TIDMUEN
RNS Number : 0999N
Urals Energy Public Company Limited
04 May 2018
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR).
4 May 2018
Urals Energy Public Company Limited
("Urals Energy", the "Company" or the "Group")
Shareholder update
The board (the "Board") of Urals Energy PCL (AIM: UEN), the
independent oil and gas exploration and production company with
operations in Russia, is pleased to provide the following
updates.
Competent Person's Report
Blackwatch Petroleum Services Ltd ("Blackwatch") have completed
their assessment of the Company's "Remaining Reserves and Resources
Potential" as at 1 January 2018, which is contained within a
Competent Person's Report which is in the process of being
finalised (the "CPR" or "Report") and is summarised below:
All in million 1P Proved 2P Proved & Probable 3P Proved Probable
barrels oil & Possible
Arcticneft and
Arctic Oil Company 40.8 59.0 78.4
Petrosakh - Okruzhnoe 0.8 16.9 43.7
Petrosakh - S.
Dagi 2.9 20.9 38.3
BVN Oil 1.0 10.8 13.7
TOTAL 46.2 108.2 174.8
Further details can also be found in the table below:
Original Recoverable Cumulative Gross Remaining Urals Net Operator
Reserves Prior Production Reserves Interest attributable
to Production as of as of 31/12/2017 in Remaining
(MMSTB) 31/12/2018 the Reserves
(MMSTB) Licence as of 31/12/2017
Proved
Proved +Probable
Proved +Probable +Possible
(1P) (2P) (3P) 1P 2P 3P 1P 2P 3P
------------------- ------- ----------- ----- ----- ------ --------- ------ ------ ------ ----------
Okruzhnoye
Total 24.5 40.6 67.4 23.76 0.8 16.9 43.7 97.16% 0.73 16.37 42.41 Petrosakh
------- ---------- ----------- ----------- ----- ----- ------ --------- ------ ------ ------ ----------
South Dagi
Total 2.9 20.9 38.3 0.00 2.9 20.9 38.3 97.16% 2.82 20.32 37.25 Petrosakh
------- ---------- ----------- ----------- ----- ----- ------ --------- ------ ------ ------ ----------
Okruzhnoye
& South
Dagi Combined 27.4 61.5 105.8 23.76 3.7 37.8 82.0 97.16% 3.55 36.69 79.66 Petrosakh
------- ---------- ----------- ----------- ----- ----- ------ --------- ------ ------ ------ ----------
Babaevskiy BVN
Total 1.0 10.8 13.7 0.00 1.0 10.8 13.7 100% 1.00 10.80 13.66 Oil
------- ---------- ----------- ----------- ----- ----- ------ --------- ------ ------ ------ ----------
Peschanoozerskoye Articneft
Total 58.7 76.8 96.3 17.85 40.8 59.0 78.4 100% 40.84 58.97 78.43 + ANK
------- ---------- ----------- ----------- ----- ----- ------ --------- ------ ------ ------ ----------
In addition, Blackwatch have recognised Prospective Resources at
the Company's Ordymsky licence ("RK Oil") in the Komi Republic:
Low (P90) Mid (P50) High (P10)
Ordymsky 124.7 178.0 256.4
Further details can also be found in the table below:
Gross Prospective Urals Net Attributable Risk Operator
Resources (MMSTB) Interest Prospective Resources Factor
as of 31/12/2017 in the (MMSTB) as of
Licence 31/12/2017
Low Best High % Low Best High %
Estimate Estimate Estimate Estimate Estimate Estimate
(P90) (P50) (P10)
---------- ---------- ---------- ---------- ---------- ---------- --------
Ordymsky
Total 124.7 178.0 256.4 100% 124.7 178.0 256.4 25% RK Oil
---------- ---------- ---------- ---------- ---------- ---------- ---------- -------- ---------
The primary basis for Blackwatch's assessment was a package of
data made available by Urals Energy. Where possible, Blackwatch
have undertaken a review/audit of the technical work carried out by
Urals Energy and its advisors and third party consultants that have
worked on the assets for Urals Energy. Blackwatch have carried out
independent estimates of reserves, contingent resources and
prospective resources and their findings will be summarized in the
CPR. In estimating hydrocarbons in place and recoverable volumes,
Blackwatch have used the standard geoscience and petroleum
engineering techniques. These combine geophysical and geological
knowledge with detailed information concerning porosity and
permeability distributions, reservoir temperature and pressure
conditions and fluid characteristics. There is of course
uncertainty inherent in the measurement and interpretation of basic
data. Blackwatch have estimated the degree of this uncertainty and
have used statistical methods to calculate the range of
hydrocarbons initially in place or recoverable. It should be
understood that any technical assessment, particularly one
involving exploration and future petroleum developments, may be
subject to significant variations over time as new information
become available. The resources included in this evaluation are
therefore estimates and should not be construed as exact
quantities. Blackwatch have classified the prospective hydrocarbons
according to the SPE/WPC/AAPG/SPEE Petroleum Resources Management
System ("PRMS") (Source:
http://www.spe.org/industry/docs/Petroleum_Resources_Management_System_2007.pdf).
Once finalised, the Company intends in due course to publish an
Executive Summary of the Report on the Company's web site -
www.uralsenergy.com
Production and drilling update
Average daily production at Petrosakh declined, as expected,
from 1,275 bbls/day in 2016 to 1,079 bbls/day in 2017. Production
has now been stabilised at an average of 930 bbls/day through work
overs of existing wells.
At Arcticneft, average production in 2017 was 992 bbls/day and
this continues to be maintained, with an active well work over
programme.
Drilling of the first well at South Dagi was delayed by adverse
weather conditions in the first months of the year, but now is
underway and should be completed by the end of the second quarter
of 2018, as announced on 6 February 2017.
In order to speed up the development of South Dagi, the Board
has decided to order the work over of three of the original wells
on the licence, with additional equipment acquired on Sakhalin
Island. This will assist in mitigating against the decline at
Petrosakh and thus increase throughput at the Company's
refinery.
Tanker for Arcticneft
The Board anticipates that the first 2018 tanker loading for
Articneft will be towards the end of July 2018, with a target of
20,000 tons (158,000 bbls), with a second towards the end of
October 2018 with the same volume.
2017 EBITDA and dividend
Reduced production at Petrosakh, combined with the increases in
the Mineral Extraction Tax and Excise Duty imposed on domestic
sales, offset partially by the effect of a full year of production
and revenue due to the acquisition of Artic Oil, will mean that the
overall group EBITDA for the year ended 31 December 2017 will be
lower than in 2016 (2016 EBITDA: US$ 7.8 million). Results for the
year ended 31 December 2017 are expected to be published in June
2018. A recommendation for a dividend will be made at the same
time, which will be subject to shareholder approval at the next
Annual General Meeting, planned for November 2018. The Board's
policy is to maintain a dividend at 10% of EBITDA, subject to no
other adverse factors.
Appointment of Brandon Hill Capital Limited
The Board is pleased to announce that Brandon Hill Capital
Limited has been appointed as the Group's Financial Adviser to
introduce strategic partners such as oilfield services companies
and investors, with the aim of forming joint venture partnerships
or other suitable structures, and/or raising capital for our
development projects for Articneft and in Komi. The intention is to
start with the Articneft development, where our plans include
fracking and additional wells, taking advantage of the substantial
reserves confirmed by Blackwatch and shown at the beginning of this
announcement.
Andrew Shrager, Chairman of Urals Energy, commented: "Our
Reserve Report confirms the scale of the development potential
within our Proven and Probable Reserves, as well as the substantial
scope within our Komi Republic portfolio for upgrading to reserves
and development. We are continuing to work on possible
acquisitions, as well as the partnerships on which Brandon Hill
will be assisting us, to advance these opportunities for major
development. As always timing is critical, and the recent
improvements in the oil price are encouraging, but we need to make
sure we achieve the best deals for the benefit of shareholders. A
continuation of dividends reflects the Board's confidence in the
strong position of the Company."
Further announcements will be made as appropriate.
Mr. Radwan Hadi, who meets the criteria of a qualified person
under the AIM Guidance Note for Mining, Oil and Gas Companies, has
reviewed and approved the technical information contained within
the 'Competent Person's Report' and the 'Glossary of Technical
Terms' sections of this announcement. Mr. Hadi is a BSc graduate
and was awarded an MSc in Chemical Engineering from the University
of Bradford in 1979. He is Deputy Managing Director of Blackwatch
Petroleum Services and has over thirty five years of experience in
the international oil industry.
For further information, please contact:
Urals Energy Public Company Limited
Andrew Shrager, Chairman Tel: +7 495 795 0300
Leonid Dyachenko, Chief Executive
Officer
Sergey Uzornikov, Chief Financial www.uralsenergy.com
Officer
Allenby Capital Limited
Nominated Adviser and Broker
Nick Naylor / Alex Brearley Tel: +44 (0) 20 3328
5656
www.allenbycapital.com
Appendix
Glossary of Technical Terms
Reserves Categories:
(Source:
http://www.spe.org/industry/docs/Petroleum_Resources_Management_System_2007.pdf
- pages 28 & 29)
Proved reserves are those quantities of petroleum, which by
analysis of geoscience and engineering data, can be estimated with
reasonable certainty to be commercially recoverable, from a given
date forward, from known reservoirs and under defined economic
conditions, operating methods, and government regulations.
Probable reserves are those additional Reserves which analysis
of geoscience and engineering data indicate are less likely to be
recovered than Proved Reserves but more certain to be recovered
than Possible Reserves.
Possible reserves are those additional reserves which analysis
of geoscience and engineering data indicate are less likely to be
recoverable than Probable Reserves.
1P - Taken to be equivalent to Proved Reserves; denotes low
estimate scenario of Reserves.
2P - Taken to be equivalent to the sum of Proved plus Probable
Reserves; denotes best estimate scenario of Reserves.
3P - Taken to be equivalent to the sum of Proved plus Probable
plus Possible Reserves; denotes high estimate scenario of
reserves.
Prospective Resources Categorization
Source:
http://www.spe.org/industry/docs/Petroleum_Resources_Management_System_2007.pdf
- pages 31, 39 & 37
Low (P90) resource: With respect to resource categorization,
this is considered to be a conservative estimate of the quantity
that will actually be recovered from the accumulation by a project.
If probabilistic methods are used, there should be at least a 90%
probability (P90) that the quantities actually recovered will equal
or exceed the low estimate.
Best (P50) resource: With respect to resource categorization,
this is considered to be the best estimate of the quantity that
will actually be recovered from the accumulation by the project. It
is the most realistic assessment of recoverable quantities if only
a single result were reported. If probabilistic methods are used,
there should be at least a 50% probability (P50) that the
quantities actually recovered will equal or exceed the best
estimate.
High (P10) resource: With respect to resource categorization,
this is considered to be an optimistic estimate of the quantity
that will actually be recovered from an accumulation by a project.
If probabilistic methods are used, there should be at least a 10%
probability (P10) that the quantities actually recovered will equal
or exceed the high estimate.
Prospective Resources - those quantities of petroleum which are
estimated, as of a given date, to be potentially recoverable from
undiscovered accumulations.
Remaining Reserves and Resources - those quantities of petroleum
(of any category) which are estimated, as of a given date, to be
recoverable after deducting actual petroleum quantities that are
already produced.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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