West Siberian Resources signs MoU for acquisition of Russian Oil Company

West Siberian Resources Ltd has signed a Memorandum of Understanding setting out the principal terms for the acquisition of an oil company operating in the Volga-Ural region of Russia. The acquisition target’s main assets include proven and probable oil reserves of 51 million barrels and estimated possible reserves of 83 million barrels, under Russian classification. Average daily oil production amounted to approximately 5,000 barrels in the third quarter. The purchase price amounts to USD 140 million out of which West Siberian has agreed to pay half in cash and half in newly issued shares.

West Siberian Resources Ltd has signed a Memorandum of Understanding (MoU) setting out the principal terms and intentions in relation to the proposed acquisition of a Russian joint stock company. The intention is to enter into a binding Sale and Purchase agreement relating to 100% of the shares of the company and to complete the acquisition in the beginning of 2006. The company to be acquired owns exploration and production licenses covering several oil fields located in the Volga-Ural region of central Russia. Proven and probable oil reserves (C1+C2) are estimated at 50.75 million barrels and possible reserves (C3) are estimated at 82.9 million barrels. Oil production from the fields amounted to approximately 5,000 barrels per day from 28 wells in the third quarter 2005. The exploration and development plan for the fields includes drilling several additional wells contributing to production increases and reclassification of possible reserves. The purchase price for 100% of the shares in the company to be acquired will be USD 140 million on a debt free basis. The purchase price shall be paid by USD 70 million in cash and USD 70 million in West Siberian shares valued at SEK 4,74 per share. West Siberian Resources has agreed to issue 116 500 000 shares, representing 13%, to current shareholders of the acquisition target. The MOU and the acquisition are subject to several conditions including the signing of a mutually acceptable sale and purchase agreement, Russian Antimonopoly Committee approval, and other necessary corporate approvals. Provided a share purchase agreement relating to the acquisition is signed, West Siberian plans to raise debt and equity to finance the cash portion of the purchase price.