Regal Petroleum Acquires Ukrainian Exploration Company Arkona Gas-Energy
AIM-listed E&P company Regal Petroleum Plc has acquired Ukrainian oil & gas company LLC Arkona Gas-Energy from its existing shareholders, for an aggregate consideration of up to US$8.63 million. Arkona holds a 100% interest in the Svystunivsko-Chervonolutskyi exploration licence in north-eastern Ukraine, located approximately 15 km east of Regal’s existing Svyrydivske (SV) licence.
The acquisition consideration is comprised of a first tranche of US$4.315 million (less certain adjustments for debt liabilities) to be paid on completion, a second tranche of US$2.1575 million payable on satisfaction of certain conditions (including the favourable resolution of a third party claim against Arkona relating to the licence, the absence of any contractual, warranty or indemnity claims, and the delivery of certain documentation by the sellers), and a third tranche of US$2.1575 million payable in 12 months from the date of payment of the second tranche, provided that if the conditions for payment of the second tranche are not satisfied, then neither the second tranche nor the third tranche shall become payable.
The Svystunivsko-Chervonolutskyi licence covers an area of 97 sq. km located in the Poltava region in the Dnieper-Donets Basin of north-eastern Ukraine. The licence was granted in May 2017 with a duration of 20 years, and is prospective for gas and condensate. A total of 5 exploration wells have been drilled on the licence since the 1980s, although none are currently on production. According to the Ukrainian State Balance of Natural Resources, the licence has C1 and C2 hydrocarbon reserves (Ukrainian classification, as at January 1st, 2020) of approximately 38.0 million barrels of oil equivalent (MMboe), including 4.9 billion cubic meters of gas.
Regal Petroleum intends to undertake development planning for the licence, and envisages that this will include the commencement of a new well within the next 12 months, with drilling and completion operations expected to take up to a further 12 months.