[Goldfisch]

Sept. 17, 2004, 11:37PM

Yukos beefs up reserves estimates
Russian oil company's move could be a ploy
By DMITRY ZHDANNIKOV
Reuters News Service

MOSCOW - Russian oil major Yukos, fighting to prevent a cheap fire sale of assets in a tax dispute with the state, boosted estimates of oil reserves at its core Yugansk unit fivefold on Friday.

Siberian exploration work showed that Yugansk contained 93.7 billion barrels of oil reserves, up from 19.4 billion barrels previously, Yukos said. The reserves estimate had not been audited by a Western firm, however, it added.

If confirmed, they would be bigger than Russia's total oil reserves, according to BP's Statistical Review of World Energy, which puts Russia's total reserves at 69.1 billion barrels as of the end of 2003, or 6 percent of the world's total.

"We recognize that these results are stunning," Yukos Chief Financial Officer Bruce Misamore said during a conference call. He said the company would now be working to transfer new resources into the category of recoverable reserves.

Yukos said it had notified investment bank Dresdner Kleinwort Wasserstein of the boost to the reserves estimate.

The government has hired DrKW to value Yugansk for sale to recover $7 billion in back taxes owed by Yukos for 2000-2001. The appraisal process is expected to be completed this month.

Yukos shares extended gains despite scepticism over the reserves hike, which analysts said appeared to be a defensive ploy to stave off the company's breakup. The shares traded up 8 percent at 112.8 rubles.

"Now it becomes impossible for the state to sell Yugansk without withdrawing its licences," said Maxim Sheyn, a BrokerCreditService analyst.

Yukos' tax troubles are part of a broader campaign seen by many analysts as orchestrated by the Kremlin to punish the company's main owner Mikhail Khodorkovsky for political activities. He is on trial on fraud and tax-evasion charges.

Yukos has said it feared the state could sell Yugansk cheaply to state energy firms — with a threat by Resources Minister Yuri Trutnev to strip Yugansk of its operating licences making that outcome more likely.

The parent company had valued the unit at $30 billion before the reserves boost, while analysts put its value at around $16 billion.

Many analysts believe that Russia's total reserves, a state secret, are underestimated by BP. The oil major does not rule that out, saying it relies on government data.

However, even the most optimistic estimates rarely go above putting Russia's total reserves at 120 billion barrels, on a par with Iraq and second only to Saudi Arabia.

Khodorkovsky himself repeatedly said Russia's total reserves were probably close to 120 billion barrels.

Misamore reiterated that the freezing of Yukos's bank accounts was making it extremely difficult for the firm to fund its daily operations.

He said the firm's revenues were roughly $2 billion a month, of which $1 billion was immediately channeled to cover the back tax bill. The company has managed to pay $2.4 billion so far, he said.