Regal Eyes Ukrainian Licences

UK-listed Regal Petroleum is planning to buy 100% of Ukrnaftinvest (UNI), the sole holder of "substantial resources" in the Belolisky and Alibeysk-Trapivska production licences in southwest Ukraine, it said November 26. The offer is for up to $40mn, of which only $10mn is payable up front and the rest will depend on the reserves established by an independent assessor but capped at $30mn. It has signed a memorandum of understanding with UNI, a company equally owned by Lidiia Chernysh and Bolaso Investments, owned by Leonid Kozachenko.

The acquisition is conditional on and subject to completion of Regal's due diligence enquiries, certain conditions precedent and the parties entering into detailed transaction documentation, which will contain terms, conditions, warranties and indemnities that are standard in such preliminary agreements, Regal said.

UNI is a Ukrainian incorporated company, and its audited financial statements for the year ended December 31, 2018 show that its net assets as at 31 December 2018 were hryvnia 178.9 ($7.4)mn and losses after tax for last year were hryvnia 0.7mn, with corresponding unaudited figures at June 30, 2019 of net assets of hryvnia 179mn and net profits after tax of hryvnia 0.2mn.

UNI holds a 100% interest in each of the licences, which are in the Odessa region in south-western Ukraine. Awarded in August 2004, they will expire in 2024, and UNI will apply for extensions. The licences are prospective for oil, as well as gas, and have been the subject of exploration since the 1980s, with 24 wells drilled.

Regal estimates that there is a substantial resource of about 675mn barrels of oil equivalent and the two sides are to agree a work programme to appraise them further. This will include up to three wells, subject to satisfactory results of each well.