MOSCOW Jan 23 Sweden-listed oil firm West
Siberian Resources WSIBsdb.ST (WSR) and Russia's Alliance Oil
will continue with their merger plans despite WSR's dramatic
fall in value, the firms said on Wednesday.
"We are not looking at changing the parameters of the deal,"
WSR's Maxim Barsky told Reuters.
The world's financial markets have experienced significant
pressure over recent weeks as fears the U.S. economy will go
into recession mount, causing shares in the vast majority of
listed companies globally to fall.
WSR, which has its operations in Russia, last week said
payment for Alliance Oil would consist of around 1.75 billion
new West Siberian shares. Under the terms of the deal, Alliance
shareholders would own 60 percent of stock in the merged firm.
The deal would have valued Alliance at $1.5 billion and WSR
at $1 billion, but WSR's shares have plunged since Jan 15, when
the announcement was made.
WSR's shares closed down 4.94 percent at 4.43 Swedish crowns
($0.679), down 16 percent from 5.3 crowns on Jan 14, one day
before the announcement.
"The deal should be completed in March. The main thing is
the cashflow, and we generate it by producing oil," said Barsky,
who will continue as managing director of the combined company.
WSR should expect oil reserve increases of around 10 percent
soon in the near future, he added.
Alliance has also previously said the deal would be in
"Yes, the market has fallen, but it can also bounce back," a
company spokesman said.
For the deal to go through, the Russian regulatory
authorities must approve the merger and an extraordinary
shareholders' meeting must take place at WSR.
If formed, the group will have proven and probable oil
reserves of 430 million barrels. Production capacity would be
51,000 barrels per day (bpd) while it would be able to refine
70,000. It would also operate 255 gas stations in eastern
Alliance Oil is controlled by the Bazhaev family and the
(Reporting by Vladimir Soldatkin, writing by Amie
Ferris-Rotman; editing by Elaine Hardcastle)