Regal Petroleum PLC Gas Sales to Related Party (6503J)
30 June 2017 - 4:00PM
UK Regulatory
TIDMRPT
RNS Number : 6503J
Regal Petroleum PLC
30 June 2017
30 June 2017
Regal Petroleum plc
("Regal" or the "Company")
Gas Sales to Related Party
Regal Petroleum plc (AIM: RPT), the AIM-quoted oil and gas
exploration and production group, announces that it has agreed to
sell all of its gas production to LLC Smart Energy ("Smart
Energy").
The Company operates the Mekhediviska-Golotvshinska (MEX-GOL),
Svyrydivske (SV) and Vasyschevskoye (VAS) fields in Ukraine,
producing gas, condensate and LPG.
Smart Energy has oil and gas operations in Ukraine and is part
of the PJSC Smart-Holding Group, which is ultimately controlled by
Mr Vadim Novinskiy, who also controls an indirect 54% majority
shareholding in Regal. As such, Smart Energy is considered to be a
related party of Regal pursuant to the AIM Rules for Companies
("AIM Rules").
The Ukrainian Government has introduced a number of new
provisions into the Ukrainian Tax Code over the last two years,
including transfer pricing regulations for companies operating in
Ukraine. The introduction of the new regulations has meant that
there is an increased regulatory burden on affected companies in
Ukraine who must prepare and submit reporting information to the
Ukrainian Tax Authorities.
Due to the corporate structure of the Regal Group, a substantial
proportion of Regal's gas production is produced by a non-Ukrainian
subsidiary of the Company, which under the new tax regulations,
places additional reporting burdens on each of Regal's potential
customers who may be less inclined to purchase Regal's gas and/or
may seek discounts on sales prices.
As a result of discussions between Regal and Smart Energy, Smart
Energy has agreed to purchase all of Regal's gas production and to
assume responsibility for the regulatory obligations under the
Ukrainian tax regulations.
Furthermore, Smart Energy has agreed to combine Regal's gas
production with its own gas production, and to sell such gas as
combined volumes, which should result in higher sales prices due to
the larger sales volumes. In order to cover Smart Energy's sales,
administration and regulatory compliance costs, Regal has agreed to
sell its gas to Smart Energy at a discount of 0.5% to the gas sales
prices achieved by Smart Energy.
The terms of sale for Regal's gas to Smart Energy are (i)
payment for one third of gas delivered by the 20(th) of the month
of delivery, and (ii) payment of the remaining balance by the
10(th) of the month following the month of delivery.
Given that Smart Energy is a related party to the Company
pursuant to the AIM Rules, the sale of the Company's gas, on the
terms set out above, is deemed a related party transaction pursuant
to the AIM Rules. Accordingly, the independent directors of the
Company, being Keith Henry, Alastair Graham and Adrian Coates,
having consulted with the Company's Nominated Adviser, Strand
Hanson Limited, consider that the sale of the Company's gas on the
terms set out above is fair and reasonable insofar as shareholders
are concerned.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For further information, please contact:
Regal Petroleum plc Tel: 020 3427
3550
Keith Henry, Chairman
Sergei Glazunov, Financial
Director
Strand Hanson Limited Tel: 020 7409
3494
Rory Murphy / Richard Tulloch
Citigate Dewe Rogerson Tel: 020 7638
9571
Martin Jackson / Louise Mason
/ Shabnam Bashir
This information is provided by RNS
The company news service from the London Stock Exchange
END
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