The Board of Urals Energy (AIM:UEN), the independent exploration and production company with operations in Russia, is pleased to provide the following operational update.
Tanker shipment update
The price per barrel for the tanker shipment announced on 31 October 2017 has now been confirmed as US$62.15 per barrel. This pricing is based on the arithmetic average of the quotations for Brent DTD published in “Platts Crude Oil Marketwire” for the five days after the date of the bill of lading.
After taking into account all duties and taxes, transport costs and demurrage, the net proceeds from the shipment are expected to be approximately US$8.5 million, representing a net back of US$45.08 per barrel. This represents an improvement of approximately US$14.18 per barrel, when compared with the net receipts from our first tanker export in June of this year, which was affected by the fall at that time in the international oil price, as noted in our announcement on 28 September 2017.
After repayment from the proceeds of the tanker payment of the Petraco pre-export short term loan finance arrangement, announced on 7 September 2017, we anticipate that the Company’s net debt will be reduced from US$12.3 million as at the end of June 2017 to US$3.8 million.
Corporate website updates
The Company will relaunch the Shareholder questions and answers (Q&A) section on its website in the coming days. Shareholders are encouraged to post any questions that they may have through the website and, as far as is permitted by the legal and regulatory framework which applies to the Company, the Board will answer these on a regular basis.
The website’s new Q&A section will also include a commentary from the Chairman on the Board’s view of the Company’s strengths and investment case, as well as an outline of the Board’s key strategic plans for 2018, which is reproduced below.
Our plans for 2018 are as follows:
– continue work overs and the installation of jack pumps with the aim of keeping production stable at approximately 1,000 bbls/day
– assessment of a new programme of deviated wells and or fracking to increase production significantly from existing horizons, and in the case of success;
– apply for additional licences on the Island, in order to take advantage of our unique position as the only operator with processing, tank farm availability and its own tanker terminals
– continue well work overs at Petrosakh, thus seeking to maintain production at approximately 1,200 bbls/day
– upgrade refinery equipment to increase the yield and quality of products
– obtain a marine terminal licence for the sale of bunker fuel to local ship operators
– deploy newly acquired rig to drill three wells at our new South Dagi licence
– workover two existing wells on South Dagi
– additional seismic interpretation for the two oil fields held by RK Oil and BVN Oil
– following the cancelation of the first drilling contract at RK Oil, seek a partnership, ideally with a major oil service company to manage the development of the large proven and probable reserves, potentially coordinated with adjacent oil fields that have necessary infrastructure and transit connections
New investor presentation
The Company will also post a new Investor Presentation on its website in the coming days.
Andrew Shrager, Chairman of Urals, commented:
“We have been more fortunate with the price received for our oil shipped by the second tanker, and this has put the Company in a strong financial position. The fact that we now have increased production on Kolguev Island has allowed us to make these two shipments per year, rather than one, and has benefitted our cash flow considerably. It has been efficient, however, to continue to have the financial support of Petraco with a short-term pre-export loan finance facility ahead of each shipment, as it helps us to meet taxes and duties that have to be paid prior to the shipment being made, and releases our working capital for other operations. Shareholders are reminded that we will be paying our maiden dividend on 1 December 2017.
“The new Investor Presentation will include analysis prepared by CMA, an independent research consultancy retained by the Company, that reflects the relative performance of the Company, compared with oil and gas companies operating in Russia, the Former Soviet Union and the AIM market, which we hope shareholders will find useful.”
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