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:
Following the announcement on 20 July 2017, testing of well 130 (which will be known as well 102 in future updates) has been completed. The well encountered the pilling rock formation at 1,787 metres, and the production liner is at a depth of between 1,534 and 1,720 metres. The location of the well is at an area of the reservoir where porosity is relatively low compared with other areas of the reservoir. The well’s flow has averaged between approximately 22.5 and 37.5 barrels of oil per day. The Board anticipates that the well will flow for three years and will then be used as a water injector to maintain pressure in the reservoir.
The new rig that has been acquired for South Dagi licence area has arrived on the Island of Sakhalin and is undergoing customs clearances. Drilling locations for this rig have been determined. The Board anticipates that the first well at South Dagi will be spudded by the end of October, subject to no delays in completing all necessary regulatory approvals by the end of September 2017. The drilling team will move to the area in September 2017.
Negotiations with our current contractor for our first exploratory well on RK Oil field continue. As announced on 20 July 2017, the Company has given notice of termination of the drilling contract because of poor performance and is considering its options in respect of the current contractor’s performance. The Company is in discussions with new drilling contractors and expects to spud a new well at the Komi site in December 2017.
Following the announcement on 20 July 2017, the representative of Blackwatch Petroleum Services, the Competent Person firm engaged by the Company to carry out an update of the Company’s reserves has arrived in Moscow and will start work on the Competent Person’s Report on the Company’s portfolio of licences this week.
Share Premium Reduction Process
The reduction of the Company’s share premium account from US$656,167,589 to nil, by writing off accumulated losses of the Company equivalent to the reduction amount of the share premium account (the “Share Premium Reduction”) has completed.
Following a Court order sanctioning the Share Premium Reduction, the Company has received confirmation that the Share Premium Reduction has been registered in the public records of the Registrar of Companies in Cyprus, which represents the completion of the Share Premium Reduction process. Following the completion of the Share Premium Reduction, it is now possible for the Company to lawfully reward shareholders with dividends.
As indicated in Urals Energy’s results for the year ended 31 December 2016, it is the Company’s intention to seek further shareholder approval for a dividend payment to shareholders. It is currently anticipated that shareholder approval will be sought at the Company’s Annual General Meeting, later this year. Subject to the approval of shareholders, the Board proposes that the maiden dividend should be approximately 6.2 US cents per share, equivalent to approximately 10% of the Group’s 2016 EBITDA, costing approximately US$780,000. Further announcements will be made as appropriate.
Qualified Person Statement
Dr Svyatoslav Bilibin, (Dr.Sci.Tech. and Corresponding Member of the Russian Academy of Natural Sciences), an independent adviser to Urals Energy, who meets the criteria of a qualified person under the AIM Guidance Note for Mining, Oil and Gas Companies, has reviewed and approved the technical information contained within this announcement.