REG - Enwell Energy PLC - Quarterly Operations Update

Enwell EnergyAnnouncement

23/01/2025 07:00

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RNS Number : 3732U  Enwell Energy PLC  23 January 2025

23 January 2025

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 2024

 

The average daily production of gas, condensate and LPG for the 82 days that
the MEX-GOL, SV  and VAS fields were producing over the period from 1 October
2024 to 31 December 2024 was as follows:

 

 Field             Gas               Condensate*       LPG               Aggregate

                   (MMcf/d)          (bbl/d)           (bbl/d)           boepd
                   Q4 2024  Q4 2023  Q4 2024  Q4 2023  Q4 2024  Q4 2023  Q4 2024  Q4 2023

 MEX-GOL & SV      7.4      9.1      444      346      233      368      1,922    2,212
 VAS               0.5      -        7        -        -        -        92       -
 Total             7.9      9.1      451      346      233      368      2,014    2,212

 

*Condensate includes light oil from well MEX-102

The ongoing war in Ukraine continues to cause disruption to operations at the
Company's fields, and the adverse regulatory actions taken by the Ukrainian
authorities, culminating in suspension of the MEX-GOL, SV and VAS licences
between 15 November 2024 and 25 November 2024, similarly negatively impacted
the Company's operations during the period, most notably by the loss of
production from those fields. However, following the interim rulings of the
Poltava District Administrative Court in Ukraine to lift the suspensions of
these licences, production from those fields resumed. Gas production volumes
at the MEX-GOL and SV fields were lower when compared with Q4 2023
predominantly due to the period of suspension of production and natural field
decline. There are no Q4 2023 comparative average production figures for the
VAS field since the VAS licence was suspended during that period.

 

Production - Full Year 2024

 

The average daily production of gas, condensate and LPG for the 356 days that
the MEX-GOL and SV fields were producing (365 days in 2023) and the 143 days
that the VAS field was producing (124 days in 2023), over the 2024 year, was
as follows:

 

 Field             Gas           Condensate*     LPG           Aggregate

                   (MMcf/d)      (bbl/d)         (bbl/d)       boepd
                   2024   2023   2024    2023    2024   2023   2024   2023

 MEX-GOL & SV      8.3    9.5    480     368     238    379    2,126  2,314
 VAS               0.7    1.7    6       18      -      -      142    330
 Total             9.0    11.2   486     386     238    379    2,268  2,644

 

*Condensate includes light oil from well MEX-102

 

During the year, regulatory actions taken by the Ukrainian authorities
resulted in suspension of (i) the VAS and SC licences between 4 May 2023 and
26 June 2024 and (ii) the MEX-GOL, SV and VAS licences between 15 November
2024 and 25 November 2024, during which periods there was no production from
the respective fields.

 

Operations

 

Production operations are continuing at the MEX-GOL and SV fields, and,
currently, the aggregate production rate is approximately 1,780 boepd. Field
operations at site are currently continuing relatively normally, but there
have been disruptions to the supply of equipment and fuel, as well as
interruptions to the electricity supply, which has caused delays to some
activities.

 

The workover of the MEX-102 well to gain access to the previously productive
V-19 and V-20 horizons in the Visean formation was completed. These horizons
had previously been isolated from the producing V-23 horizon. The workover
allowed access to one interval in the V-19 horizon and three intervals in the
V-20 horizon, and these intervals were tested, with encouraging gas and light
oil flows achieved in testing of the V-19 horizon. The flows of light oil are
interesting, as this is the only oil producing horizon in the field, although
the light oil is similar in composition but slightly denser than the
condensate in the field. Currently, the well is producing 0.1 MMscf/d of gas
and 218 bbl/d of oil.

 

At present, production of LPG is suspended at the MEX-GOL and SV fields whilst
the issuance of a new licence for LPG production is awaited, with unfortunate
administrative delays affecting the oil and gas industry in Ukraine.

 

At the VAS field, production operations resumed during August 2024, but
achieving a stabilised operating regime took considerable time, and production
rates are lower than pre-suspension levels due to low pressure in the
producing reservoirs. Currently, the production rate is approximately 151
boepd.

 

At the SC exploration licence area, planning for the development of the
licence area is continuing, including planning for the installation of new gas
processing facilities and other surface infrastructure and/or assessing the
feasibility of connection to existing gas processing facilities.

 

In general, the operating environment in Ukraine remains very challenging. The
Company continues to be cautious and vigilant with its ongoing 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 2024, the Company's cash resources were approximately $99.4
million, comprised of $83.0 million equivalent in Ukrainian Hryvnia and the
balance of $16.4 million equivalent in a combination of US Dollars, Pounds
Sterling and Euros.

 

Board Changes

 

On 25 October 2024, the Company announced that Yuliia Kirianova had stepped
down as a non-executive director of the Company with immediate effect and that
Oleksiy Zayets had been appointed as a director of the Company, whilst
remaining Interim Chief Executive Officer.

 

Period of Suspension of MEX-GOL, SV and VAS Licences

 

As announced on 18 November 2024, the State Geologic and Subsoil Survey of
Ukraine (the "SGSS") issued orders dated 15 November 2024 to suspend the
MEX-GOL, SV and VAS production licences. These orders were made pursuant to
Ukrainian legislation, specifically Law No. 2805-IX, under which the SGSS has
legislative powers to suspend and/or revoke hydrocarbon licences where the
ultimate beneficial owner is the subject of Ukrainian Government sanctions.

 

As announced on 11 October 2024, a Decree of the President of Ukraine numbered
698/2024 and dated 8 October 2024 (the "Decree"), made pursuant to a
resolution of the National Security and Defence Council of Ukraine dated 8
October 2024, entitled "On application of personal special economic and other
restrictive measures (sanctions)", was implemented, pursuant to which personal
special economic and other restrictive measures (sanctions) were applied to,
inter alia, Proteas Trustee Services Limited and Proteas Trustees Limited (as
well as their respective shareholders Andreas Sophocleous and Konstantina
Alkiviadous), Elena Iona and Afrodite Loukiadou, who are trustees of Cypriot
Trusts (the "Trustees") that hold a major indirect shareholding interest in
the Company.

 

Under Ukrainian legislation, the Company's subsidiary companies which own its
hydrocarbon licences in Ukraine, namely Regal Petroleum Corporation Limited in
the case of the MEX-GOL and SV production licences and LLC Prom-Enerho Produkt
in the case of the VAS production licence, are required to register their
respective ultimate beneficial owners in the Unified State Register of Legal
Entities, Individuals-entrepreneurs and Civil Institutions of Ukraine (the
"State Register"). The registration entries for each of these companies states
that their ultimate beneficial owners are the Trustees, based on the
notifications made by the Trustees to the Company and published to the market
on 26 January 2023, 31 July 2023 and 20 March 2024.

 

As a consequence of such registrations in the State Register, the SGSS
recognises the Trustees as the ultimate beneficial owners of the MEX-GOL, SV
and VAS production licences. As a result, the SGSS issued the suspension
orders dated 15 November 2024 in respect of each of the MEX-GOL, SV and VAS
production licences for a period of 10 years effective from 8 October 2024
(being the date of the Decree). As a result, the Company ceased all field
operations on each of these licences, including shutting down production
operations.

 

Following the receipt of the suspension orders, the Company issued legal
proceedings in the Poltava District Administrative Court in Ukraine to
challenge such orders, and within such proceedings, the Company sought interim
rulings to have such orders lifted pending determination of the substantive
issues in the legal proceedings. As announced on 26 November 2024, the Court
made interim rulings to lift the respective suspension orders of the MEX-GOL,
SV and VAS production licences pending the determination of the legal
proceedings. Following such interim rulings, the Company resumed field
operations on each of these licences, including resuming production
operations.

 

The legal proceedings to challenge the suspension orders are continuing, and
the Company is consulting with its external legal and other advisers to
endeavour to mitigate the risks associated with the regulatory actions of the
Ukrainian authorities.

 

Oleksiy Zayets, Interim CEO, commented: "The operating environment in Ukraine
remains extremely difficult as a result of the war, as well as the challenging
regulatory environment. We are pleased to be able to continue our production
operations at the MEX-GOL, SV and VAS fields, as well as advancing the
development of the SC exploration licence area."

 

 

For further information, please contact:

 

 Enwell Energy plc                              Tel: 020 3427 3550
 Chuck Valceschini, Chairman
 Oleksiy Zayets, Interim CEO
 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
 Alex Winch

 

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.

 

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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