Press Release Source: Chaparral Resources, Inc.
Chaparral Resources, Inc. announcement with regard to the definitive agreement for Lukoil to acquire all outstanding shares of Nelson Resources Limited
Friday October 14, 3:11 pm ET
WHITE PLAINS, NY, Oct. 14 /PRNewswire-FirstCall/ - Chaparral Resources, Inc. (OTCBB: CHAR - News; the "Company") today issued the following statement with regard to the definitive agreement between Nelson Resources Limited (TSX/AIM: NLG) ("Nelson") and LUKOIL Overseas Holding Ltd. ("Lukoil") for Lukoil to acquire all outstanding shares of Nelson.
On Thursday, October 13, 2005, Nelson, which has a 60% ownership interest in the Company, announced that it had entered into a definitive agreement with Lukoil dated October 13, 2005 to effect an amalgamation between Nelson and a wholly-owned subsidiary of Lukoil. On the effective date of this amalgamation, all issued and outstanding common shares of Nelson on a fully diluted basis will be exchanged for US$2 billion in cash. Lukoil has also announced that it has concluded a six month acquisition loan in the amount of US$2 billion to be used for this purpose. Nelson indicated in a press release that the transaction is subject to certain conditions, including approval of 75% of the votes cast by Nelson's shareholders at a special meeting of shareholders expected to be held in late November, 2005. Nelson also indicated in a press release that approximately 66% of Nelson's shareholders have agreed with Lukoil to vote their shares in favor of the amalgamation.
As previously announced, the Board of Directors of Chaparral has appointed a special committee of independent directors to represent the interests of the Company's shareholders with respect to this transaction. The committee continues to monitor the transaction, and has retained the law firm of Baker Botts L.L.P. of Houston and London to advise the committee in connection with this transaction. The committee has requested a meeting with Lukoil to discuss the intentions of Lukoil with respect to the Company and has requested that Nelson provide the Company with additional information regarding the agreement between Nelson and Lukoil.
The Company also announced the resignation of Nigel Penney, its former Vice President-Finance and Chief Financial Officer, effective September 30, 2005, who resigned upon completion of the term of his employment agreement. The resignation is not related to the transaction between Nelson and Lukoil. The Board of Directors of the Company elected Charles Talbot as Vice President - Finance and Chief Financial Officer of the Company effective as of October 1, 2005 to replace Mr. Penney.
Chaparral Resources, Inc. is an oil and gas development and production company. The Company's only operating asset is its participation in the development of the Karakuduk Field, in the Republic of Kazakhstan, through JSC Karakudukmunai ("KKM"), which is the operating company. The Company has directly and indirectly a 60% ownership interest in KKM with the other 40% ownership interest being held by Nelson. Nelson, an independent oil company listed on the Toronto Stock Exchange and the Alternative Investment Market of the London Stock Exchange, holds a majority interest in Chaparral and operates several other producing oil fields in Kazakhstan. The Company's field operations remain unaffected by the pending transaction between Nelson and Lukoil. The Company's daily production is approximately 12,700 barrels per day and it believes it is on schedule to reach 13,000 barrels per day of production by year-end. More information is available on the Company's web site, www.chaparralresources.com.
Information Regarding Forward-Looking Statements: Except for historical information contained herein, the statements in this News Release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, volatility of oil prices, product demand, market competition, risks inherent in the Company's international operations, imprecision of reserve estimates and Chaparral's ability to replace and expand oil and gas reserves. These and other risks are described in the Company's Annual Report on Form 10-K and other filings with the Securities and Exchange Commission.