RusPetro shares soar on growth plan

Shares in Siberia oil producer RusPetro jumped as high as 17 per cent Friday after announcing it would strengthen its finances and begin an upgraded processing unit next month.

The company said it expects its first credit rating from Standard and Poor's and was selling secured notes to repay Sberbank loans and fund field development, with the state bank to provide a $50m credit line.

Plans to convert a $62.8m loan from investor Limolines Transport into shares at an initial public offering price of 135p each were also outlined by the company but would be subject to results from a shareholder meeting next month.

The promising outlook comes after RusPetro missed targets last year. Debts to Sberbank came to a total of $289m as of June 30th, according to the website, and shares fell as low as 44% after saying earlier this month it missed a year-end output target of 10,400 barrels a day. It blamed a lack of capacity to process high condensate volumes.

A heat-exchange system to increase condensate processing is expected to begin next month to meet increased demand. RusPetro expects total production will rise from 6,500 barrels of oil per day (bopd) to 9,000 bopd post commissioning.

Average crude and condensate output is planned to rise to 13,000 bopd by December and average 10,000 in 2013.

"We are delighted to announce our plans for strengthening of our balance sheet through a range of actions today, including the notes offering, Limolines loan conversion and the new Sberbank facility.

"These will simplify our capital structure and raise new funds that can be deployed in to the field. Our business is now operating cash flow positive and we believe that our strategic development plan will put the business on a firm trajectory for growth in 2013 and beyond."

The oil producer projected an exit rate of 20,000 bopd in 2014 and 31,000 in 2015.

By 10:45 on Friday, shares were up 8.80% at 51.00p.

RD