Urals Energy (UEN) - Small Market Cap vs Good Production

Sunday, Apr 24 2011 by
10

Many of us know what happened to Urals Energy (LON:UEN) in 2009 and some are probably still watching to see if the company can rise again. For those that do not know, UEN lost their two biggest assets by far, Dulisma and Taas Yuriakh to Sberbank (largest bank in Russia and Eastern Europe) as they could not negotiate an extension to the loan which enabled them to buy these assets in the first place.

Since then, the company has been on the slow road to recovery and is starting to look in good shape, so I have bullet pointed the facts as I see them and tried to evidence this where I can. Following this, I have given some of my own opinion.

  • Has debt of USD28m owed to trade partner and major shareholder, Petraco, in which repayments are made once a year in December. 
  • Petraco also have the option to aquire USD5m worth or UEN shares @ 22p (current price 12p to 13p).
  • When Sberbank took Taas Yuriakh from UEN in 2009, this included a loan which currently stands at approx USD37.5m which is still owed to UEN. Sberbank are looking to sell this asset and repayment to UEN could occur at any time.
  • A strange situation "appears" to exist in which three large shareholders, Finfund, VR trade and Vyacheslav Rovneiko seem to want to discredit the company and take full control. They have communicated with shareholders in the past, to get the BOD replaced with people appointed by them and "seem" to be behind http://www.saveuralsenergy.com/. To me, they appear to be doing so for their sole benefit and not what is best for all shareholders. I believe this information to be correct and apologise if it is not as I have not meant to misrepresent.
  • Current production = Petrosakh - 1,422 BOPD and Arcticneft (seasonal shipping only from july to nov) - 726 BOPD. Total 2148. 
  • Petrosakh plans for this year = Two new vertical wells and four sidetracks.
  • Arcticneft plans for this year = Recommence water injection,…

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Urals Energy Public Company Limited is an independent exploration and production company. The Company is primarily engaged in oil and gas exploration and production in the Russian Federation and processing of crude oil for distribution on both Russian and international markets. The Company's exploration and production operations are on the Kolguyev Island based in Timan Pechora and on Sakhalin Island. The Company's ZAO Petrosakh develops the Okruzhnoye field on the Eastern coast of Sakhalin Island. The Company's ZAO Arcticneft develops and operates the Peschanoozerskoye field on Kolguyev Island in the Barents Sea. The Company is producing on average approximately two thousand barrels of oil per day from Petrosakh and Arcticneft with 100% of production being refined in Petrosakh and 100% being exported in Arcticneft. more »

LSE Price
38p
Change
 
Mkt Cap (£m)
n/a
P/E (fwd)
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  Is LON:UEN fundamentally strong or weak? Find out More »


2 Posts on this Thread show/hide all

bazza d2 6th May '11 1 of 2
3

Agree with everything mentioned Pezza. Even if oil prices drop considerably, the output of bopd will cover decembers loan facility with funds to spare.Im in for the long haul back to recovery albeit on a lesser but still profitable scale than before. Good luck with this and any other investments you have!

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Elias Jones 28th Dec '11 2 of 2
3

Hi pezza,

Thanks for the “Urals Energy CEO Alexei Maximov talks to Proactive Investors” Dec 2011 link on one of your UEN threads.

Been watching Urals Energy for some time and following the recent loan news, which was clearly the noose, a couple of thousand barrels of oil production per day at a quoted market cap of £17.2m makes the stock appear a decent risk v reward proposition for me. With the stock according to Allenby Capital currently selling at $0.3/barrel of 2P reserves compared to its peer group who are trading on enterprise values of between $0.9/barrel and $1.7/barrel of 2P reserves, there is a potential re-rate possibility at some stage on a positive flow of news and on meeting broker expectations going forward over the next few years.

Allenby Capital Institutional Research Note October 13 2011
http://www.allenbycapital.com/research/urals131011.html

Elias

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