The oil and gas giant Urals Energy acquired Arctic Oil Company (ANK) from the Russian state-owned JSC Zarubezhneft. The Arctic Oil Company developed Peschanoozerskoye deposit on the Kolguyev island in the Nenets Autonomous District in Barents Sea. The transaction amounted to 1.56 million USD, equivalent to 0.09 USD per barrel of recoverable reserves. The deal is expected to finish until the end of 2016 and will be financed by short-term loan from Kamchatcomagroprombank with interest on a 17% annualized basis, received against Arctic Oil’s crude oil production. The new deposit will add additional 16 million barrels to the portfolio of Urals Energy, which already operated eastern and western parts from the deposit through its subsidiary Arcticneft.

“This is an acquisition that we have trying to achieve for some years, since the synergy benefits are significant to Urals Energy”, said the chairman of Urals Energy, Andrew Shrager. “With the cost savings that we will be able to make, the combination will be cash generative and the acquisition cost should be recovered in up to 18 months at current price for oil, taxes and the exchange rate between the US dollar and the Russian rouble. We anticipate that cash flow through the year will also be improved. The big prize, though, will be the ability to exploit our increased proven undeveloped reserves as part of a combined development plan”, added he.

Current production of Zarubezhneft’s Arctic Oil Company from the oil field is 340 barrels per day, but oil prices pushed the company into financial problems. The operator suffered from large debts, low liquidity and decreasing cash flows.

The oil and gas giant Urals Energy is company registered in Cyprus. The company’s shares are traded on the London Stock Exchange. Currently company produces oil at Sakhalin’s field Petros (owning 97.16%) and Timan-Pechora Basin.