REG - Enwell Energy PLC - Quarterly Operations Update

Enwell EnergyAnnouncement

08/07/2022 07:00

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RNS Number : 7702R  Enwell Energy PLC  08 July 2022

8 July 2022

Enwell Energy plc
("Enwell" or the "Company")

 

Quarterly Operations Update

 

Enwell Energy plc (AIM: ENW), the AIM-quoted oil and gas exploration and
production group, provides an update on its operational activities in Ukraine,
where it operates the Mekhediviska-Golotvshinska (MEX-GOL), Svyrydivske (SV)
and Vasyschevskoye (VAS) gas and condensate fields, as well as the
Svystunivsko-Chervonolutskyi (SC) exploration licence.

 

The Russian military action in Ukraine, which began on 24 February 2022, is
ongoing, and has made the situation in Ukraine extremely challenging.
Nevertheless, Enwell had been able to continue production and some field
operations at the MEX-GOL and SV fields, and completion of the drilling of the
SC-4 well at the SC licence is planned shortly. However, all operations at the
VAS field (located near to Kharkiv) remain suspended due to the risks
associated with the military activity near this location.

 

The Company continues to be cautious and vigilant in continuing these
operations and is taking all measures available to protect and safeguard its
personnel and business. The safety and wellbeing of its personnel and
contractors is paramount and the Company will continue to take all possible
steps to ensure their safety.

 

Production - Q2 2022

 

The average daily production of gas, condensate and LPG from the MEX-GOL, SV
and VAS fields over the period from 1 April 2022 to 30 June 2022 was as
follows:-

 

 Field             Gas               Condensate        LPG               Aggregate

                   (MMcf/d)          (bbl/d)           (bbl/d)           boepd
                   Q2 2022  Q2 2021  Q2 2022  Q2 2021  Q2 2022  Q2 2021  Q2 2022  Q2 2021

 MEX-GOL & SV      10.7     21.2     421      752      241      326      2,478    4,723
 VAS               -        3.0      -        29       -        -        -        531
 Total             10.7     24.2     421      781      241      326      2,478    5,254

 

 

The disruption to production operations at the MEX-GOL and SV fields, where
certain remedial and maintenance work was delayed and/or disrupted, and the
shut-in of the VAS field since February 2022 meant that production volumes
were materially lower compared with Q2 2021. In addition, drilling of new
wells and some remedial work on existing wells has been deferred or suspended
until there is an improvement in the situation in Ukraine.

 

Notwithstanding the disruption to production operations, the continuing high
gas prices in Europe have fed through to Ukrainian gas prices, although there
has been significant volatility in gas prices, both in Europe and Ukraine.
Nevertheless, the sales prices being achieved by the Company for its gas, as
well as condensate and LPG, have been high by comparison to Q2 2021, and the
continued high hydrocarbons sales prices have helped to offset the impact on
revenues during the quarter due to the lower production volumes.

 

Demand for hydrocarbons, particularly gas, has been understandably variable
since the military conflict commenced in February 2022. The Company has
continued to supply gas to its existing ultimate off-takers, although volumes
ordered by such off-takers have reduced over recent months, which has meant
that the Company has been selling a higher proportion of its gas through the
Ukrainian electronic gas trading market. It has been necessary for the Company
to allow some flexibility in the recovery of sales receivables from certain
ultimate off-takers, while sales through the Ukrainian electronic market are
made on a prepayment basis. The Company is working with its customers and
ultimate off-takers to manage the situation as satisfactorily as possible in
the circumstances.

 

Operations

 

Production operations are continuing at the MEX-GOL and SV fields, where a
proportion of the wells have been put on production, and, currently, the
production rate is approximately 2,600 boepd. Some other field operations have
resumed, including workover operations on the SV-2 well, and perforation and
testing of various intervals in the SV-29 development well. In addition,
construction work on the upgrades to the gas processing facilities at the
MEX-GOL and SV fields was completed during the quarter. All other works have
been deferred or suspended.

 

Preparations to resume drilling of the SC-4 appraisal well at the SC licence
are also underway, and once drilling operations are completed, it is planned
to log, and subject thereto, test this well.

 

All production and field operations at the VAS field remain suspended.

 

Cash Holdings

 

At 30 June 2022, the Company's cash resources were approximately $77.6
million, comprised of $18.6 million equivalent in Ukrainian Hryvnia and the
balance of $59.0 million equivalent in a combination of US Dollars, Pounds
Sterling and Euros, and at 6 July 2022, were approximately $83.8 million,
comprised of $24.9 million equivalent in Ukrainian Hryvnia and the balance of
$58.9 million equivalent in a combination of US Dollars, Pounds Sterling and
Euros .

 

The Company has contributed funds and is intending to allocate further funds
to certain humanitarian aid organisations to assist with the valuable work
that such organisations are undertaking in Ukraine.

VAS Licence Order for Suspension

 

The Company does not have any further information to report in relation to the
Order for suspension relating to the production licence for the VAS field
since the announcements made on 12 March 2019 and 19 March 2019 respectively,
other than to report that the legal proceedings issued in the Ukrainian Courts
to challenge the validity of the Order are ongoing, and the Company remains
confident that it will ultimately be successful in such legal proceedings.

 

Sergii Glazunov, Chief Executive Officer, said: "The situation in Ukraine
continues to be extremely challenging, but we are taking all available
measures to protect our business and ensure the safety and wellbeing of our
personnel, while continuing to operate where we believe it is safe to do so."

 

This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014, which forms part of United Kingdom domestic law by
virtue of the European Union (Withdrawal) Act 2018, as amended.

 

For further information, please contact:

 

 Enwell Energy plc                                 Tel: 020 3427 3550
 Chris Hopkinson, Chairman
 Sergii Glazunov, Chief Executive Officer
 Bruce Burrows, Finance Director

 Strand Hanson Limited                             Tel: 020 7409 3494
 Rory Murphy / Matthew Chandler

 Arden Partners plc                                Tel: 020 7614 5900
 Ruari McGirr / Elliot Mustoe (Corporate Finance)
 Simon Johnson (Corporate Broking)

 Citigate Dewe Rogerson                            Tel: 020 7638 9571
 Ellen Wilton

 

Dmitry Sazonenko, MSc Geology, MSc Petroleum Engineering, Member of AAPG, SPE
and EAGE, Director of the Company, has reviewed and approved the technical
information contained within this press release in his capacity as a qualified
person, as required under the AIM Rules.

 

 Definitions

 bbl/d   barrels per day
 boepd   barrels of oil equivalent per day
 cf      cubic feet measured at 20 degrees Celsius and one atmosphere
 LPG     liquefied petroleum gas
 MMcf/d  million cubic feet per day
 $       US Dollars

 

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