Petraco Debt Restructuring and Operational Update
12 Abril 2010 - 11:30AM
UK Regulatory
TIDMUEN
RNS Number : 0677K
Urals Energy Public Company Limited
12 April 2010
12 April 2010
Urals Energy Public Company Limited
('Urals Energy' or the 'Company')
Petraco debt restructuring and operational update
Urals Energy, the AIM listed independent exploration and production company with
operations in Russia, is pleased to announce that it has reached agreement with
Petraco Oil Company Limited ("Petraco") relating to the restructuring of the
Company's prepayment financing arrangements with Petraco (the "Petraco
Facility"). In addition, Urals Energy is today providing an operational update.
Petraco Facility restructuring
Urals Energy has reached agreement with Petraco relating to the restructuring of
the Petraco Facility (the "Restructuring Agreement"). The principal terms of the
Restructuring Agreement are as follows:
· Total indebtedness owed by the Company to Petraco, as at 31 March
2010, was US$34.3 million, made up as follows:
+------------------------------------+------------------+
| - capital amount outstanding (the | US$30.7 million |
| "Capital Outstanding") of: | |
| | |
+------------------------------------+------------------+
| - accrued interest outstanding | US$3.6 million |
| (the "Accrued Interest") of: | |
| | |
+------------------------------------+------------------+
At 1 April 2010, the Capital Outstanding and Accrued Interest will be added
together and carried forward as principal ("Principal"). After 1 April 2010
interest will be accrued on the Principal and will not be compounded. All
accrued interest from 1 April 2010 will be paid once the Principal has been
repaid and all payments made by the Company according to the payment schedule
set out below will be applied against the Principal outstanding. Interest will
be charged on the Principal at a rate of 6 month LIBOR plus 5% per annum,
non-compounding.
· Subject to a waiver of preemption rights by shareholders in Urals
Energy (the "Shareholders") at an extraordinary general meeting (the "EGM"),
Petraco will convert US$2.0 million of the Capital Outstanding into Urals Energy
ordinary shares at the volume weighted average price for the five days following
the date of this announcement, but at not more than GBP0.15 per Urals Energy
ordinary share. Also, subject to approval from the Shareholders at the EGM,
Petraco will receive an option to acquire $5.0 million of new Urals Energy
ordinary shares at the volume weighted average price for the five days following
the date of this announcement plus 50%.
· The repayment schedule of the balance for the Capital Outstanding and
the Accrued Interest will be as follows:
+-------------------------------------+-------------------+
| Payment date | Amount to be paid |
| | by Urals Energy |
| | to Petraco |
| | |
+-------------------------------------+-------------------+
| 30 September 2010 | US$3.0 million |
| | |
+-------------------------------------+-------------------+
| 31 December 2010 ** | US$3.0 million * |
| | |
+-------------------------------------+-------------------+
| 31 December 2011 | US$8.0 million |
| | |
+-------------------------------------+-------------------+
| 31 December 2012 | US$11.7 million |
| | |
+-------------------------------------+-------------------+
| 31 December 2013 | Outstanding |
| | balance |
| | |
+-------------------------------------+-------------------+
| Notes |
| * In the event that Urals Energy does not export any |
| oil from Petrosakh (Urals Energy's operations on |
| Sakhalin Island), the amount of this tranche is to be |
| increased to US$4.0 million. |
| |
| ** Urals Energy and Petraco as part of the |
| Restructuring Agreement have also agreed a distribution |
| schedule of the Taas-Yuriakh Neftegazodobycha loan (the |
| "Taas loan") proceeds based on the amount of any early |
| repayment received by the Company. In the event of |
| early repayment of the Taas Loan in 2010, the maximum |
| payment by the Company to Petraco is to be not more |
| than US$10.0 million. If the Taas Loan is repaid |
| earlier than maturity, but later than 31 December 2010, |
| Urals Energy and Petraco have agreed to a schedule of |
| settlement. |
+---------------------------------------------------------+
| |
| |
+-------------------------------------+-------------------+
· Urals Energy will, subject to the approval by Urals Energy
shareholders at the EGM, pledge 100% of the shares it currently holds in CJSC
Arcticneft and 97.2% of shares it currently holds in CJSC Petrosakh to Petraco
as security against the restructured Petraco Facility.
In accordance with AIM Rule 15 "Fundamental changes of business", completion of
the Restructuring Agreement is conditional, inter alia, upon the Urals Energy
obtaining certain approvals from its Shareholders and this will form one of the
resolutions put to Shareholders at the EGM.
The EGM is being convened for 10.00 a.m. local Cyprus time on 29 April 2010 in
Evagoras Building Office 34 3rd Floor 31 Evagorou Avenue, Nicosia, Cyprus.
A circular (the "Circular") setting out the details of the Restructuring
Agreement and a notice of the EGM will be posted to Urals Energy shareholders
shortly and will, when published, be available, in electronic form, for download
on the Company's website at www.uralsenergy.com.
Further details of the Restructuring Agreement will be set out in the Circular.
Operations update
Commencement of drilling of the first side track well in Petrosakh
The Company has signed drilling contracts for the first side track well #35b at
Petrosakh. Prepayments for materials and drilling equipment have been made and
the Company's management plans to spud this well on or around 1 June 2010. For
drilling this well the Company will use its own rig and total costs should not
exceed Roubles 16 million ($0.53 million) and production should commence in
July 2010. An expected production rate from this well is approximately 225
BOPD.
Management plans to spud the second side-track well in July following the
completion of well #35b.
Petrosakh.
Current production remains at 1,500 barrels of oil per day ("BOPD").
The recent decline in production at Petrosakh has been stabilised. The Company
has completed two wells with workovers and installed two rod pumps on the other
two wells.
Production from well #47 after a workover has increased by 50 BOPD. Following
an installation of a rod pump a further increase of 50 BOPD is expected by the
management. The Company purchased two rod pumps and expect delivery by the end
of April 2010.
Well #34 was reperforated in the interval 1,411-1,651 meters. The total fluid
production rate doubled after perforation, but the level of crude oil production
remained unchanged. It was decided to stop a nearby water injection well and
production rate of crude started increasing. Management plans to increase the
diameter of a rod pump to increase the production volume of liquids. At the
moment review and assessment of this well's performance is ongoing and
preliminary results are expected by the end of this week.
Currently, 100% of production is refined and sold on a local market.
Arcticneft
Current production at Articneft is 700 BOPD.
Since the Company's last operational update the production decline has
stabilised. By using internal resources and existing perforators in stock on the
island, the Company has performed several minor workovers on the existing wells
of the Western Block of the field. As a result production increased by 56 BOPD.
Currently 4 wells on the Western Block of the field remain shut, but production
is anticipated to restart in April 2010. Before shutting production from these
wells was 70 BOPD.
By the end of April, the Company expects to receive preliminary results of a
geological update and study which will determine the remaining field development
programme in 2010.
As of 11 April 2010 Arcticneft had 103,412 bbls of self produced crude oil in
stock. First delivery of crude oil from Arcticneft is expected in July 2010.
Enquiries:
+----------------------------------+--------------------------------+
| | |
| Allenby Capital Limited | +44 (0)20 3328 5656 |
+----------------------------------+--------------------------------+
| Nick Naylor | |
| Alex Price | |
+----------------------------------+--------------------------------+
| | |
+----------------------------------+--------------------------------+
| Pelham Bell Pottinger | +44 (0)20 7337 1500 |
+----------------------------------+--------------------------------+
| Mark Antelme | |
+----------------------------------+--------------------------------+
| Evgeniy Chuikov | |
+----------------------------------+--------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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