The partnership of Canadian Vermilion Energy Inc. and Ukrgazvydobuvannia in a joint project on development of three oil and gas fields in Ukraine under production sharing agreements (PSA) is now 50/50, according to its second quarter year report.
“Entering Ukraine aligns with our strategy to capitalize on opportunities in under-exploited basins by using modern technologies to improve success rates and recovery,” reads the document.
Vermilion said that subsequent to the end of the second quarter of 2019, it entered into a 50/50 partnership with Ukrgazvydobuvannia and were awarded two exploration licenses in Ukraine, subject to a final production sharing agreement.
“The licenses cover approximately 585,000 gross acres situated in one of Europe’s most prolific natural gas regions (Dniprovsko-Donetsky Basin). The new licenses are in close proximity to several multiTCF gas fields with most of the basin (and awarded license areas) still uncovered by 3D seismic. The terms of the licenses include a modest capital commitment, back-loaded over a five-year time frame,” reads the report posted on the company’s website.
As earlier reported, Canada’s Vermilion Energy jointly with a Ukrainian company (Ukrgazvydobuvannia) has won the right to develop three oil and gas fields in Ukraine.
On July 1, an interdepartmental commission for organizing the conclusion and implementation of the product sharing agreements (PSA) prepared for the government proposals on the winners in nine continental hydrocarbon sectors put up for auctions. Among them are Ukrgazvydobuvannia in alliance with Vermilion for Balakliyske and Ivanivske fields, Ukrgazvydobuvannia for Berestianske and Buzivske, private company Ukrnaftoburinnia for Rusanivske, U.S. Aspect Energy for Varvynske, DTEK for Zinkivske, Geo Alliance for Sofiyivske and Zakhidnadraservis for Uhnivske fields.
The head of the office of the National Investment Council, Yulia Kovaliv, said that now within two months companies must agree on the contracts themselves and sign agreements with the government in order to start exploration as soon as possible and to start work as soon as possible. She also said that the volume of investments of the winning companies is $430 million in the pessimistic scenario.
According to Vermilion report, its quarterly production volumes by approximately 1,300 boe/d and FFO by approximately $11 million, we recorded corporate production of approximately 103,000 boe/d, little changed from the previous quarter.
JSC Ukrgazvydobuvannia in June 2019 opened new fields in Kharkiv and Poltava regions.
According to the press service of the company, in particular, in Kharkiv region, after testing an exploratory well with a depth of over 3,700 meters, an oil inflow was obtained. Oil resources in the field are about 130,000 tonnes.
In Poltava region, after drilling the first exploratory well with a depth of 6,300 meters, an industrial gas flow was obtained. The resources of the open gas condensate field exceed 2.7 billion cubic meters of gas.
“Ukrgazvydobuvannia significantly intensified exploration work, in particular, seismic exploration in all promising areas of the subsurface, which made it possible to open eight new fields in the last three years, six of which in 2018,” the company said.
As reported, Ukrgazvydobuvannia in 2018 increased gas production by 1.2% (by 176.2 million cubic meters) compared to 2017, to 15.420 billion cubic meters. The company’s share in total production in Ukraine in 2018 was 73.8%.
JSC Ukrgazvydobuvannia and Vermilion Ukraine Exploration have submitted joint application for developing four fossil fuel fields under product sharing agreements (PSA).
According to information presented at a meeting of the interdepartmental commission for organizing the signing of PSA, these are two joint bids for Sofiyivska, Ivanivska, Zinkivska and Balakliyska.
Vermilion Ukraine Exploration is a resident representation of Vermilion oil and gas company based in Canada.
Ukrgazvydobuvannia, fully owned by Naftogaz Ukrainy, is the country’s largest gas producing company, providing about 75% of the country’s total gas production.
JSC Ukrgazvydobuvannia in January-March 2019 increased its net profit by 3% (UAH 222.065 million) compared to the same period last year, to UAH 7.546 billion.
According to the report on the company’s website, its net income for the first quarter increased by 21% (UAH 3.924 billion), to UAH 22.609 billion, gross profit by 5.7% (UAH 543.67 million), to UAH 10.150 billion.
As reported, Ukrgazvydobuvannia in 2018 reduced its net profit by 11% compared to 2017, to UAH 27.135 billion (about $1 billion). Its net income for 2018 increased by 5.2%, to UAH 78.970 billion, while gross profit decreased by 8.8%, to UAH 38.368 billion.
JSC Ukrgazvydobuvannia saw an 11% fall in net profit in 2018, to UAH 27.135 billion (around $1 billion).
According to the financial statements audited by Deloitte and posted on the company’s website, net revenue in 2018 grew by 5.2%, to UAH 78.97 billion, while gross profit fell by 8.8%, to UAH 38.368 billion.
In 2018, the company saw revenue from sale of natural gas and oil in the amount of UAH 69.825 billion (a rise of 3.7% on 2017), from sale of refined petroleum products – UAH 8.465 billion (a rise of 21.4%), fossil fuel extraction and preparation services – UAH 220.216 million (a fall of 31.6%), and other goods and services – UAH 459.661 million (a rise of 3%).
The royalty for the use of subsoil and other taxes in 2018 was UAH 25.268 billion (a rise of 13.4% year-over-year), depreciation totaled UAH 9.84 billion (a rise of 47.7%), staff costs and social payments came to UAH 3.007 billion (a rise of 34.4%), and other costs – UAH 2.487 billion (a rise of 35.2%).
As reported, Ukrgazvydobuvannia increased production by 1.2% (by 176.2 million cubic meters), to 15.42 billion cubic meters in 2018.
Ukrgazvydobuvannia, fully owned by Naftogaz Ukrainy, is the country’s largest gas producing company, providing about 75% of the country’s total gas production.
JSC Ukrgazvydobuvannia plans to conduct over 100 hydraulic fracturing operations and extract an additional 500 million cubic meters of gas thanks to them, the company’s press service has reported.
Ukrgazvydobuvannia said that from September 2016 through February 2019 a total of 330 hydraulic fracturing operations were conducted.
“Since the beginning of 2019, Ukrgazvydobuvannia has significantly increased the number of works on hydraulic fracturing and performed 40 operations within two months, which is 90% higher than the same period last year,” the company said, adding that the increase in production intensification operations enabled it daily production increase in January-February 2019 at the level of the first four months of 2018.
