A marriage of East and West?
"We share the same philosophy with MI Energy: to create an international exploration and production company. The combination of our experience and concessions in Kazakhstan and the proven reserves and stable cash flow of MI Energy in China will help us accomplish that," Paweł Gricuk, president of Petrolinvest, toldWBJ.
According to the agreement, MI Energy will offer Petrolinvest $5-10 (zł.14.7-29.5) million in a convertible loan. The Chinese firm will also directly invest around $25-50 (zł.73.5-147.1) million in Petrolinvest stock.
Were MI Energy and Petrolinvest to merge, it would be the first large M&A deal in Poland involving a Chinese company. MI Energy is registered in the Cayman Islands, but owned by a Chinese entrepreneur.
Gricuk was reticent to discuss the affect of recent stock and currency fluctuations on the valuation and structure of the potential merger, noting that the firm's advisors were working on the matter and that due diligence had just begun. He said, however, that Petrolinvest's management felt the firm's current valuation did not represent its actual value.
The question also stands as to where the merged firm would be listed. "One of the options is that the combined company would be listed in Warsaw and also in London or Hong Kong," according to Gricuk. He said that the firm would not de-list from the WSE.
Petrolinvest holds a number of concessions in Kazakhstan, but recent press reports have suggested the firm's investors have been getting nervous about a perceived lack of extraction.
Gricuk downplayed these fears, however. "We
are finalizing production tests on two important deep wells on our concessions.
We discovered oil in Emba in November last year and are currently extracting
400 barrels per day on this concession. And we plan to be producing 5,000 to 10,000
barrels per day in H2 of 2009," he said.
