TIDMUEN
RNS Number : 2421Y
Urals Energy Public Company Limited
20 December 2010
20 December 2010
Urals Energy Public Company Limited
('Urals Energy' or the 'Company')
Placing
Urals Energy, the Russian focused oil & gas exploration and
production company, is pleased to announce that it has completed a
conditional placing to provide the Company with additional funds to
enhance the development of its business. The Company is raising
GBP5.8 million (being US$9.0 million, based on an exchange rate of
US$1.5533 to GBGBP1.00) before expenses. This is to be effected by
means of a placing of 52,420,768 shares with a nominal value of
US$0.0063 each (the "Placing Shares") at a placing price of 11.0
pence per Placing Share (the "Placing Price"). The Placing has been
arranged by Allenby Capital Limited ("Allenby Capital").
Background to the Placing, use of proceeds and working
capital
The Directors wish to take advantage of the opportunity to raise
funds from a small number of institutional and other investors at
the present time. On 14 December 2010 the Directors sent to
shareholders a circular convening an Extraordinary General Meeting
at 11.00 am on 30 December 2010 the (the "EGM") at which they are
seeking shareholder approval for the disapplication of the
shareholders' statutory pre-emptive rights to allow the issue of up
to 65,000,000 new shares of US$0.0063 each for cash.
The Directors have decided to undertake the fundraising by way
of the Placing following a limited and targeted marketing exercise,
rather than by offering all shareholders the opportunity to acquire
further shares. The Directors believe that the additional cost and
delay incurred in connection with any such offer (as a result of
satisfying the regulatory requirements associated with allowing the
Company's shareholders to participate in a fundraising) would not
have been in the best interests of the Company. In addition the
Director's believe that the investors procured by Allenby Capital
will be able to provide further funding to the Company at the
appropriate time in the future.
The net proceeds of the Placing will be used for:
-- development drilling and workovers at both Articneft and
Petrosakh;
-- maintenance CAPEX at both Articneft and Petrosakh; and
-- working capital financing.
The Placing will provide the Company with funds to increase its
production and this increased production will generate funds both
to repay Petraco Oil Company Limited ("Petraco") in accordance with
the previously announced repayment schedule and to start to
generate returns for shareholders. In the event that the Company
cannot make the repayments to Petraco on the scheduled dates then
the Board believe that the interests of shareholders will be
significantly damaged as steps may be taken by Petraco to protect
its position.
The Directors are of the view that the Placing will give the
Company sufficient working capital for at least the next 12 months.
However, the Company's growth is difficult to predict and if it
were to grow faster or slower than anticipated, or in the event of
unforeseen circumstances, further working capital may be required.
There can be no certainty as to the terms or availability of such
funding in the future.
The Company continues to look at opportunities in relation to
the Tarkskoye field, which is located close to the Company's
Arcticneft operations and is currently subject of a government
auction process, but at this point no decision has been made.
However, the Directors do not plan to use the proceeds from the
Placing in relation to any development at the Tarkskoye field.
Taas loan
The Directors note the recent public announcements by Sberbank
relating to a possible disposal of the Taas-Yuryakh and Dulisma
operations during the first half of 2011. These operations were
formally owned by Urals Energy but were transferred to Sberbank to
settle outstanding loans in late 2009 following the change of
management at Sberbank, which decided not to extend the loans. The
Directors believe that any disposal by Sberbank of the Taas-Yuryakh
and Dulisma operations may accelerate the repayment of the $37.5
million now owed to Urals by Taas-YuryakhNeftegasDobycha LLC which
is otherwise due in 2015. However, the Board believes it would not
be prudent to incorporate this possible cash inflow in the
Company's cash flow projections or to assume that these proceeds
may be available during the 2011 for the development of Urals
Energy's existing assets.
Operational update
The Directors are pleased to report that the Company's current
production stands at a level of 2,360 barrels of oil per day
("BOPD"), taking into account production at natural flow rates from
the side track well 35b at Petrosakh of 152 BOPD.
The Company plans to drill five new and side track wells at the
Petrosakh field in the next year. The Company is currently in the
process of selecting a drilling contractor for these wells.
The Company also plans to drill four side track wells and
recommence pressure maintenance on the reservoir. These activities
would not only increase current production at Arcticneft, but may
also prove the recent geological studies of the field, which may
result in an upgrade or increase of the reserves.
Strategy overview
The Company's short-term strategy is to ensure that its
remaining debts are repaid, its liquidity situation is stabilised
and that its cost reduction programme is completed.
In the mid-term, the Company intends to focus on optimising the
operations of its existing assets, identifying ways of utilising
the maximum upside potential in downstream and marketing and
achieving a positive operating cash flow. The Directors intend to
work towards achieving a target production from the Company's
existing assets of 3 400 BOPD by the end of 2011 and 5,150 BOPD by
the end of 2013. In addition to development drilling at Arcticneft,
the work program aims to prove the results of the recent geological
studies, which may result not only in the stabilising of
production, but in the increase of production from existing wells
and upgrade, or even increase, in the reserves numbers.
The Placing will allow the Company to hire an experienced
high-profile drilling contractor to run drilling operations at both
of the Company's sites to overcome issues encountered in the past
in drilling and completing new and side track wells. Whilst there
may be a small increase in costs, this would substantially increase
the speed of drilling and mitigate risks. The Company has already
started negotiations with several drilling contractors and will
make a decision once the proceeds from the Placing are
received.
In the long-term, the Directors intend to derive maximum value
for the Company's shareholders through continued enhanced effective
management of the Company's assets. Various alternative growth and
expansion opportunities are being considered by the Directors, but
these will only be actively pursued where the Board considers them
to be clearly beneficial to the Company.
Conditions of the Placing
As a result of the size of the Placing relative to the Company's
existing authority to allot shares for cash otherwise than on a
pre-emptive basis, the Placing is conditional, inter alia, upon the
passing of the resolutions by the Company's shareholders at the
EGM. These resolutions approve the disapplication of pre-emption
rights to enable the Directors to allot the Placing Shares for cash
to persons other than current shareholders.
Under the terms of a placing agreement dated 17 December 2010
and entered into between the Company, the executive directors of
the Company and Allenby Capital, Allenby Capital has agreed to use
its reasonable endeavours to procure placees for the Placing Shares
at the Placing Price. The Placing is not being underwritten.
The Placing, is conditional, inter alia, on shareholder approval
of the above mentioned disapplication of pre-emptive rights at the
Company's forthcoming EGM on 30 December 2010, further details of
which were announced on 14 December 2010 and the admission of the
Placing Shares to trading on AIM.
Application will be made to the London Stock Exchange plc for
the Placing Shares to be admitted to trading on AIM. It is expected
that, following the passing of the resolutions at the EGM, dealings
in the Placing Shares will commence on or around 31 December 2010.
The Placing Shares will rank paripassu with the existing shares of
US$0.0063 each in the Company.
The Placing Shares are equivalent to approximately 21.54 per
cent of the enlarged issued share capital of the Company following
Admission and the Placing Price represents a discount of
approximately 15 per cent to the closing mid-market price of an
existing issued Ordinary Share of 13.0 pence on 17 December 2010,
being the latest practicable date prior to this announcement. The
total enlarged issued share capital of the Company following
Admission will be 243,414,731 shares of US$0.0063 each in the
capital of the Company. The above figure may be used by
shareholders as the denominator for the calculations by which they
can determine if they are required to notify their interest in, or
a change to their interest in, the share capital of the Company
under the AIM Rules.
Alexei Maximov, CEO of Urals Energy, commented as follows:
"We are pleased to welcome new institutional shareholders to the
Company who we believe will be able to assist the Company in
implementing its future plans. The funds raised will allow the
Company to undertake a more active development program and increase
our flexibility while continuing our focus on increasing
shareholder value.
"Without this funding Urals Energy may be unable to make the
staged repayments to Petraco on the agreed dates and in these
circumstances the Directors would have to take steps to protect the
interests of creditors which would be the detriment of
shareholders. The Directors therefore urge all existing
shareholders to support this fundraising by voting in favour of the
resolutions at the EGM on 30 December 2010.
"2010 was a year of "house cleaning" and in 2011 we will focus
on production and operations' improvements, while seeking growth
opportunities. To be able to undertake such development, it is
vital that in the future we make the repayments to Petraco on the
agreed dates and this fundraising will give us the ability to do
so. We will start looking again at opportunities for expanding our
operations, but this can be done only once we have completed the
development stage."
Enquiries:
Urals Energy Public Company Limited +7 495 795 03 00
Alexei Maximov
--------------------
Grigory Kazakov
--------------------
Allenby Capital Limited +44 (0)20 3328 5656
--------------------
Nick Naylor
Alex Price
--------------------
Pelham Bell Pottinger +44 (0)20 7861 3232
--------------------
Mark Antelme
--------------------
Jenny Renton
--------------------
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
IOEFFAEFUFSSEEE
Urals Energy (LSE:UEN)
Historical Stock Chart
From Jun 2024 to Jul 2024
Urals Energy (LSE:UEN)
Historical Stock Chart
From Jul 2023 to Jul 2024
