The Chinese conglomerate CEFC China Energy (Huaxin) may buy almost 50% in the Payakhskoye oil field in the Taimyr Peninsula which belongs to Eduard Khudainatov’s Independent Oil and Gas Company (NNK).
Its actual reserves are estimated at more than 160 million tons of oil, and reserves at about 500 million tons. NNK and CEFC started negotiations about the deal a few weeks ago. The Russian company may sell 50% minus 1 share, according to Prime. Two weeks ago, Khudainatov estimated the entire Payakhskoye oil field at $5.8 billion, thus, the transaction amount may be slightly less than $3 billion.
The parties may agree on joint equal investment in the development of the field, which, according to Khudainatov, would require at least $5 billion more. The total costs exceed $20 billion. In this case, the field will be able to produce 18 to 20 million tons of oil per year in 2025. Russian banks will not finance CEFC to buy shares in the Payakhskoye field, the company will raise funds in its own country.
NNK will benefit from this deal. According to Raiffeisenbank analyst Andrei Polishchuk, the company’s net debt is $1.9 billion, and the debt leverage is equal to 5.23 EBITDA. He added that there will still be enough money left for investment.