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RNS Number : 4007C
Enwell Energy PLC
11 October 2022
11 October 2022
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, 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 2022
The average daily production of gas, condensate and LPG from the
MEX-GOL, SV and VAS fields over the period from 1 July 2022 to 30
September 2022 was as follows:-
Field Gas Condensate LPG Aggregate
(MMcf/d) (bbl/d) (bbl/d) boepd
Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021
-------- -------- -------- -------- -------- -------- -------- --------
MEX-GOL
& SV 10.9 21.0 453 749 297 278 2,588 4,645
-------- -------- -------- -------- -------- -------- -------- --------
VAS - 2.5 - 24 - - - 481
-------- -------- -------- -------- -------- -------- -------- --------
Total 10.9 23.5 453 773 297 278 2,588 5,126
-------- -------- -------- -------- -------- -------- -------- --------
The disruption to production operations at the MEX-GOL and SV
fields, where certain remedial and maintenance work was delayed
and/or disrupted, and the shut-in of the VAS field since February
2022 meant that production volumes were materially lower when
compared with Q3 2021. In addition, the drilling of new wells and
some remedial work on existing wells has been deferred or suspended
until there is an improvement in the operating environment in
Ukraine.
Operations
Production operations are continuing at the MEX-GOL and SV
fields, and, currently, the production rate is approximately 2,700
boepd. Some other field operations have resumed, including workover
operations on the SV-2 well and maintenance of field
infrastructure, but all o ther works have been deferred or
suspended.
At the MEX-GOL and SV fields, the SV-31 development well, which
was completed in May 2022 and brought on production from one
interval, at a drilled depth of 5,210 - 5,219 metres, within the
V-22 Visean formation, has continued to produce strongly. In
September 2022, pursuant to the plans for this well, two additional
intervals, at drilled depths of 5,187 - 5,189 and 5,120 - 5,123
metres, respectively within the V-22 and V-21 Visean formations,
were perforated to access additional reserves. These additional
intervals have also proved productive and materially boosted
production rates from this well, which are currently approximately
3.36 MMscf/d of gas and 161 bbl/d of condensate (785 boepd in
aggregate).
On the SC licence area, after a period of suspension, drilling
operations resumed at the SC-4 well in July 2022 and the well was
drilled to its final depth of 5,585 metres. The well is primarily
an appraisal well, targeting production from the V-22 horizon, as
well as exploring the V-16 and V-21 horizons, in the Visean
formation. Currently, testing operations are underway at the well.
In addition , the interpretation of the 1 50 km(2) of 3D seismic,
that was acquired last winter, is nearing completion.
At the VAS field, after being suspended since February 2022,
production operations have resumed this month, and, currently, the
production wells at the field are cleaning up after the period of
suspension.
The Company continues to be cautious and vigilant in continuing
these operations and is taking all 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.
Subsoil Production and Excise Tax Changes
With effect from 1 March 2022, the Ukrainian Government enacted
changes to the subsoil production tax rates applicable to gas
production by modifying the applicable rates based on gas prices,
extending the incentive rates for new wells for a further 10 years
and making improvements to the regulatory environment. The
legislation which introduced these changes also included provisions
that these rates would not be increased for 10 years. Further
details are set out in the Company's announcement dated 13 April
2022.
However, as a direct result of the conflict in Ukraine,
including the significant decline in domestic consumption
disrupting the previous supply, demand and pricing dynamics, there
has been a divergence between domestic and European gas pricing,
and accordingly, the methodology (linked to European prices) used
to determine the reference gas price for the new subsoil tax rates
has had a significantly detrimental effect for domestic gas
producers. In order to address this issue, the Ukrainian Parliament
has recently enacted new legislation which modifies such
methodology to ensure that it operates as originally intended (with
such reference price being aligned with domestic prices). This
modification has an effective date of 1 August 2022.
In addition, the excise tax on LPG sales was suspended between
24 February 2022 and 30 September 2022, but has now been
reinstated, while the VAT rate applicable to condensate and LPG
sales was reduced to 7% (from 20%) with effect from 18 March
2022.
Cash Holdings
At 30 September 2022, the Company's cash resources were
approximately $78.6 million, comprised of $20.9 million equivalent
in Ukrainian Hryvnia and the balance of $57.7 million equivalent in
a combination of US Dollars, Pounds Sterling and Euros .
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.
Sergii Glazunov, Chief Executive Officer, said : "Although the
situation in Ukraine continues to be extremely challenging, w e are
pleased that, with the recent resumption of production operations
at the VAS field, we now have active operational activity at all of
our assets, and we also look forward to the results of the recently
completed SC-4 well in due course"
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.
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
Arden Partners plc Tel: 020 7614
5900
Ruari McGirr / Elliot Mustoe (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
km(2) square kilometre
LPG liquefied petroleum gas
Mm(3) thousand cubic metres
MMcf/d million cubic feet per day
% per cent.
$ US Dollars
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END
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