REG - Enwell Energy PLC - Quarterly Operations Update

Enwell EnergyAnnouncement

17/01/2024 07:00

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RNS Number : 9063Z  Enwell Energy PLC  17 January 2024

17 January 2024

 

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
in respect of its Mekhediviska-Golotvshinska ("MEX-GOL"), Svyrydivske ("SV")
and Vasyschevskoye ("VAS") gas and condensate fields and
Svystunivsko-Chervonolutskyi ("SC") exploration licence.

 

Production - Q4 2023

 

The average daily production of gas, condensate and LPG from the MEX-GOL, SV
and VAS fields over the period from 1 October 2023 to 31 December 2023 was as
follows:

 

 Field             Gas               Condensate        LPG               Aggregate

                   (MMcf/d)          (bbl/d)           (bbl/d)           boepd
                   Q4 2023  Q4 2022  Q4 2023  Q4 2022  Q4 2023  Q4 2022  Q4 2023  Q4 2022
 MEX-GOL & SV      9.1      10.8     346      426      368      441      2,212    2,641
 VAS               -        1.6      -        14       -        -        -        303
 Total             9.1      12.4     346      440      368      441      2,212    2,944

 

The ongoing war in Ukraine continues to cause disruption to operations at the
Company's fields, whilst the adverse regulatory actions taken by the Ukrainian
authorities, culminating in suspension of the VAS and SC licences on 4 May
2023, have similarly negatively impacted the Company's operations, with a loss
of production from the VAS field. Production volumes at the MEX-GOL and SV
fields were lower when compared with Q4 2022 due to natural field decline.

 

Production - Full Year 2023

 

The average daily production of gas, condensate and LPG for the 2023 year from
the MEX-GOL and SV fields (351 days in 2022), and for the 124 days in 2023
(147 days in 2022) that the VAS field was producing, was as follows:

 

 Field             Gas           Condensate      LPG           Aggregate

                   (MMcf/d)      (bbl/d)         (bbl/d)       boepd
                   2023   2022   2023    2022    2023   2022   2023   2022
 MEX-GOL & SV      9.5    11.0   368     445     379    318    2,314  2,604
 VAS               1.7    1.8    18      18      -      -      330    352
 Total             11.2   12.8   386     463     379    318    2,644  2,956

 

Operations

 

Production operations are continuing at the MEX-GOL and SV fields, and,
currently, the aggregate production rate is approximately 2,120 boepd. Field
operations are currently continuing relatively normally, but there have been
disruptions to the supply of equipment and fuel, as well as interruptions to
the supply of electricity, which has caused delays to some activities. In
general, the operating environment in Ukraine remains very challenging.

 

The GOL-107 development well, targeting production from the V-20 and V-23
horizons in the Visean formation, was completed in late October 2023. The well
was spudded in December 2022 and drilled to a final depth of 5,190 metres. One
interval, at a drilled depth of 5,140 - 5,143 metres, within the V-23 horizon,
was perforated and demonstrated gas flows, but at lower than anticipated
rates. The well has now been hooked up to the gas processing facilities to
undergo longer-term testing to establish its optimal operating parameters and
assess whether stimulation of the well may improve flow rates.

 

At the VAS field and SC exploration licence area, all operations are currently
suspended following suspension orders made by the State Geologic and Subsoil
Survey of Ukraine (the "SGSS") on 4 May 2023.

 

The Company continues to be cautious and vigilant in continuing with its
operations and is taking the appropriate 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.

 

Cash Holdings

 

At 31 December 2023, the Company's cash resources were approximately $77.0
million, comprised of $56.3 million equivalent in Ukrainian Hryvnia and the
balance of $20.7 million equivalent in a combination of US Dollars, Pounds
Sterling and Euros.

 

Suspension of VAS and SC Licences

 

As announced on 4 May 2023, the SGSS has issued orders suspending the
Company's VAS production licence and SC exploration licence.

 

This followed action by the Ministry of Justice of Ukraine (the "MoJ") on 2
May 2023, which made Orders (the "MoJ Orders") cancelling the registration
entry made on behalf of three Ukrainian subsidiaries of the Company named LLC
Prom-Enerho Produkt ("PEP"), LLC Arkona Gas-Energy ("Arkona") and LLC Well
Investum ("Well Investum") respectively in the Unified State Register of Legal
Entities, Individuals-entrepreneurs and Civil Institutions of Ukraine (the
"State Register") relating to the ultimate beneficial owners of such
companies. The registration entry for each of these companies stated the
ultimate beneficial owners to be the beneficial owners of the indirect
majority shareholder of the Company as notified to the Company and published
to the market on 26 January 2023, but the MoJ Orders removed each such
registration entry and restored the previous entry in the State Register,
Vadym Novynskyi ("Mr Novynskyi"). As announced on 26 January 2023, the Company
was notified that Mr Novynskyi ceased holding a beneficial interest in the
indirect majority shareholder of the Company on 1 December 2022. PEP holds the
VAS production licence, Arkona holds the SC exploration licence and Well
Investum is a dormant company.

 

Under Ukrainian Law No. 2805-IX, which came into force on 28 March 2023, the
SGSS has legislative powers to suspend and/or revoke hydrocarbon licences of
which the ultimate beneficial owner is the subject of Ukrainian Government
sanctions. As announced on 9 December 2022, the Ukrainian Government imposed
sanctions on Mr Novynskyi, who previously held a major indirect shareholding
interest in the Company, but ceased to do so on 1 December 2022 as referred to
above. However, following the issuance of the MoJ Orders, Mr Novynskyi is now
registered in the State Register as the ultimate beneficial owner of each of
PEP and Arkona, and is consequently recognised by the SGSS as the ultimate
beneficial owner of each of the VAS production licence and SC exploration
licence. As a result, the SGSS issued the suspension orders in respect of each
of the VAS production licence and SC exploration licence for a period of 5
years effective from 4 May 2023. Accordingly, the Company ceased all field and
production operations on the VAS and SC licence areas.

 

Sergii Glazunov, Chief Executive Officer, said: "The operating environment in
Ukraine continues to be extremely challenging as a result of the war, and
additionally the regulatory actions and continuing suspension orders made by
the Ukrainian authorities are very disappointing. Nevertheless, we are pleased
to be able to continue our production operations at the MEX-GOL and SV fields,
and to undertake the long-term testing of the GOL-107 well. We continue to
consult with our lawyers to pursue all available measures to protect our
assets and business and to, hopefully, successfully challenge the regulatory
actions taken by the Ukrainian authorities in due course."

 

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 by virtue of
the Market Abuse (Amendment) (EU Exit) Regulations 2019.

 

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

 Zeus Capital Limited                           Tel: 020 7614 5900
 Alexandra Campbell-Harris (Corporate Finance)
 Simon Johnson (Corporate Broking)

 Citigate Dewe Rogerson                         Tel: 020 7638 9571
 Ellen Wilton

 

 

Dr Gehrig Schultz, BSc Geophysical Engineering, PhD Geophysics, Member of the
European Association of Geophysical Engineers, Member of the Executive
Coordinating Committee of the Continental European Energy Council, and a
Non-Executive Director of the Company, has reviewed and approved the technical
information contained within this announcement in his capacity as a qualified
person, as required under the AIM Rules for Companies.

 

 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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