LUKOIL-ConocoPhillips

September 29, 2004

      Compass Advisers, LLP ("Compass") is pleased to announce a strategic alliance between two major integrated oil companies, Moscow-based OAO LUKOIL ("LUKOIL") and Houston-based ConocoPhillips Co. ("ConocoPhillips"), in the largest privatization ever completed in Russia.  The transaction includes ConocoPhillips' $2 billion equity investment for a 7.59% stake in LUKOIL with the option to increase its equity stake to 20%, and an additional $370 million investment securing ConocoPhillips' 30% stake in a joint venture with LUKOIL to develop resources in Russia's Timan-Pechora oil and gas province.  Compass acted as exclusive advisor to LUKOIL in the transaction, which was endorsed by both the United States and Russian governments.  Larger firms were brought in to provide fairness opinions.

      For LUKOIL, the rationale was to raise the value of reserves held by LUKOIL by increasing the price per barrel paid by investors.  At the time of the transaction, the reserves of western oil companies were valued at much higher prices, owing to the perception of risk in Russia.  An investment in LUKOIL equity by a major western integrated oil company would increase investor confidence in the transparency of LUKOIL's financial information and quality of management, thus leading to a higher share price.

      For ConocoPhillips, the major benefit of the transaction was to provide access to the vast oil and gas reserves held by LUKOIL, both through consolidation of existing LUKOIL reserves in ConocoPhillips' balance sheet, and through direct participation in the development of the joint venture in Timan-Pechora.

      Compass initiated the transaction, presenting it to both companies simultaneously, and was retained on an exclusive basis by LUKOIL.  Our team was actively involved in the complicated negotiations on both the equity investment and the upstream joint venture over a two-year period.  The transaction was successfully concluded on September 29, 2004 and the shares of both companies increased in value following the announcement of the transaction.  The LUKOIL/ConocoPhillips deal was selected as one of the "14 Deals of the Year" by The Deal magazine.