TIDMENW
RNS Number : 4830P
Enwell Energy PLC
10 October 2023
10 October 2023
Enwell Energy plc
("Enwell" or the "Company")
Quarterly Operations 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 in respect of its
Mekhediviska-Golotvshinska ("MEX-GOL"), Svyrydivske ("SV") and
Vasyschevskoye ("VAS") gas and condensate fields and
Svystunivsko-Chervonolutskyi ("SC") exploration licence .
Production - Q3 2023
The average daily production of gas, condensate and LPG from the
MEX-GOL, SV and VAS fields over the period from 1 July 2023 to 30
September 2023 was as follows:
Field Gas Condensate LPG Aggregate
(MMcf/d) (bbl/d) (bbl/d) boepd
Q3 2023 Q3 2022 Q3 2023 Q3 2022 Q3 2023 Q3 2022 Q3 2023 Q3 2022
-------- -------- -------- -------- -------- -------- -------- --------
MEX-GOL
& SV 9.4 10.9 358 453 323 297 2,248 2,588
-------- -------- -------- -------- -------- -------- -------- --------
VAS - - - - - - - -
-------- -------- -------- -------- -------- -------- -------- --------
Total 9.4 10.9 358 453 323 297 2,248 2,588
-------- -------- -------- -------- -------- -------- -------- --------
The ongoing war in Ukraine continues to cause disruption to
operations at the Company's fields and recent adverse regulatory
actions by the Ukrainian authorities, culminating in suspension of
the VAS and SC licences on 4 May 2023, have caused further severe
disruption to the Company's operations and a loss of production
from the VAS field. Production volumes at the MEX-GOL and SV fields
were lower when compared with Q3 2022 due to natural field decline,
with the exception of LPG recoveries, which improved significantly
following the completion of upgrade works to the gas processing
facilities at the fields in mid-2022.
Operations
Production operations are continuing at the MEX-GOL and SV
fields, and, currently, the production rate is approximately 2,200
boepd. Field operations are currently continuing relatively
normally, but there have been disruptions to the supply of
equipment and fuel, as well as interruptions to the supply of
electricity, which has caused delays to the progress of some
activities. In general, the operating environment in Ukraine
remains very challenging.
The GOL-107 well is a development well, targeting production
from the V-20 and V-23 horizons in the Visean formation. The well
was spudded in December 2022 and has been drilled to a final depth
of 5,190 metres. One interval, at a drilled depth of 5,140 - 5,143
metres, within the V-23 horizon, has been perforated and
demonstrated gas flows. Initial testing of the well, using a
variety of choke sizes, will now be undertaken to determine the
productivity of the well, and thereafter it is intended that the
well will be hooked up to the gas processing facilities to allow
production testing to be conducted to establish the operating
parameters of the well. Further information on the outcome of the
testing of this well will be announced in due course.
At the VAS field and SC exploration licence area, all operations
are suspended following suspension orders made by the State
Geologic and Subsoil Survey of Ukraine (the "SGSS") on 4 May
2023.
The Company continues to be cautious and vigilant in continuing
with its operations and is taking the appropriate measures
available to protect and safeguard its personnel and business. The
safety and wellbeing of its personnel and contractors is paramount
and the Company will continue to take all possible steps to ensure
their safety.
Cash Holdings
At 30 September 2023, the Company's cash resources were
approximately $72.9 million, comprised of $51.4 million equivalent
in Ukrainian Hryvnia and the balance of $21.5 million equivalent in
a combination of US Dollars, Pounds Sterling and Euros.
Gas Sales and Sales Receivables
During Q3 2023, demand for gas in Ukraine has remained weak due
to the war, although gas sale prices improved moderately during the
quarter. In Q2 2023, the Company completed a restructure of its
contractual relationships relating to the sale of its gas, and
pursuant to such restructuring, ceased selling gas to LLC Smart
Energy. The Company now sells all of its gas directly to its
off-takers. During the quarter, all of the remaining receivable
balance under the previous sale arrangement with LLC Smart Energy
was received.
New Auditor and Suspension from trading on AIM Market
The Company is pleased to announce that it has recently engaged
Zenith Audit Ltd as its new auditor for the audit of its financial
statements. Zenith Audit Ltd has commenced work on the audit of the
Company's financial statements for the year ended 31 December 2022
(the "2022 Accounts") , in conjunction with Kreston Ukraine who are
undertaking the Ukrainian component of the audit of such financial
statements . Completion of the 2022 Accounts is expected to be in
Q4 2023.
Prior to the appointment of Zenith Audit Ltd, the Company did
not have an auditor to enable it to complete, publish and post its
audited 2022 Accounts to shareholders by the deadline of 30 June
2023 as required by Rule 19 of the AIM Rules for Companies. As a
result, trading in the Company's ordinary shares on AIM was
suspended with effect from 7.30 a.m. on 3 July 2023 pending
publication and posting to shareholders of the 2022 Accounts.
Suspension from trading is expected to be lifted upon publication
and posting to shareholders of the 2022 Accounts, and the Company's
interim results for the six month period ended 30 June 2023, which
are expected to be completed shortly after the publication of the
2022 Accounts.
Suspension of VAS and SC Licences
As announced on 4 May 2023, the SGSS has issued orders
suspending the Company's VAS production licence and SC exploration
licence.
This followed action by the Ministry of Justice of Ukraine (the
"MoJ") on 2 May 2023, which made Orders (the "MoJ Orders")
cancelling the registration entry made on behalf of three Ukrainian
subsidiaries of the Company named LLC Prom-Enerho Produkt ("PEP"),
LLC Arkona Gas-Energy ("Arkona") and LLC Well Investum ("Well
Investum") respectively in the Unified State Register of Legal
Entities, Individuals-entrepreneurs and Civil Institutions of
Ukraine (the "State Register") relating to the ultimate beneficial
owners of such companies. The registration entry for each of these
companies stated the ultimate beneficial owners to be the
beneficial owners of the indirect majority shareholder of the
Company as notified to the Company and published to the market on
26 January 2023, but the MoJ Orders removed each such registration
entry and restored the previous entry in the State Register, Vadym
Novynskyi ("Mr Novynskyi"). As announced on 26 January 2023, the
Company was notified that Mr Novynskyi ceased holding a beneficial
interest in the indirect majority shareholder of the Company on 1
December 2022. PEP holds the VAS production licence, Arkona holds
the SC exploration licence and Well Investum is a dormant
company.
Under Ukrainian Law No. 2805-IX, which came into force on 28
March 2023 , the SGSS has legislative powers to suspend and/or
revoke hydrocarbon licences of which the ultimate beneficial owner
is the subject of Ukrainian Government sanctions. A s announced on
9 December 2022, the Ukrainian Government imposed sanctions on Mr
Novynskyi, who previously held a major indirect shareholding
interest in the Company, but ceased to do so on 1 December 2022 as
referred to above. However, following the issuance of the MoJ
Orders, Mr Novynskyi is now registered in the State Register as the
ultimate beneficial owner of each of PEP and Arkona, and is
consequently recognised by the SGSS as the ultimate beneficial
owner of each of the VAS production licence and SC exploration
licence. As a result, the SGSS issued the suspension orders in
respect of each of the VAS production licence and SC exploration
licence for a period of 5 years effective from 4 May 2023 .
Accordingly, the Company has ceased all field and production
operations on the VAS and SC licence areas.
Regulatory Actions by Ukrainian Authorities
As announced on 12 April 2023, the Ukrainian authorities have
taken a number of regulatory actions against certain of the
Company's subsidiaries in Ukraine, including conducting a search at
the Group's Yakhnyky office, from where the MEX-GOL and SV fields
are operated, and placing certain physical assets of the Ukrainian
branch (representative) office of Regal Petroleum Corporation
Limited ("RPC") and Arkona (which respectively hold the MEX-GOL and
SV fields and the SC exploration licence) under seizure, thereby
restricting any actions that would change registration of the
property rights relating to such assets. However, the use of such
assets is not restricted and therefore the Company is able to
continue to operate and produce gas and condensate from the MEX-GOL
and SV fields. In addition, the MoJ made an Order cancelling the
registration entry made on behalf of a subsidiary of the Company
named LLC Regal Petroleum Corporation (Ukraine) Limited in the
State Register relating to the ultimate beneficial owners of such
company, thereby restoring the previous entry in the State
Register, Mr Novynskyi. Furthermore, the SGSS issued an Order to
RPC requiring that additional information be provided and/or
violations be eliminated in the disclosures relating to the
ultimate beneficial owners of the MEX-GOL and SV licences
respectively.
Sergii Glazunov, Chief Executive Officer, said : "The operating
environment in Ukraine continues to be extremely challenging as a
result of the war, and additionally the regulatory actions and
continuing suspension orders made by the Ukrainian authorities are
extremely disappointing. Nevertheless, w e are pleased to be able
to continue our production operations at the MEX-GOL and SV fields,
and to progress the testing of the GOL-107 well. We are consulting
with our lawyers to take all available measures to protect our
assets and business and to, hopefully, successfully challenge the
regulatory actions taken by the Ukrainian authorities."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014, which forms part of United
Kingdom domestic law by virtue of the European Union (Withdrawal)
Act 2018, as amended by virtue of the Market Abuse (Amendment) (EU
Exit) Regulations 2019.
For further information, please contact:
Enwell Energy plc Tel: 020 3427
3550
Chris Hopkinson, Chairman
Sergii Glazunov, Chief Executive Officer
Bruce Burrows, Finance Director
Strand Hanson Limited Tel: 020 7409
3494
Rory Murphy / Matthew Chandler
Zeus Capital Limited Tel: 020 7614
5900
Alexandra Campbell-Harris (Corporate
Finance)
Simon Johnson (Corporate Broking)
Citigate Dewe Rogerson Tel: 020 7638
9571
Ellen Wilton
Dr Gehrig Schultz, BSc Geophysical Engineering, PhD Geophysics,
Member of the European Association of Geophysical Engineers, Member
of the Executive Coordinating Committee of the Continental European
Energy Council, and a Non-Executive Director of the Company, has
reviewed and approved the technical information contained within
this announcement in his capacity as a qualified person, as
required under the AIM Rules for Companies.
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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END
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October 10, 2023 02:00 ET (06:00 GMT)
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