U.S. oil major ConocoPhillips is seeking to buy up to 25 percent in Russian oil giant Lukoil, booking billions of barrels of new reserves, an industry source familiar with the matter said on Friday.
The source said Conoco was looking to buy extra shares on the market after the Russian state sells its remaining 7.6 percent stake in Lukoil at an auction on September 29 with a $1.928 billion starting price. Conoco is seen as a frontrunner.
“Conoco is going to seek additional stock on the market. It will be looking for a very large portion ... Probably up to a quarter [of share capital],” said the source, who spoke on condition of anonymity.
“The two companies will be looking to set up joint ventures in Russia and Iraq. In Russia, it will be in the north and probably some other regions. This will add billions of barrels to Conoco’s portfolio.
“For Conoco reserves are top priority. As for Lukoil, it is interested in U.S. downstream and the liquefied natural gas [LNG] business.”
Lukoil shares rallied on the news to trade 2.2 percent higher at 851.50 rubles on Moscow’s MICEX exchange. Its dollar shares gained 2.3 percent on the RTS exchange to trade at $29.10.
Analysts say the starting price of the Lukoil stake auction values the company at $29.86 per share — a premium to the market.