OVL not to revise Imperial bid price

The fall in international oil prices notwithstanding, ONGC Videsh will not revise its 12.50 pounds a share buyout of Imperial Energy Corp as the acquisition priced UK-listed firm's in-place oil reserves at $2.5-3 per barrel.

"OVL has valued Imperial's 2P (proven and probable) oil and gas reserves at $2.5-3 per barrel and the acquisition even at current oil prices is enormously beneficial," said a source associated with the transaction.

Imperial explores for oil in Russia's Siberia region and had the equivalent of 920 million barrels of proven and probable oil reserves as on December 2007, according to an audit by DeGolyer & MacNaughton. '2P' tag means a 50 per cent likelihood of recovery of the reserves.

Acquisition of Imperial will cost OVL, the overseas arm of state-run Oil and Natural Gas Corporation, about 1.4 billion pounds or $2.1 billion at current exchange rates.

"OVL had the option of revising bid price but it is not considering doing so," he said. Crude oil prices were trading at $115-120 a barrel when OVL made the bid for Imperial in August. They are now around $50 per barrel and Imperial shares are at 10.71 pounds.

OVL has time till December 9 to make an offer to acquire all outstanding shares of Imperial. The offer will remain open for 28 days and OVL will take another 14 days thereafter to make payments to shareholders tendering their shares, he said.

All of the funding for the acquisition was in place. ONGC is lending most of the money to OVL at 6 per cent interest rate while $1 billion has been tied-up in bridge loan. "Borrowings have become expense...They are charing Libor plus 3-4 per cent," the source said.