North-West Oil Group Inc.
North-West Oil Group Inc.:Interview with the president
North-West Oil Group Inc. / Statement/Miscellaneous Corporate news transmitted by DGAP - a company of EquityStory AG. The issuer is solely responsible for the content of this announcement. ---------------------------------------------------------------------- Ernst Malyshev: 'We Prefer To Use Internal Reserves To Develop Our Business' Ernst Malyshev, President of North-West Oil Group, Looks Back on 2006 in his interview to 'Big Business' Magazine - Ernst Gurgenovich, North -West Oil Group is expanding through buying up different oil-producing enterprises. Is it just a publicity effort or does the company have a well-thought M&A strategy? - As you have rightfully noticed, some of the tenders we’ve participated in did have an important publicity angle to them, but that was only a part of the picture. First and foremost, we try to purchase existing small-cap oil producers that have potential, thus increasing our own market capitalization. This strategy is fairly new to Russia but we believe it will become increasingly popular in the nearest future. Our company from the very beginning aimed at active acquisition of interesting companies, including the foreign ones. When 'Orenburgneft' is put up for auction we plan to participate in the tender. The company looks promising. - So if acquisition is such an attractive strategy, why do so many companies try to raise capital through IPOs? - We believe that raising capital on an exchange can be time-consuming and difficult. We prefer to use internal reserves and increase our market capitalization in a more dynamic way. - Why did North-West Oil Group fail to acquire 'Magma' and 'Udmurtneft'? - 'Magma' simply was overpriced. 'Udmurtneft' story was more complicated. The company did look attractive, but we could not have afforded it alone (it was, after all, worth 3.5 billion USD) and competition for the asset was tough. We did find a good partner for the deal – an Indian, state-owned company Oil India Limited (OIL) - but we were only able to offer 2.5 billion dollars. - How would you comment on the fact that North-West Oil Group sold its rights for Surgutsky-7 block to Hungarian company MOL? - We found it more profitable to sell this asset rather than continue exploring it further. From the very start of this project we worked with MOL - a large state-owned Hungarian company – together, but later on they started to increase the cost of the project. These extra costs didn’t make much difference for their business but for us they turned out to be quite burdensome. So we decided to part ways. Now most of our sites are located in Saratov region. - How important for you is the fact that the acquired companies have their own geological exploration capabilities? - Very important, especially considering the upcoming exploration in Eastern Siberia and other oil-producing regions. For 2007 the Russian government earmarked over 300 million US dollars for geological exploration and we hope to finally see this part of the oil extraction business revived. - Speaking of the upcoming exploration on East Siberia, what are your company’s plans in that respect? - By the end of this year we plan to participate in the tender for sites in Eastern Siberia. All sites have the proven capacity of 10 million tons each, so we expect the competition for them to be extremely serious. - Do you expect any foreign bidders to participate in the tender? - Only as a joint venture with Russian companies. Eastern Siberia is such a ‘tasty morsel’, the Government probably won’t let any foreigners have a piece of it. - What do you see as the most important areas of development in your business? - We currently pay special attention to international project development. We plan to enter American oil exchange and now are having our financials audited. We are especially interested in three countries of the Middle East Region – Syria, Jordan and Lybia - where we try to develop a number of agreements, especially in the field of construction and extraction of hydrocarbon raw materials. On September 21st, 2006, North-West Oil Group acquired 63% of shares of 'Creditline', a Russian operator that will build a refinery and petrochemical facility in Syria. This five-year project is estimated at 3.5 billion dollars and since it is of strategic importance to the Russian government we hope it will be backed by Ministry of Foreign Affairs and Ministry of Defense. - Oil exploration and production market in Russia is extremely competitive these days. Do you fell that small- and medium-sized companies are at a disadvantage under current conditions? - We see protecting the rights of smaller players on the market as the issue of utmost importance so we do our best to initiate the discussion on the subject through the 'Assoneft' association that unites small- and medium-sized oil producers. We recently met with Elena Korzun, the head of the association, and suggested the ways to correct current imbalance. If small private oil exploration and production companies are not protected they will die out, and those companies are the only ones who would work on smaller sites with capacity of 500 thousand tons that constitute the majority of oil deposits in Russia. - Unlike many Russian businesspeople you support charitable projects publicly. Why? - I believe that charitable activity should not be kept secret. Those projects played an important role in building up 'North-West Oil Company' when we together with other well-known companies of the oil sector funded the restoration for 'Konstantinovsky' palace in St. Petersburg. Moreover, public and regular charitable activity is one of the founding stones of our company; in my viewpoint, 'anonymous' charity often doesn’t reach its recipients. I believe that good deeds are nothing to be ashamed of, that’s why we included charitable activities in our long-term strategy. Background 'North-West Oil Group' closed joint-stock company was founded in 2004. The names of shareholders are not disclosed. The company produces and distributes oil, gas and oil products. The company has signed agreements to provide crude oil and oil products to such companies as Salavatnefteorgsintez, TNK-BP Management, Moscow oil refinery. Internationally, 'North-West Oil Group' cooperates with Projector Ltd (UK), Petrocraft (UK) Ltd, LITASCO (LUKOIL). 'North-West Oil Group' explores the fields in Saratov region (Severo-Vasnetsovskoe, Stepnovskoe, Kalininskoe, Goruchkinskoe). 'North-West Oil Group' has become one of the main sponsors of charitable programs managed by 'Konstantinovsky' charity fund together with President’s administration Important Information About Forward-Looking Statements All statements in this news release that are other than statements of historical facts are forward-looking statements, which contain our current expectations about our future results. Forward-looking statements involve numerous risks and uncertainties. We have attempted to identify any forward-looking statements by using words such as 'anticipates,' 'believes,' 'could,' 'expects,' 'intends,' 'may,' 'should' and other similar expressions. Although we believe that the expectations reflected in all of our forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. A number of factors may affect our future results and may cause those results to differ materially from those indicated in any forward-looking statements made by us or on our behalf. Such factors include our limited operating history; our need for significant capital to finance internal growth as well as strategic acquisitions; our ability to attract and retain key employees and strategic partners; our ability to achieve and maintain profitability; fluctuations in the trading price and volume of our stock; competition from other providers of similar products and services; and other unanticipated future events and conditions. DGAP 04.01.2007 ----------------------------------------------------------------------
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