Britain’s oil and gas company Regal Petroleum Plc with assets in Ukraine has acquired the acquisition of Arkona Gas-Energy LLC, which holds the Svystunivsko-Chervonolutskyi exploration license in Poltava region for $8.63 million, the company has reported on the London Stock Exchange (LSE).
The acquisition was completed on Tuesday pursuant to an acquisition agreement made between the company and Igor Mychko, Oleksandr Neschchotnyy, Dmitro Volonets and Oleg Olkhovoy to acquire a 100% shareholding interest in Arkona.
A first tranche is $4.315 million (less certain adjustments for debt liabilities) paid on completion.
A second tranche is $2.158 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.
A third tranche is $2.158 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.
According to Geoinform Ukraine, the license of Arkona is in effect until May 18, 2037.
Regal said that the license is prospective for gas and condensate, and has been the subject of exploration since the 1980s, with five wells having been drilled on the license since then, although none of these wells are currently on production. According to the recorded information on the Ukrainian State Balance of Natural Resources as at January 1, 2020, the license has hydrocarbon reserves of approximately 38.0 MMboe (4.9 billion m3 of gas and 0.86 Mtonnes of condensate). Whilst the company has undertaken a detailed review of the available technical data relating to the license, which is considered supportive of such assessment of hydrocarbon reserves, it should be noted that such hydrocarbon reserves have not been verified by an independent reserves assessor, Regal said.
The company now intends to undertake development planning for the license, 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.