OREANDA-NEWS. On 12 February 2008 was announced, that OJSC “Alliance Group” and West Siberian Resources Ltd. (WSR) signed Memorandum of Understanding January 15-th in Stockholm stating merger of OJSC “Alliance Oil Company” and WSR. The merger will create vertically integrated company with a mix of upstream and downstream businesses. Combined pro forma revenues for the first nine month 2007 amounts to USD 1,398 million. According to the Memorandum WSR acquires 100% (888, 000) shares of Alliance Oil Company in exchange for newly issued shares (1,783,540,968) of WRS. Thus Alliance Oil Company’s shareholders will hold 60% of  WSR.

The President of Alliance Group Musa Bazhaev stated: “We are excited by the new opportunity to merge. I believe that the combination of our two companies creates substantial new opportunities for growth. For Alliance merger is security of crude oil supply to the Khabarovsk Refinery and creating of opportunities to increase production capacity of higher value-added petroleum products. In the meantime we achieve our goal of Alliance Oil Company becoming a public company. Management teams of Alliance and WSR contemplate each other effectively and thus new group will create a very strong management team with great experience in all segments of oil industry that will allow both companies to take advantage of favourable economical situation   and growing customers’ demand for our product”.

Total proved and probable oil reserves of combined group estimated according to SPE (Society of Petroleum Engineers) methodology amount to 59,5 million tonnes (430million barrels). Total current production of combined company is about 7 thousand tonnes per day and refining capacity is about 8,9 thousand tonnes per day.

Combined Company will have significant potential of reserves and production growth. By  2011 when Khabarovsk Refinery Reconstruction Program is implemented its production may exceed 4 million tons per year with expected crude oil refining capacity up to 4,5 million tons. The combined market capitalisation of the companies amounts to approximately USD 2.5 billion (based on the share price of WSR in the amount of SEK 5.30 per one share at closing rate at Stockholm Stock Exchange ОМХ).