OAO TNK, which itself controls four upstream subsidiaries: Samotlorneftegaz, Nizhnevartovsk Oil & Gas, TNK Nyagan and Tyumenneftegaz. Before the deal, TNK Intl and OAO TNK controlled a 91% stake in Onaco, as well as a 61% voting interest in Orenburgneft (through Onaco). It also owns controlling stakes in four refineries (Ryazan, Nizhnevartovsk, Orsk and Ukrainian Lisichansk, providing it with a combined annual refining capacity of 900 kbpd. The only oil asset of the TNK group not consolidated in TNK Intl is SIDANCO.
The company is registered in the British Virgin Islands and was, prior to the deal, owned equally by Alfa Group and Access Renova. In the interests of liquidity, it is the structure likely to be used for a future IPO or sale of equity to a strategic investor.
A fair deal
We believe the agreement to be positive for both TNK and Sibneft. It effectively completes the consolidation of TNK Intl, by giving the company more than 90% voting control in all of its assets. Sibneft also appears to have secured attractive terms, particularly if the guarantees from TNK shareholders are taken into account.
The value of Sibneftís investment in Orenburgneft and Onaco was reported to be $430 mln on Sibneftís balance sheet at end 2001. Based on this figure, the deal implies an equity value for TNK Intl of exactly $5 bln and this is likely to have served as a basis for negotiation. It translates into an EV/EBITDA multiple for TNK Intl of 4.0, on a par with Russiaís first tier oil majors. Although it could be argued that TNK deserves a discount to other traded oil majors due to the poorer quality of its asset base and share illiquidity, the put option and guaranteed dividends are an important consideration and should compensate Sibneft.
E mail: [email protected], [email protected]SIBNEFT: ONACO ASSET SWAP Swap valuations
Book value of Sibneftís investment in Onaco assets
Implied valuation of TNK Intl
After the conversion, Sibneft will, through the 8.6% stake in TNK Intl, command an annual oil output of 22.33 mln bbl. This is 2% lower than that from its stakes in Orenburgneft and Onaco, but the put option and dividend guarantees make up for this.
Before conversion Annual output, mln bbl, equity based Sibneft share
Sibneftís share of output, mln bbl After conversion Annual output, mln bbl, equity based TNK Intl share
Sibneftís share of output, mln bbl (8.6% of TNK Intl) Minorities left out in the cold
Although the deal is positive for Sibneft, its exit as blocking shareholder will reflect negatively on minority shareholders in both Orenburgneft and Onaco, who are unlikely to be offered the same terms. One very simple reason for this is that conversion into shares of an offshore company would be technically difficult for Russian residents. The most likely scenario is a buyout of these minorities by TNK, although the timing and even likelihood of such a buyout are uncertain. Having already accumulated more than 90% of the voting shares, TNK will certainly be in no hurry.
TROIKA DIALOG SIBNEFT: ONACO ASSET SWAP
President, RESEARCH Chief Executive Officer Managing Director, Capital Markets Consumer, Industrial, Banking Chief Economist Corporate Governance Analyst
CONTACT DETAILS Electricity Fixed Income Research Machinery Metals and Mining Equity Sales Oil and Gas Fixed Income Sales Politics Technical Analysis Telecoms and Internet Structured Projects Production New York Office
Production and Layout: Karen Kesoyan, Andrey Demchuk
This research report is prepared by TROIKA DIALOG or its affiliate named herein. It is being distributed in the United States by TROIKA DIALOG USA, which accepts responsibility for its contents. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact TROIKA DIALOG USA, not its affiliate. This information herein has been obtained from, and any opinions herein are based upon, sources believed to be reliable, but no representation is made that it is accurate or complete and it should not be relied upon as such. All such information and opinions are subject to change without notice. From time to time, TROIKA DIALOG USA or its affiliates or the principals or employees of its affiliates may have positions or derivative positions in the securities referred to herein or make a market or otherwise act as principal in transactions in any of these securities or may provide investment banking or consulting services to or serve as a director of a company being reported on herein. This information does not constitute an offer to buy or sell securities. Further information on the securities referred to herein may be obtained from TROIKA DIALOG USA upon request. This report may not be reproduced, copied nor extracts taken from it, without the express written consent of TROIKA DIALOG. TROIKA DIALOG 2002 TROIKA DIALOG
Are rheumatologists’ treatment decisions influenced bypatients’ age?Objectives. The objective of this study was to determine whether physicians’ treatment preferences are influenced bypatients’ age. Methods. We mailed a survey to a random sample of rheumatologists practicing in the US. The survey included a scenariodescribing a hypothetical patient with rheumatoid arthritis (RA) on hydrox
IMPLEMENTING PROBLEM-BASED LEARNING IN Nanyang Technological University, Singapore Paya Lebar Methodist Girls' Secondary School, Singapore This paper reports on how problem-based learning was incorporated into the biology curriculum in a secondary three class. The focus of the paper is on how the students generated ideas for their problems, the types of questions that they asked, and
