Regal Petroleum makes solid progress in Ukraine

Oil and gas exploration and production group Regal Petroleum announced its audited results for the year to 31 December on Friday, with average production from the MEX-GOL and SV fields in Ukraine over the year standing at 1,321 barrels of oil equivalent per day in aggregate, compared to 1,274 boepd in 2015.

The AIM-traded company said that consisted of 157,228 cubic metres per day of gas, 41 m3/d of condensate and 19 m3/d of LPG, compared to 144,783 m3/d of gas, 44 m3/d of condensate and 21 m3/d of LPG in the prior year.

Average gas and condensate production from the VAS field for period from 4 July to 31 December was 82,624 m3/d of gas and 6.5 m3/d of condensate, or 556 boepd in aggregate.

During 2016, the group purchased 8,262,121 m3 of ‘wet’ gas and, following treatment of that gas, produced 4,929,386 m3 of gas, 1,448 m3 of condensate and 11,034 m3 of LPG for 87,713 boe in aggregate.

The board said that arrangement had now ended.

Operations on the MEX-109 well were continuing with testing expected to commence by May 2017 and, subject to successful testing, production hook-up by the end of the second quarter of 2017, the board added.

On the financial front, revenue for the year to 31 December was $25.7m, rising from $23.4m, with the company’s loss for the year widening slightly to $1.3m from $1.0m in 2015.

Its foreign exchange translation loss for the year was $5.9m, narrower than the $22.8m it reported a year earlier, due to the devaluation of the Ukrainian hryvnia against the US dollar.

Cash generated from operations during the year was $10.0m, up from $8.8m.

Cash and cash equivalents at 31 December remained in line year-on-year at $20.0m, compared to $19.9m, with cash and cash equivalents at 26 April 2017 of $23.0m, held as to $11.2m equivalent in hryvnia and the balance of $11.8m equivalent predominantly in dollars and sterling.

“[An] improving geopolitical outlook in Ukraine has led to [a] gradual increase in [our] development programme for 2017,” the board explained in its release.

“[The] focus during 2017 at MEX-GOL and SV fields [will be] on [the] completion of [the] MEX-109 well, further geophysical studies on existing seismic data, [a] joint venture arrangement for [the] workover of [the] SV-2 well, [the] workover of [the] GOL-2 well, [the] installation of additional compression equipment, continued investment in gas processing facilities and [the] pipeline network, and upgrading ... existing wells.”

Its focus at the VAS field would be on the reinterpretation of existing seismic data, the acquisition of new 3D seismic and the drilling of the VAS-10 well, the board added, with funding for the 2017 development programme anticipated to be from existing cash and cash equivalents and operational cash flow.