Operational and corporate update


 

TIDMUEN 
 
RNS Number : 4097H 
Urals Energy Public Company Limited 
19 February 2010 
 

19 February, 2010 
 
                      Urals Energy Public Company Limited 
                        ('Urals Energy' or the 'Company') 
 
                        Operational and corporate update 
 
Urals Energy, the AIM listed independent exploration and production company with 
operations in Russia, today provides an operational and corporate update. 
 
 
Operations 
 
Production from Urals' two producing fields, Arcticneft and Petrosakh, is 
currently 645 barrels of oil per day ('bopd') and 1,420 bopd respectively. 
 
Workover is currently underway on well 47 at Petrosakh, which is anticipated to 
increase current production by up to 140 bopd, at a total cost of approximately 
US$50,000.  In addition, another two well rod pumps were acquired and are 
awaiting installation following the swabbing of well 47.  Subject to available 
financing or internal cash flow generation, a total of ten workover wells are 
being planned by the Company for 2010 at Petrosakh.  These workover wells are 
being undertaken primarily to mitigate production decline and the Company 
expects to see a moderate short-term increase in production. 
 
The Company is also expecting to spud the first of three side track wells at 
Petrosakh in May 2010, with an anticipated initial flow rate of up to 300 bopd. 
 
Following changes in Russian legislation regarding offshore exploration, only 
State companies with more than three years experience of off-shore development 
can operate off-shore blocks.  Consequently, the Company did not sign the 
farm-out agreement for the exploration of the off-shore Petrosakh licence. All 
3P reserves at Petrosakh were impaired in the Company's financial statements in 
2008. 
 
 
Financing 
 
Currently, Petrosakh refines and sells 100% of its production on the domestic 
Russian market.  Proceeds from such sales are currently anticipated to be 
sufficient for Urals' short-term liquidity requirements.  However the Company 
believes that additional financing will be required before the first export 
delivery from Arcticneftand the Board is currently reviewing options in this 
regard. 
 
The Company has also started the process of looking at financing options for its 
2010 development programme. The total requirement for the year ranges from US$10 
to US$15 million, depending on the extent of the work programme, its success and 
other factors. 
 
 
Negotiations with Petraco 
 
Discussions relating to the restructuring of the Company's export financing with 
Petraco remain a key priority and the Company continues to progress its 
discussions with Petraco. 
 
Petraco have indicated to the Company that they may seek a pledge over some of 
the Company's assets as part of a restructuring arrangement.  At this time the 
Directors believe that the granting of such a pledge may require the approval of 
the Company's shareholders and this would result in an Extraordinary General 
Meeting being convened to seek such shareholder approval.  A further 
announcement will be made in due course. 
 
 
 
The foregoing announcement contains certain forward-looking statements 
concerning future circumstances and results. Such statements are based on 
current plans, estimates, projections and expectations, which are based on 
certain assumptions that the Company believes are reasonable at this time.  No 
representation or warranties are given as to the achievement of the matters set 
forth in such statements and no reliance should be placed thereon. 
 
 
Enquiries: 
+----------------------------------+--------------------------------+ 
|                                  |                                | 
| Allenby Capital Limited          | +44 (0)20 3328 5656            | 
+----------------------------------+--------------------------------+ 
| Nick Naylor                      |                                | 
| Jamie Boyd                       |                                | 
+----------------------------------+--------------------------------+ 
|                                  |                                | 
+----------------------------------+--------------------------------+ 
| Pelham Bell Pottinger            | +44 (0)20 7337 1500            | 
+----------------------------------+--------------------------------+ 
| Mark Antelme                     |                                | 
+----------------------------------+--------------------------------+ 
| Evgeniy Chuikov                  |                                | 
+----------------------------------+--------------------------------+ 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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