Higher gas prices help offset shut-ins for Ukraine's Enwell

Ukraine-focussed oil and gas explorer and producer Enwell Energy updated the market on its operations on Wednesday, having partially restarted production in March amid Russia’s invasion of the country.

The AIM-traded firm operates the Mekhediviska-Golotvshinska (MEX-GOL), Svyrydivske (SV) and Vasyschevskoye (VAS) gas and condensate fields, as well as the Svystunivsko-Chervonolutskyi (SC) exploration licence in Ukraine.

At the time of Russia’s violent invasion on 24 February, Enwell shut-in and made safe its production and drilling operations at all of its fields.

On 11 March, having taken measures to ensure safe operations, the company started the partial restart of production operations at its MEX-GOL and SV fields.

Its board said it was continuing to exercise “caution” and “vigilance” in continuing partial production operations, and was “taking all available measures” to protect and safeguard its personnel and business.

Looking at first quarter production, Enwell reported a total of 2,570 barrels of oil equivalent per day for the three months ended 31 March, down from 4,576 barrels per day at the same time last year.

Those figures included the shut-in periods of its fields, with the MEX-GOL and SV fields producing for 76 days in the quarter, and the VAS field producing for 55 days.

Enwell said the disruption to operations and the shut-in of the fields during the quarter meant that volumes were materially lower, both compared with the first quarter of 2021, and the quarter immediately prior.

Additionally, drilling and remedial work on existing wells had been stopped until there was an improvement in the situation in Ukraine.

Notwithstanding the disruption to production, Enwell said the continuing high gas prices in Europe had fed through to Ukrainian gas prices, which benefited the sales prices it was achieving for its gas, as well as condensate and LPG.

Those continued high hydrocarbon prices had helped to offset the impact on revenues during the quarter due to the lower production volumes.

Operationally, Enwell confirmed that partial production operations were ongoing at the MEX-GOL and SV fields, where a proportion of the wells had been put on production, with the current rate standing at about 2,500 barrels of oil equivalent per day.

Other field operations, including the testing of the SV-29 development well, the drilling of the SV-31 development well and the workovers of the SV-2 and MEX-109 wells remained suspended.

In addition, construction work on the upgrades to the gas processing facilities at the MEX-GOL and SV fields was also suspended.

Drilling of the SC-4 appraisal well at the SC licence, and all field operations at the VAS field, had also been suspended.

“The situation in Ukraine is extremely challenging at present, but we continue to focus on taking all available measures to protect our business and ensure the safety and wellbeing of our personnel,” said executive chairman Sergii Glazunov.

At 0809 BST, shares in Enwell Energy were down 0.04% at 24.49p.