Smaller Companies: Russian link breathes new life into Aminex

IRISH exploration companies can seriously damage your wealth. Whether Aminex can succeed in living down past indiscretions and shake off the has-been tag that embraces so many Dublin shares remains to be seen.

The company has, in effect, exchanged its dream ticket from American gold to Russian oil.

Its surprising emergence as a potentially powerful player in the struggling Russian oil industry has lifted the shares from 4p in January to 52p. They are now 41p on the Dublin exploration share market, something akin to the late lamented Third Market.

At one time called Eglinton Exploration, it had a ragbag of resource interests, with gold mining in Nevada as a main activity. In the heady 1980s, when almost any Irish mining stock attracted an often frantic following, Eglinton hit 240p.

But, like so many others, it failed to last the pace and by the time Brian Hall arrived as chairman in 1991 the shares were in the doldrums and friendless. He changed the name and concentrated on oil and gas exploration.

Deals were fixed up. But clearly it was going to be a long hard slog before Aminex, with more than 7,000 shareholders, would recapture even a suggestion of past excitement.

Then came the Russians. They had seen Brabant as their quoted resources vehicle. But the company lost its independence and Aminex suddenly found itself with an intriguing and aggressive new shareholder, East West Oil.

In Dublin the message was received and understood. East West had Russian links. It is now owned by Titan Assets, which has Russian shareholders, and Zarubezhneftj, a state-owned Russian oil operation.

The rumoured movements of Mr Hall, a well-regarded figure in the oil industry, were the subject of intense speculation as Aminex shares enjoyed their dramatic resurrection. Stories about meetings in Russia kept the shares moving. In fact Mr Hall is due to make his first visit to Russia next month.

East West added fuel to the speculation by steadily increasing its Aminex shareholding to 35 per cent. And then came confirmation that the tiddler had elbowed aside the oil giants and could be a leading beneficiary of any Russian oil revival. Alexander Sarukhanov, a 44-year-old oil engineer and deputy director- general of Zarubezhneftj, joined the Aminex board.

The once burnt-out Irish star is expected to start work soon reviving some of the neglected oil wells in Siberia and does not believe it will encounter too many difficulties transporting the stuff to thirsty economies.

The Russian oil industry, prosperous a few years ago, is now in a sorry state. Production has slumped, reflecting lack of investment and the sheer disorganisation stemming from the break-up of the Soviet Union.

Why have the Russians descended on a tiddler? It is Aminex's modest size, a mere Ir pounds 10m, that prompts many to question whether it will ever deliver any Russian oil.

Mr Hall believes the Russians picked Aminex because of its proven ability to run oil operations and the tight controls introduced in the past few years. But he realises they can exercise much more influence at Aminex than they could if they had chosen a much bigger partner.

Current thinking is that Aminex should sign letters of intent giving it participation in some Siberian wells in a few weeks. But the oil may not be flowing for more than a year.

Aminex shares have been inspired by the pounds 1.5m Russian involvement. But they still have a long way to go to reach the giddy heights achieved in the 1980s and restore the faded investments of small shareholders attracted by earlier prospects.

Mr Hall and Aminex have stolen a lead on the rest of the industry. But they will need to draw heavily on the support of their new-found Russian friends.

And Aminex shares? For a time at least the action could be more subdued.

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