Press Releases

Statement from the Chairman;

05.06.2013

Selena Oil and Gas Company - a new start!

Dear Investor,

On the 3rd of June 2013, Selena Oil and Gas Holding AB (Selena) held its first meeting of the newly elected Board of Directors in Stockholm.

As many of you are already aware, Selena has gone through, and now finally left behind, a long period of inaction and lack of clear and common corporate strategy. Disputes between the previous larger owners and creditors have been the main reasons for the company’s inability to develop its true potential in an efficient manner.
 
Today, however, as a result of the settlement agreement decided upon by the EGM held on May 31st, Selena finds itself in a position to return to its core business.
 
To search for, find and produce oil requires great resources and persistence of an oil company. This business is also heavily regulated.  Russia is no exception and it is of utmost importance for any serious oil company to comply with all applicable rules and regulations.
 
The first two parts, finding the oil and thereafter producing it profitably, involves high levels of uncertainty and risks and, in general, requires very significant capital expenditures. As a result of most known conventional oil resources on-shore having been depleted, oil exploration today often takes place off-shore at sea, at great depths, high costs, and frightening environmental risks.
 
When we look at Selena, the first part of the business is already done. The oil is there, and so is the infrastructure with roads and railways. Its assets are based in the Perm region that has been producing oil since back in the 1930s. Not only do we know there is oil in the ground, it is also remarkably well documented. Whereas oil explorers in most other parts of the world were limited by access to capital, costs in the Soviet Union were often not an issue. Hence, drilling teams were sent out to drill and document their findings across large areas. In the 1970s, able oilmen, many of them working for what is today LUKoil, were identifying plenty of oil rich areas where Selena now has production licenses.
 
Many wells were drilled, and the low hanging fruits, i.e. those with high flow rates were put into production. Other lesser producing wells, were conserved for the future. With today’s oil prices, many of these conserved wells will be very profitable once they are put into production. As for the second and third part, we have able hands on the ground to bring the oil to the surface, and then on to trucks and railcars to be delivered to local refineries. 
 
“Why aren’t there more foreign oil companies active in Russia then?”
You must have a local organization and knowledge of Russia in the management, to succeed there. Doing business in Russia is not for beginners. Russia is found very far down on the World Bank’s ease of doing business ranking list. I am the first to agree that it is tedious work to operate in the Russian business environment, but it can be done in a good, transparent and profitable way.
 
As for any business, and that goes for something as basic as crude oil, it is all about people. Having worked with investments, corporate restructuring and capital markets in and around Russia for more than 20 years, I know that cheap assets are fairly easily found. The challenge is finding the entrepreneurs who can navigate properly and in an orderly manner get things done on the ground.
 
The Board and Management of Selena have today initiated intensive work that will form the basis for immediate investment decisions as well as for longer term expansion plans. It is too early to talk about expected production from new, or rather reopened, wells. Needless to say, we shall communicate such information as soon as possible. The roles of the Board of Directors are several. Apart from guiding and supporting management, as well as ensuring that the company at all times works in the best interest of its investors and creditors, the Board of Directors sets the overall standards of the company. Some of you may find softer parameters such as codes of conduct, business ethics, quality control and others, being of less importance than the bottom line result. It is my firm belief that a sustainable business is a business that commits to both.
 
It is therefore, I am very pleased to present the new Board Members of Selena in an informal and personal manner. A more uniform presentation of each member will be posted on this website soon.
 
Indrek Rahumaa, b. 1972, is a Swedish and Russian speaking Estonian national educated at the Stockholm School of Economics. We have worked on various projects since 2009, during my time at Carnegie Investment Bank. Indrek has participated in the privatisation and turn-around of industries in the CIS since the mid-nineties and is together with Jürgen Lamp a co-founder of Selena.
 
Jürgen Lamp, b. 1971 is also a Russian speaking Estonian national who has worked as a consultant at McKinsey in Stockholm and Helsinki, and was later a member of the SEB Estonia management team. Jyrgen is the man on the ground that is in charge of operations and leading the team.
 
Paul Waern, b 1950, has spent his professional life in the oil industry and is one of the most experienced oil men active in Northern Europe. He regularly flies out to supervise the drilling performed by international majors in the North and Barent’s Seas. Paul is also a Member of the Board of PA Resources, another oil company listed on NASDAQ OMX.
 
Staffan Torstensson, b 1972, who is the Head of Equity Capital Markets at Evli Bank, brings valuable investment banking and capital markets competence to the Board. Once drilling and investment plans have been decided upon, the company will seek to find optimal ways to finance investments that may not be funded from own cash flow. Capital markets will offer interesting opportunities.
 
Per-Olof Sjöstedt, b.1953, has been the CEO of Ericsson Russia, CEO of US Company Emerson in Russia, and recently Board Member and Director for Strategic Development of Megafon, one of the leading mobile operators in Russia. Few people can match PeO’s competence, integrity and knowledge of the Russian language, corporate and cultural soul. His recent engagement with the company is much appreciated and welcome.
 
Magnus Stuart, b. 1954, who is the company’s CEO, is the right man for keeping order in the Stockholm based holding company. With its shares listed on NASDAQ OMX First North, and with an ambition to be listed on the regulated main market once deemed appropriate, transparency, compliance and communication with third parties is of key importance. Magnus’s experience will ensure that this is done by the book. Magnus is presently serving as board member of Ginger Oil AB, listed on NGM-Equity where he has served as CEO between 2008 and 2012.
 
As for myself, I feel at home in Russia where I have spent all of my professional life. Half of it, I have been living there and the other half, I have been travelling out of Stockholm. During my years as, i.a., Harvard advisor to the Russian Government in the early nineties, and CEO of Alfred Berg/ABN Amro Equities in Russia, I have come across a lot of different types of people and assets.
 
In Selena, I have found a very promising combination of assets and people, and one of my most important functions is to ensure that all competences and resources made available to the company are utilized in full.
On a final note, the Board of Directors has got a best in class ambition in all areas of the business and our goal is to build a company for the future. 
 
Our first immediate steps are: 1) secure financing for current operations and near term investments into production, 2) put in place a proper legal and corporate governance structure, 3) continue to build a competent team in Perm, 4) establish a compliance function to ensure that all formal requirements for its operations are met, and 5) to establish clear communication practices, both internally and externally.
 
We will now return to work and return to you with updates and more information on our progress in due course.
Sincerely,
 
Lars Bergström
Chairman of the Board of Directors
Stockholm, June 5th 2013
 
 
Selena Oil & Gas Holding AB (publ) (former Emitor Holding AB) is engaged in the production and transportation of oil and gas in the Volga-Ural region in the Russian Federation, including Perm and Udmurtia. The company is listed on NASDAQ OMX First North Premier in Stockholm under the ticker SOGH. Mangold Fondkommission is the company´s Certified Adviser and liquidity provider. Telephone +46 8-503 015 50.  
 

 

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