July 17 2001
LUKOIL Oil Company to acquire Bitech Petroleum Corporation in agreed transaction.
The Boards of Directors of Lukoil Overseas Holding Limited ("Lukoil Overseas") backed by the decision of the Management Board of Lukoil Oil Company (together "Lukoil") (RTS: "LKOH") and Bitech Petroleum Corporation ("Bitech") (TSE: "BPU") jointly announce that they have entered into an agreement pursuant to which Lukoil Overseas will make a cash offer of C$1.55 per share for all of the issued and outstanding common shares of Bitech.
· The offer values Bitech?s fully diluted share capital at approximately C$123 million. · The offer represents a 99 per cent premium over Bitech?s closing share price of C$0.78 on the Toronto Stock Exchange on July 16th, 2001.
· The Board of Directors of Bitech has unanimously agreed to recommend acceptance of the offer to the shareholders of Bitech.
· Bitech's directors and officers have committed to tender all of their common shares and ?in the money? options to the offer, representing 3.33 per cent of Bitech?s outstanding common shares on a fully diluted basis. In addition, certain other major shareholders have committed to tender all of their common shares under the offer, representing a further 39.16 per cent of Bitech's outstanding common shares on a fully diluted basis.
· Lukoil Overseas is funding the acquisition from its internal cash resources.
Bitech has agreed not to solicit or initiate discussions or negotiations with any third party concerning any material portion of the assets of Bitech, or any acquisition or business combination involving Bitech.
The offering circular associated with the transaction is expected to be mailed to Bitech shareholders shortly and the offer will expire 35 days thereafter, unless extended by Lukoil Overseas. The offer will be made through a wholly-owned subsidiary of Lukoil Overseas.
The offer is conditional on, inter alia, at least two-thirds of Bitech's common shares being tendered (fully diluted), and receipt of all necessary regulatory approvals and on other conditions customary in transactions of this nature. The Board of Directors of Bitech has also resolved to extend the separation time of the rights to, and to waive the application of, Bitech?s Shareholders Rights Plan to Lukoil Overseas' offer, immediately prior to the expiry time of the offer.
Lukoil is one of Russia's leading oil companies, with its principal operations in Western Siberia, Northern Russia and the Caspian region. Bitech is a Canadian oil exploration and production company, with operations predominantly within the Republic of Komi in the Russian Federation ("Komi Republic").
"The acquisition of Bitech is consistent with Lukoil?s strategy of consolidating its position in a number of core operating regions within Russia, while expanding outside Russia and the Former Soviet Union, especially to North Africa and the Middle East ? stressed Mr. Vagit Alekperov, President of LUKOIL. Bitech?s operations in the Komi Republic represent an important addition in terms of reserves and production to Lukoil's projects in the Timan-Pechora oil and gas province. In addition, Bitech?s acquisition of Vanguard, which has attractive hydrocarbon exploration projects in Egypt, Morocco, Tunisia and Colombia, together with the acquisition of a license in Sakhalin, have the potential to provide Lukoil Overseas with important building blocks for future expansion."
Commenting on the transaction, Mr. Andrei Kuziaev, President of Lukoil Overseas said:
"The acquisition of Bitech represents another important step towards strengthening Lukoil?s leading position in the Timan Pechora oil basin and demonstrating Lukoil?s strong commitment to its strategy of developing the oil and gas resources in that region. The acquisition of a controlling stake in Parma-Oil company by LUKOIL-Perm was the latest new project in this direction. In addition, the acquisition of Bitech will contribute towards Lukoil Overseas' objective of building a sizeable exploration and production business outside Russia in coming years."
Mr. Nicholas Gay, Bitech?s President and CEO commented that:
"This transaction, a conventional corporate acquisition in western capital markets, may well be seen in future years as a watershed for the development of the Russian oil business. Although today?s sale represents the end of an era for Bitech, we are confident that our efforts in recent years have created a valuable new addition to Lukoil's business, both inside and outside of Russia."
Lukoil Overseas is being advised by Dresdner Kleinwort Wasserstein Limited and Bitech is being advised by Peters & Co. Limited.
Summary information regarding the acquisition of Bitech is available at http://www.lukoil.com
For enquiries regarding the acquisition of Bitech please contact:
Lukoil Overseas Holding Ltd.: Gavin Anderson & Company, London
Marina Boughton Tel: + 44 07775 992 437 Mboughton@gavinanderson.co.uk
Graham Prince Tel: +44 20 7496 1469 gprince@gavinanderson.co.uk
Bitech Petroleum Corporation: tel.: +44 (0)20 7766 9600 fax: +44 (0)20 7766 9660 http://www.bitechpetroleum.com
Raymond De Smedt, Chairman e-mail: raydesmedt@bitechpetroleum.com
Nicholas Gay, President and CEO e-mail: nicholasgay@bitechpetroleum.com
Statements in this press release may contain forward-looking statements including expectations of future production and capital expenditures. Information concerning reserves may also be deemed to be forward-looking statements as such estimates involve the implied assessment that the resources described can be profitably produced in future. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated. Additional information on these and other factors which could affect Bitech's operations or financial results are included in Bitech's 2000 Annual Report under the heading ?Management's Discussion and Analysis - Business Risks? and in Bitech's other reports on file with Canadian securities regulatory authorities.
This announcement is issued jointly by Lukoil Overseas and Bitech and the Directors of Lukoil Overseas and Bitech are the persons responsible for the information contained in this announcement. The contents, which has been issued by, and is the joint responsibility of Lukoil Overseas and Bitech, have been approved by Dresdner Kleinwort Wasserstein Limited, which is regulated in the UK by The Securities and Futures Authority, solely for the purposes of Section 57 of the Financial Services Act 1986 in the UK. Dresdner Kleinwort Wasserstein Limited is acting for Lukoil Overseas and no one else in relation to the offer and will not be responsible to anyone other than Lukoil Overseas for providing the protections afforded to its customers or for providing advice in relation to the offer or any other matters referred to herein.
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