|
BP's chairman Carl-Henric Svanberg said: "This is an important day for BP. Russia is vital to world energy security and will be increasingly significant in years to come. Russia has also been an important country for us over the past 20 years. Our involvement has moved with the times. TNK-BP has been a good investment and we are now laying a new foundation for our work in Russia. "Rosneft is set to be a major player in the global oil industry. This material holding in Rosneft will, we believe, give BP solid returns. We consider that this is a deal which will deliver both cash and long term value for BP and its shareholders. It provides us with a sustainable stake in Russia’s energy future and is consistent with our Group strategy. "Over the coming months we will work hard to complete the transaction and we look forward to the next step of deepening our already strong relationship with Russia.” BP's group chief executive Bob Dudley said: "This investment builds on BP’s track record of value creation in Russia. It is consistent with our strategy of deepening our positions in the world’s most prolific oil and gas regions. "BP intends to be a long term investor in Rosneft – an investment which I believe will deliver value for our shareholders over the next decade and beyond. "Rosneft is a company working to become a global leader in the sector. It is developing its substantial asset base with new technologies and improving its management processes and corporate governance. As a major investor BP looks forward to being able to contribute to Rosneft's success and add value through our participation on the Board. In this regard BP is supportive of Rosneft's intention to pursue further equity in TNK-BP in due course." BP intends to retain the shares resulting from the proposed transaction, and will evaluate how the cash proceeds will be utilised. At minimum BP's intention is to offset any dilution to earnings per share as a result of the sale of its interest in TNK-BP as well as continue with its progressive dividend policy. BP supports Rosneft in its plans to acquire additional equity stakes from other shareholders in TNK-BP. This proposed transaction would constitute a Class 2 transaction under UK Listing Rules. Morgan Stanley & Co. Ltd. is acting as principal financial advisor to BP on the proposed transaction. UBS Investment Bank is acting as financial advisor and corporate broker to BP. Goldman Sachs International, Lambert Energy Advisory Ltd. and Renaissance Capital have also each acted as financial advisors. Credit Suisse Securities (Europe) Ltd. has provided a fairness opinion to BP's Board on the proposed transaction. Linklaters LLP are acting as principal legal advisors on the proposed transaction. • The proposed sale of the TNK-BP shareholding to Rosneft consists of a cash element of $17.1 billion and 1,360,449,797 Rosneft shares. Shares in Rosneft traded at close of business on the bid date (18 October 2012) at $7.13. • TNK-BP is a vertically integrated Russian oil company with a diversified upstream and downstream portfolio in Russia and Ukraine. TNK-BP is Russia’s third largest oil producer, employs c.50,000 people and operates in nearly all of Russia's major hydrocarbon regions, including: West Siberia (in the Tyumen, Khanty-Mansiysk, Yamal-Nenetsk and Novosibirsk Regions), the Volga-Urals (in the Orenburg and Saratov Regions) and East Siberia (in the Irkutsk Region). Average daily production of TNK-BP in 2011 was 1.987 million boe/d, including the interest in Slavneft. • TNK-BP is accounted for in BP's consolidated financial statements using the equity method of accounting for investments in associates. The value attributed to TNK-BP in BP's consolidated balance sheet as at 30 June 2012 was $10,715 million and BP’s share of net income for the year ended 31 December 2011 was $4.1 billion. • In 2011 Rosneft, a fully integrated national oil and gas company, produced 2.45 million barrels a day of oil, up 52 per cent since 2006. As at the end of 2011, Rosneft’s proved developed reserves stood at 9.96 billion barrels of oil equivalent (boe) with proved undeveloped reserves of 8.39 billion boe. • Rosneft’s proved oil reserve replacement ratio was 127 per cent in 2011. It has begun a programme to develop its substantial tight oil reserves, recently estimated at 5.8 billion barrels. • Last year Rosneft’s net income totalled $10.8 billion. Rosneft’s dividend for 2011 was 25 per cent of IFRS net income. • BP has a long relationship with Rosneft including an alliance that started in 1998 to explore the Russian continental shelf offshore Sakhalin. Rosneft and BP are 50/50 owners of the 530,000 barrels a day German refining joint venture Ruhr Oel GmbH. • Today’s announcement marks a further stage in a process that began in June when BP announced its intention to sell its share in TNK-BP. Since then BP held detailed negotiations with Rosneft and Alfa Access Renova. Cautionary note to US investors: Certain estimates of Rosneft’s reserves included in this announcement are not calculated in accordance with SEC guidelines. BP press release |
BP today announced that it has signed heads of terms to sell its 50 per cent share in TNK-BP to Rosneft, the major Russian integrated oil and gas company. Under the heads of terms Rosneft has agreed in principle to buy BP’s share in TNK-BP.