Urals Energy to buy ANK

ANK’s sole asset is the central part of the Peschanoozerskoe oil field on Kolguyev Island.

For the year ended 31 December, the company recorded an audited loss before tax of 56m Russian roubles on sales of approximately 180m roubles.

Urals said that by buying ANK, it will be able to achieve significant economies of scale through combining the operations of ANK with its existing operations on Kolguyev Island.

Urals Energy has entered into a sale and purchase agreement with AMNGR, which will see it pay a cash consideration of 100m Russian roubles (approximately $1.56m), equivalent to $0.09 per barrel of recoverable reserves, on a cash free/debt free basis.

The consideration will be adjusted for any net working capital at closing, which is expected to be at the end of August.

Urals chairman Andrew Shrager said: “"This is an acquisition that we have trying to achieve for some years, since the synergy benefits are significant to Urals Energy.

“With the cost savings that we will be able to make, the combination will be cash generative and the acquisition cost should be recovered in up to 18 months at current price for oil, taxes and the exchange rate between the US dollar and the Russian rouble. We anticipate that cash flow through the year will also be improved. The big prize, though, will be the ability to exploit our increased proven undeveloped reserves as part of a combined development plan.”

At 1555 BST, shares were up 12% to 2.39p.