Ukraine Update

RNS Number : 8466B

Enwell Energy PLC

13 October 2020

 

13 October 2020

Enwell Energy plc
("Enwell" or the "Company")

Ukraine Update

Enwell Energy plc (AIM: ENW), the AIM-quoted oil and gas exploration and production group, provides an update on its operational activities in Ukraine, where it operates the Mekhediviska-Golotvshinska (MEX-GOL), Svyrydivske (SV) and Vasyschevskoye (VAS) gas and condensate fields, as well as the Svystunivsko-Chervonolutskyi (SC) exploration licence .

Production - Q3 2020

The average daily production of gas, condensate and LPG from the MEX-GOL, SV and VAS fields for the period from 1 July 2020 to 30 September 2020 was as follows:-

Field	Gas (MMcf/d)		Condensate (bbl/d)		LPG (bbl/d)		Aggregate boepd
	Q3 2020	Q3 2019	Q3 2020	Q3 2019	Q3 2020	Q3 2019	Q3 2020	Q3 2019
MEX-GOL & SV	18.2	13.4	641.0	526.1	287.4	243.8	4,049	3,058
VAS	3.0	4.2	31.2	49.0	-	-	580	831
Total	21.2	17.6	672.2	575.1	287.4	243.8	4,629	3,889

Overall production volumes in Q3 2020 increased by approximately 19% compared with Q3 2019, a continued consequence of the significant boost in May 2020 from the SV-54 well in the SV field commencing production testing (see announcement dated 22 May 2020). However, a decline in production rates from the VAS-10 well in the later part of 2019 impacted overall production at the VAS field in 2020. As a consequence, during Q1 2020, compression equipment was installed to stabilise production from the VAS-10 well, with a longer-term plan to undertake a workover of the well to access an alternative reservoir horizon.  

Operations

At the MEX-GOL and SV fields, the drilling of the SV-25 well continues, with the well having reached a depth of approximately 4,875 metres. The well has a target depth of 5,320 metres, with drilling operations scheduled to be completed by the end of the first quarter of 2021, and, subject to successful testing, production hook-up during the second quarter of 2021. The well is an appraisal well, with its primary targets being the B-20, B-22 and B-23 horizons in the Visean formation. In addition, planning is progressing for a further well and the possible sidetracking of an existing well in the SV field in 2021.

At the VAS field, planning is continuing for a new well to explore the Vvdenska (VED) prospect within the VAS licence area. 

Arkona Legal Dispute

As announced on 24 March 2020, the Company has acquired the entire issued share capital of LLC Arkona Gas-Energy ("Arkona"), which holds the SC exploration licence (the "Licence"). As further announced on 3 July, 31 July and 30 September 2020, there are legal proceedings between NJSC Ukrnafta as claimant and Arkona as defendant, in which NJSC Ukrnafta has made claims asserting that irregular procedures were followed in the grant of the Licence to Arkona in May 2017. NJSC Ukrnafta was the holder of a previous licence over this area which expired prior to the grant of the Licence. Arkona disputes these claims.

In early July 2020, the First Instance Court in Ukraine made a ruling in favour of NJSC Ukrnafta, determining that the grant of the Licence was irregular, and accordingly, the Licence would be invalid. However, in early August 2020, Arkona filed an appeal of this decision in the Appellate Administrative Court in Kyiv, and pending the hearing of this appeal, the Licence remained valid.

At a hearing of this appeal on 29 September 2020, the Appellate Administrative Court ruled in favour of Arkona, overturning the earlier decision of the First Instance Court.

VAS Licence Order for Suspension

The Company does not have any further information to report in relation to the Order for suspension relating to the production licence for the VAS field since the announcements made on 12 March 2019 and 19 March 2019 respectively, other than to report that the legal proceedings issued in the Ukrainian Courts to challenge the validity of the Order are ongoing, and the Com pany remains confident that it will ultimately be successful in such legal proceedings.

Cash Holdings

At 30 September 2020, the Company's cash resources were approximately $55.7 million, comprised of $15.8 million equivalent in Ukrainian Hryvnia and the balance of $39.9 million equivalent in a combination of US Dollars, Pounds Sterling and Euros.

COVID-19 Pandemic

The Group continues to monitor the evolving situation relating to the COVID-19 pandemic, and to take any steps necessary to protect its staff and operations.  However, as of the date hereof, there has been no operational disruption linked to the COVID-19 pandemic, and no material impact is currently envisaged on the Group's prospects.  Nevertheless, the Group remains acutely aware of the risks, and is taking action to mitigate them where possible, with the safety of individuals and communities continuing to be the priority.

Sergii Glazunov, Chief Executive Officer, said : "We are pleased with the continued progress with the development of our fields, where we are seeing strong production, albeit in a lower gas price environment than 2019. We are also pleased with progress in the drilling of the SV-25 well, which we hope will continue our success in the development of our fields. We are closely monitoring the unprecedented developments of the ongoing COVID-19 pandemic, and although we have not experienced any material impact on our operations so far, we have taken and will continue to take action to ensure the safety of our employees and local communities."

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

For further information, please contact:

Enwell Energy plc	Tel: [phone]
Chris Hopkinson, Chairman
Sergii Glazunov, Chief Executive Officer
Bruce Burrows, Finance Director
Strand Hanson Limited	Tel: [phone]
Rory Murphy / Richard Tulloch
Arden Partners plc	Tel: [phone]
Ruari McGirr / Dan Gee-Summons (Corporate Finance)
Simon Johnson (Corporate Broking)
Citigate Dewe Rogerson	Tel: [phone]
Louise Mason-Rutherford / Elizabeth Kittle

Dmitry Sazonenko, MSc Geology, MSc Petroleum Engineering, Member of AAPG, SPE and EAGE, Director of the Company, has reviewed and approved the technical information contained within this press release in his capacity as a qualified person, as required under the AIM Rules.

Definitions
bbl/d	barrels per day
boepd	barrels of oil equivalent per day
cf	cubic feet measured at 20 degrees Celsius and one atmosphere
LPG	liquefied petroleum gas
MMcf/d	million cubic feet per day
%	per cent
$	US Dollars

 

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