Enwell Energy licence again ruled invalid by Ukraine court

Enwell Energy updated the market on further Ukrainian legal proceedings over its Svystunivsko-Chervonolutskyi exploration licence on Friday.

The AIM-traded firm said the licence is held by Arkona Gas-Energy, which it acquired in March 2020.

Since it completed the acquisition, there had been a number of legal challenges over the licence, with PJSC Ukrnafta bringing proceedings against Arkona in July 2020, in which Ukrnafta asserted that irregular procedures were followed in the grant of the licence in May 2017.

Ukrnafta also brought proceedings against the State Service of Geology and Subsoil of Ukraine (SGS).

Both Arkona and the SGS disputed the claims, with the First Instance Court ruling in favour of Ukrnafta, determining that the grant of the licence was irregular, and thus invalid.

Arkona appealed that decision in the Appellate Administrative Court in Kyiv, and on 29 September 2020 the court ruled in favour of Arkona, overturning the earlier decision of the First Instance Court.

Ukrnafta filed a further appeal in the Supreme Court in Kyiv, and in February 2021, the Supreme Court ruled that the arguments raised by Ukrnafta were not substantiated, and that the proceedings against Arkona should be dismissed.

The company said the decision of the Supreme Court represented the final appeal procedure in respect of the proceedings, and accordingly, those proceedings against Arkona were exhausted.

Before the Company's acquisition of Arkona, Ukrnafta had previously issued legal proceedings in 2018, raising substantially the same claims, which proceeded through the First Instance Court and Appellate Administrative Court, before a final appeal was determined by the Supreme Court in October 2019, in which Ukrnafta's claims were denied.

In April 2021, an entity named JV Boryslav Oil Company (Boryslav), which is 25.0999% owned by Ukrnafta, issued a further legal claim, also claiming that irregular procedures were followed in the grant of the licence, with the claim was denied by the First Instance Court in July 2021 and by the Appellate Administrative Court in October 2021.

There was no further appeal in that case, and so the decision of the Appellate Administrative Court in those legal proceedings was final.

In September 2021, Boryslav issued a further legal claim, again claiming that irregular procedures were followed in the grant of the licence, against the SGS, the State Commission of Ukraine for Mineral Resources (SCP) and Arkona, as defendants, with Ukrnafta named as a third party.

In that claim, the First Instance Court made a ruling in January this year in favour of Boryslav.

That ruling was appealed to the Appellate Administrative Court, and on 2 November, the Appellate Administrative Court made a ruling in favour of Boryslav, to uphold the decision of the First Instance Court, with the effect that the licence was now ruled invalid.

The effect of the latest ruling was that the company could not conduct any field activities on the licence area.

It said it now intended to appeal the decision of the Appellate Administrative Court to the Supreme Court.

“While we are extremely disappointed by this adverse ruling made by the Appellate Administrative Court, which we believe is unjustified, particularly having regard to the previous decisions made by the Supreme Court in favour of Arkona, we intend to pursue all measures to challenge this ruling and protect our legal rights to this licence area,” said chief executive officer Sergii Glazunov.

At 1214 GMT, shares in Enwell Energy were down 8.64% at 23.8p.

Reporting by Josh White for Sharecast.com.