MOSCOW Russia's second-largest gas producer, Novatek (NVTK.MM), said it acquired a 49 percent stake in producer Nortgas for $1.38 billion from businessman Farkhad Akhmedov, boosting Novatek's reserves by more than 10 percent.
Novatek's shares, which have been battered in recent weeks by news of rising competition on the domestic market from other non-Gazprom producers, were up 2.66 percent as of 1404 GMT.
Nortgas holds the production license for the Severo-Urengoyskoye field in the Nadym-Pur-Taz basin, in close proximity to Novatek's existing production in northern Russia.
Russian state gas export monopoly Gazprom (GAZP.MM) owns the other 51 percent of Nortgas.
"The ability to acquire a significant asset such as Nortgas is consistent with our overall strategy to expand our reserve base and raise our production profile in our core region of operations," Chief Executive Leonid Mikhelson said in a statement on Tuesday.
According to international petroleum firm DeGolyer & MacNaughton, the proved reserves of Nortgas under PRMS classification amounted to 1.7 billion barrels of oil equivalent as of end-December 2011. Novatek's current PRMS reserves are at 11.3 billion barrels.
Novatek said it bought the stake from Akhmedov's R.E.D.I. Holdings. The transaction is expected to close by the end of the year.
Novatek, controlled by Mikhelson and businessman Gennady Timchenko, is seeking to ramp up its gas production, with a view to doubling yearly output by 2020 from over 50 billion cubic meters currently.
During the first nine months of 2012, the Severo-Urengoyskoye field produced 3.1 billion cubic meters of natural gas and 320,000 tonnes of gas condensate. (Reporting by Vladimir Soldatkin; editing by Jane Baird)