North Expedition

complete

The investment will be to finance the Company’s working capital needs to enable the Company to start operating 30 new drilling rigs and become a significant niche player in exploration drilling within the Russian oil field services market. The proposed transaction will support the growth of a private, independent supplier of oil field services which offers an alternative to in-house operations to oil and gas companies and which will have a demonstration effect by introducing in Russia modern international drilling technologies and promoting sound business practices in the industry. Through the Project, the Bank will promote improvements in the business and corporate governance structure of the Company including production of IFRS audited accounts and adoption of international corporate governance principles. In addition, the Bank will seek to further improve environmental and labour protection policies in the Company’s operations. This will include the adoption of and compliance with the Bank’s Environmental Action Plan. North Expedition Limited is a high-technology drilling company focusing on exploration and production drilling in the Russian Federation. USD 50 million participation in a USD 100 million private placement of convertible preferred notes. Working capital costs of up to USD 125 million to start operating 30 new rigs. Environmental classification and rationale Screened C/1. The project involves financing of the Company's working capital, which will enable the Company to start operating 30 new drilling rigs. The potential environmental and social impacts are not directly related to the Company’s current operations but rather to the services the Company will be contracted to undertake. Therefore, there are no specific projects that would need to be assessed. An Environmental Audit of the main operational bases and a corporate audit to assess the internal environmental policies and capabilities of the Company have been carried out. Key environmental issues and mitigation During the environmental due diligence the auditors visited two drilling areas located in the area of Noviy Urengoy and a support base in the town of Gubkinsky. The audit concluded that the Company has an efficient EHS management system. No major non-compliances with regulatory requirements have been identified. The key issues identified are as follows: At the support base: As part of the environmental due diligence an EAP has been prepared. The implementation requirements of the EAP are as follows: Disclosure of information and consultation In accordance with EBRD policy the Company is required to carry out its actions in accordance with national requirements for public disclosure and consultation. Monitoring and reporting The Company will report to the EBRD annually on its environmental, safety and labour performance and on the implementation of the ESAP. The Bank will evaluate the project's compliance with the applicable environmental and social standards during the lifetime of the project by reviewing these reports and by conducting monitoring visits to the project when and if deemed appropriate. The Company will also be required to notify the Bank of any material incidents or accidents likely to have an effect on the environment or worker and public safety. n/a Mr Yuri Livshits, Chairman North Expedition Limited Tel: +7 495 967 3839 Address: 11 Stremyanniy Pereulok, Moscow 115054, Russia or Natalia Lacorzana (lacorzan@ebrd.com) EBRD Tel: +44-20-73386000