TNK-BP reported behind Itera move

TNK-BP has filed a request with the Federal Antimonopoly Service (FAS) to buy 50% of gas producer and trader Itera, according to Interfax.

According to analysts from Rye, Man Gor Securities, this deal would correspond to TNK – BP’s game plan to develop its gas business.

“The deal is in line with TNK-BP’s earlier announced strategy aimed at monetizing its gas assets and developing gas client base by 2020. The possible purchase is value-accretive if the price is fair because addition of Itera’s gas extraction volumes may double those of TNK-BP, making it No.1 among Russian oilgas VINCs in this segment.”

The representatives of the company officially refused to comment on the deal, but Vedomosti newspaper refers to the source in TNK-BP saying 50% stake in Itera could be valued at approximately $2billion.

“If such, the whole Itera is valued at EV/EBITDA=13 which implies almost 40% discount to Novatek, but almost 2.6 times above EM oilgas peers. There remains a great deal of uncertainty about the exact parameters of the deal now and we view the news as neutral for TNK-BP stocks,” analysts at Rye, Man Gor Securities calculate.

Oleg Maximov, Alex Fak, Valery Nesterov, analysts from Troika Dialog, also say there are certain assets in the two companies that can efficiently join their operations.

“We believe that TNK-BP may be interested in combining its Rospan gas producing business with Itera’s distribution network in Sverdlovsk Region. Rospan, which produced just under 3 bcm of TNK-BP’s total 16.5 bcm last year, is held by TNK-BP Holding, the traded entity that could logically be the one to buy the stake in Itera and possibly use Rospan for part of the payment.

Besides its trading and distribution asset Uralsevergas, Itera also holds a 49% stake in Sibneftegaz (whose total output was 10 bcm last year) and a 49% stake in Purgas (15 bcm total production in 2010), as well as stakes in exploration assets in offshore Turkmenistan.”

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