Petroneft Resources - Re: PTR Stream Log - From Oilbarrel 24th MArch "Petroneft...

From Oilbarrel 24th MArch "Petroneft Resources, which is finally inching towards sign off on a long promised farm-out of its flagship Licence 61 in Russia, finds itself fighting off a rear-guard action from a dissident shareholder allied to the Putin government. Natlata Partners, which has more than 10 per cent of the Dublin-based company, has called for an EGM to remove the existing Board, present its own financing proposal and make the farm-out subject to shareholder approval. Natlata, a private investment company controlled by Maxim Korobov, a businessman with oil and gas interests in Western Siberia, has offered a cheap debt-to-equity proposal, along with a proposed US$10 million open offer, which would give it control of PetroNeft without making a formal offer. This would remove PetroNeft's urgent debt crunch but would likely scupper the long-sought farm-out of Licence 61 in Tomsk Oblast, Western Siberia. Indeed, Korobov, who as a member of Putin's United Russia party was an MP between 1999 and 2011, says the planned farm-out is “a case of selling off the family silver - nearly 50 per cent of the company’s value – at an, as yet, unknown price, without shareholders’ approval”. However, PetroNeft, which currently pumps 2,400 bpd, said the Nutala financing proposal was not in the interests of shareholders as a whole. Indeed, the proposals would see the company controlled by Korobov's outfit without making a formal offer for the company. Korobov has form when it comes to being an activist shareholder; he is among those who requisitioned an EGM at Sweden's under-pressure PetroGrand, which also operates in the Tomsk Oblast. Undoubtedly, after some difficult years, PetroNeft has a number of disaffected shareholders, wearied by delays and missed production targets, who may be tempted by the Natlata proposal yet come to regret the loss of control over the longer term. One thing is certain. These kind of scuffles drain management time and are highly disruptive, particularly when a complex farm-out is being negotiated. PetroNeft says it is making “solid progress” with a large international oil and gas company for the farm-out of Licence 61 in a deal that would retire the debt, provide working capital and ensure the capability and financial muscle of an international company to advance the acreage. The AIM-quoted company says it expects to finalise the transaction in the coming weeks. This could not be more urgent as without a farm-out in place by April 15, PetroNeft could be forced to sell off Licence 61 to satisfy its key creditor Macquarie Bank. The cash crunch and the need to stave off default on its Macquarie loan recently forced another equity issue, with the Dublin E&P raising US$6.7 million through new equity issued at 5 pence per share and another tranche of debt, taking its loan with Arawak Energy to US$16.5 million. Analysts at Davy Research in Dublin welcomed the fundraise, saying it “provides financial space to complete a major farm-out in the coming weeks”, an event that could prove to be a “watershed in the group’s fortunes”. Indeed, this is the irony of the Natlata attack: after some difficult years, of missed production targets and funding constraints, PetroNeft could be at a turning point. The shares are trading north of 6 pence, more than double the lows of last summer, and analysts believe the conclusion of the farm-out could trigger a re-rating of the stock, at which point it will no longer be so vulnerable to these kinds of tactics. Interesting times.