Valuation Of M&A Transactions For Russian Oil&Gas Companies

Cross-border M&A is an important measure for international oil and gas companies to achieve business expansion and strategic development.It is also one of the main ways for Chinese oil companies to enter overseas markets and achieve international development.Russia is an important oil and gas producer and exporter in the world and a key target for China’s foreign oil and gas cooperation.Since the Crimean crisis in 2014,Russian oil and gas companies have strengthened oil and gas cooperation with Asia-Pacific countries,especially with China.In this context,Chinese companies are also actively seeking investment opportunities for Russian oil and gas companies.In overseas oil and gas M&A transactions,the valuation of the target company is the core of M&A transactions,and the pricing of the target company often affects the final M&A results.Due to the impact of sanctions and low oil prices,it is very important to study the valuation of Russian oil and gas companies in Sino-Russian oil and gas cooperation.This paper takes the value evaluation of Russian oil and gas companies in M&A transactions as the research object.Firstly,the paper analyses the current situation and existing problems of Chinese companies’ M&A of Russian oil and gas companies,and points out the importance of value evaluation of target enterprises in M&A.Secondly,three representative oil and gas companies in Russia are selected as the target enterprises of M&A valuation,and their production and operation status are analyzed,and the valuation methods of follow-up value evaluation are selected.Finally,the free cash flow discount method and P/E ratio method are used to evaluate the value of three oil and gas companies in Russia,and the valuation results are analyzed.According to the conclusion drawn from the analysis and research,although Russian oil and gas companies are subjected to continuous sanctions from the West,their production and operation situation can remain stable.Investors can use various valuation methods to verify each other when evaluating Russian oil and gas companies.The valuation results of this paper show that Russian oil and gas companies’ stock prices are undervalued.Therefore,under the conditions of low oil prices and sanctions,there is a certain prospect for Chinese companies to invest in Russian oil and gas enterprises in M&A.However,the conditions for M&A should be determined according to the specific conditions of the acquired companies and the target companies,and the appropriate premium should be made to reduce the risk.