ONGC Videsh Ltd (OVL), 100% subsidiary of ONGC, has offered to acquire Imperial Energy Corp (IEC) for a sum of US$2.8bn. With 2P reserves for IEC pegged at 920mn barrels of oil equivalent (boe), the deal is valued at US$3.5/boe of 2P reserves. With almost 94% of the reserves being crude oil reserves, the valuations offered appear attractive. However, the taxation structure in Russia works as a big drag on realizations, which impacts net present value of the assets. In CY07, the realizations for IEC were about US$24/boe as compared to average WTI price of US$72.3/bbl…
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