Buying an Oil Field: Pre-Deal Valuation
The seller shows you a deck with reserves and a production profile that suit them. You get no auction protocol and no public price for comparable deals — just the seller's numbers and a clock running down to the deposit deadline. Here's how the market for buying oil and gas assets works in Russia, what to verify, and how to work out your own ceiling price from a real 2026 deal.
Buying an oil field in Russia is almost never a license purchase — it's a purchase of shares in the license-holding company, since the license itself changes hands only in a closed list of cases. The buyer's only real protection: an independent estimate of reserves, production and NPV, checked against the seller's price before the deposit.
How Does the Market for Buying Oil and Gas Assets Work in Russia?
Subsoil deals in Russia run through two different channels. One is public: a Rosnedra auction, where the state allocates an unclaimed block to any bidder under an open procedure. The other is private negotiation between the current owner and a specific buyer — no mandatory disclosure of terms, and no single venue to check the price against comparable deals.
The private channel has one feature that shapes the entire deal structure: a subsoil-use license cannot simply be sold like ordinary property. Russia's Subsoil Law sets out a closed list of grounds on which the right to use a block can pass to another party at all — and an ordinary sale between two unrelated companies isn't on that list.
"The right to use a subsoil block passes to another business entity in the following cases: … 8) acquisition, by a business entity, under the procedure set out in Federal Law No. 127-FZ of 26 October 2002 'On Insolvency (Bankruptcy),' of the property (property complex) of a subsoil user declared insolvent (bankrupt), provided the acquirer is a legal entity formed under Russian law and meets the requirements set for subsoil users." — ConsultantPlus, Russian Subsoil Law, Art. 17.1 (in Russian)
A direct license transfer applies in practice almost only to buying a bankrupt owner's property. In the vast majority of ordinary deals, the buyer instead acquires a stake — or all — of the equity in the company the license is registered to. The license-holding legal entity itself doesn't change, so no license reregistration with Rosnedra is triggered at all.
That's how one of the industry's recent deals was structured: in May 2026, Oil Resurs Dobycha (part of the Kirillitsa group) bought the Lugovskoy license block in the Saratov region — the group's first upstream asset, after years in oilfield services.
"Oil Resurs Dobycha, part of the Kirillitsa group, has acquired the Lugovskoy subsoil license block in the Saratov region. The group's first upstream asset is planned for use not only for hydrocarbon production but also as a testing ground for enhanced-oil-recovery technologies." — Neftegaz.RU — Oil Resurs Dobycha acquires the Lugovskoye field (in Russian)
That same block had already tried to change hands through an auction once: in 2015, the regional subsoil agency attempted to put it up for bidding, but there's no record the auction succeeded. It took 11 more years to find a buyer — not at auction, but in a private deal. A telling example: for a mature asset with a complicated history, a direct deal is often the only channel that actually works.
What Should You Verify Before Buying a Field?
A seller's deck is not verification. There's barely any public data to check it against either: license deals are rarely disclosed in full, and no independent registry of deal prices exists.
"There isn't enough open data on subsoil-license deals. Most deals go through closed auctions, and their terms are rarely disclosed in full." — RBC Companies — How to value a mineral-extraction license (in Russian)
Because of that data gap, what you verify isn't the seller's final number — it's the inputs it's built from:
- Reserves category — proved (A, B, C1) or forecast (C2, P1–P3) — and the date they were last estimated
- Production history, if the block has been developed — not just reserves on paper
- Remaining license term and the status of license-condition compliance
- Encumbrances — liens, seizures, litigation tied to the block or the license-holding company
- Environmental liabilities and decommissioning costs for mature or depleted assets
How Is the License Reregistered When an Asset Is Bought?
If a deal is structured as a direct license transfer — buying a bankrupt owner's property, for instance — reregistration runs through Rosnedra and its subordinate body, Rosgeolexpertiza, under the procedure set by the joint order of the Ministry of Natural Resources and Rosnedra No. 751/10 of 14.10.2021. It's a formal, multi-step review of the application and of whether the buyer meets subsoil-user requirements, not a quick technicality.
And the transfer isn't always allowed — the law spells out specific cases where it will be refused:
"The right to use a subsoil block may not pass from a legal entity that is a subsoil user to other legal entities, in the cases specified in part one of this article: … 2) where the subsoil user has an outstanding written notice of violations under part four of Article 21 of this Law." — ConsultantPlus, Russian Subsoil Law, Art. 17.1 (in Russian)
The practical takeaway holds regardless of how the deal is structured. If it's a share purchase, this specific block doesn't technically apply — the license-holding entity never changes. But the underlying violations don't disappear: they stay with the company you're buying, along with the risk of fines and, in the worst case, forced termination of the subsoil right. Checking the seller's license-condition status is mandatory either way.
What Does a Field Cost, and What Drives the Price?
A producing field with a track record has operating data — production trends, costs, revenue — that supports an income-based calculation: forecast future cash flows and discount them to today. A mothballed or undeveloped asset has none of that, so the comparative approach takes over: finding comparable deals and normalizing reserves to one methodology. Both approaches need inputs a seller's deck usually doesn't disclose in full.
The Lugovskoye field is a case where the key inputs are actually known: the block covers 11.7 km², the exploration-and-production license runs to 2035, and reserves on the State Reserves Register, category C1, as of 1 January 2014, were 5,000 tonnes of recoverable oil and 13 million m³ of recoverable free gas. That's exactly what an independent valuation is built from — reserves category and volume, remaining license term, drilling history — not a single bottom-line figure in someone else's deck.
How Does AVP AI Calculate a Ceiling Price for a Purchase?
The question that matters for a buyer isn't "what is the seller asking" — it's "what are you actually willing to pay," backed by independent data. AVP AI — an AI platform for oil and gas asset evaluation — builds that ceiling from the same inputs a geologist and an economist would need by hand, in minutes instead of weeks.
Given coordinates or a license number, the platform pulls the block's geology from open industry data, estimates reserves by analogy across a probabilistic P90/P50/P10 range, builds a production profile and a surface-facilities layout, and runs the economics — NPV, IRR — across several oil and gas price scenarios. The output is a report with a value range for the asset and a defensible ceiling price, not one number you just have to trust.
Once the asset is actually changing hands and you need to check not just the geology but license conditions, violation history and encumbrances across the whole company, that's the job of oil and gas asset due diligence — the same calculation pipeline, run against the seller's full document set. And if you're weighing more than one entry opportunity, it's worth comparing them first through an entry-point valuation — NPV, IRR and payback for each.
Frequently Asked Questions on Buying an Oil Field
Technically yes, but Russia's Subsoil Law allows it only in a closed list of cases — reorganizing the subsoil user, buying a bankrupt owner's property, or a transfer between a parent and its subsidiary. An ordinary sale of the license between unrelated companies isn't on that list, so in practice these deals are structured as a purchase of shares in the license-holding company.
Yes. The formal block on reregistering a license with outstanding violations doesn't technically apply here — the subsoil-user entity never changes. But the violations themselves stay with the company, along with the risk of fines and forced termination of the subsoil right, so checking license-condition status is mandatory regardless of deal structure.
An auction is a public procedure: the state allocates an unclaimed block to any bidder under open rules. Buying from a current owner is a private negotiation with no mandatory disclosure of terms — you can't check the seller's price against the market directly, so you need your own independent valuation.
Given a license number or coordinates, the platform estimates the asset's reserves by analogy (P90/P50/P10), builds a production profile and NPV in minutes, and converts them into a ceiling price you can check against the seller's offer before the deposit is paid.
Sources
- Legal document ConsultantPlus ↗ Russian Subsoil Law, Article 17.1: Transfer of the right to use subsoil blocks (in Russian)
- Industry media Neftegaz.RU ↗ Oil Resurs Dobycha acquires the mature Lugovskoye oil and gas field (in Russian)
- Industry media Neftegaz.RU ↗ Federal budget revenue from subsoil-plot sales reached 28.6 billion rubles (in Russian)
- Industry media RBC Companies ↗ How to value a mineral-extraction license (in Russian)
- Official source Rosnedra ↗ Order of the Ministry of Natural Resources and Rosnedra No. 751/10 of 14.10.2021 on the license-reregistration procedure (in Russian)
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