23-04-03 Marathon Oil said it has struck a deal to buy Khanty Mansiysk Oil, a US-based oil company with operations in western Siberia, marking its first potential foray in Russia. The deal, announced for $ 275 mm in cash and assumed debt, comes at a time when major oil companies are looking to increase their operations in Russia as the country emerges as the world's premier non-OPEC oil producer.
The companies said they hope to close the deal quickly, but there is a big question mark looming. Shell Group, as a holder of 45 % stake in the company, has a short decision time to make a matching offer for the shares it does not own, or approve the deal.

Khanty Mansiysk Oil, according to Marathon, is developing nine oil fields in the Khanty-Mansiysk region of western Siberia. The company has its headquarters in New York.
"It's a brave step into Russia," said Tyler Dann, analyst with Bank of America Securities in Houston. "Marathon is trying to be as differentiated as they can with their exploration andproduction program. They are not blessed with the best-performing existing assets, so they are trying to expand their presence into more attractive areas."

This deal was announced the same day Russia's biggest oil producer, Yukos Oil, reacted to growing investment by international oil companies by agreeing to buy the fifth-largest, Sibneft, for $ 3 bn. Enterprise Oil Overseas Holdings and Enterprise Oil Exploration, both acquired by Shell last year, own the 45 % interest in Khanty Mansiysk Oil's common stock.
A majority of non-Enterprise stockholders have committed to approve the transaction, Marathon said. Other shareholders, according to Khanty Mansiysk Oil, include J.P. Morgan Chase, American International Group and the Brunswick Group.

The purchase includes assumption of all of Khanty Mansiysk Oil's debt, redemption of its preferred stock and cancellation of other securities. Marathon, in its news release announcing the deal, cautioned investors to wait for it to provide more facts on the company after the deal closes rather than rely on information about the company currently available to the public.
"We will provide further information and asset integration details upon the successful completion of the transaction," Marathon spokesman Paul Weeditz said. Marathon said its own estimates of Khanty Mansiysk Oil's operational and financial measures, including reserves and future production estimates, will be different from those available through public sources.

Khanty Mansiysk Oil was founded in 1993 as Ural Petroleum to provide service to Western oil companies getting into the former Soviet Union. In 1998, UK-based Enterprise Oil made an investment in the company. In 2002, according to the company's Internet site, Khanty Mansiysk Oil produced 20,000 bpd of oil.