REG - Petroneft Resources - Heads of Terms for Potential Disposal

Petroneft ResourcesAnnouncement

01/08/2023 07:00

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RNS Number : 7977H  Petroneft Resources PLC  01 August 2023

 PetroNeft Resources plc

1(st) August  2023

 

PetroNeft Resources plc ('PetroNeft' or 'the Company')

 

WorldAce Investments Limited & OOO Granite Construction

Heads of Terms for Potential Disposal

 

Further to our previous announcement on 14 June 2023, PetroNeft announces that
it has entered a non-binding conditional Heads of Terms (the "HoT") with Pavel
Tetyakov (CEO and Executive Director of the Company) to sell its entire
interests in WorldAce Investments Limited ("WAIL") and OOO Granite
Construction ("Granite Construction") for a nominal consideration of RUR10,000
(approximately USD110 based on current exchange rates).   The HoT is in
addition to the Heads of Terms that have been signed in respect of the
disposal of the Company's entire interest in Lineynoye LLC ("Lineynoye") which
was announced on 14 June 2023.

The proposed disposal of interests in WAIL, Granite Construction and Lineynoye
is subject, inter alia, to the execution of formal binding sales and purchase
agreements. If agreed, the proposed disposals would be subject to all
applicable corporate and government approvals, as well as approval of
independent shareholders of the Company under AIM and Euronext Growth Rules.
Moreover, the proposed disposals would be classified as a related party
transaction for PetroNeft under AIM and Euronext Growth Rules.

Completion of the sale of the Company's interest in these entities would mark
the Company's full exit from the Russian market.

Further announcements will be made, as appropriate, in due course.

Background

WAIL is a 50/50 Joint Venture company with Oil India International B.V.
("OIL") and owns 100% in Stimul-T LLP, a Russian entity owning and operating
Licence 61. Granite Construction is a Russian 100% owned subsidiary of
PetroNeft, which was set up post the farm in by OIL (2016) to manage small
scale infield construction projects for the Licence 61 operator.

 

Pavel Tetyakov previously expressed an interest in acquiring 100% of Stimul-T
LLP (which owns and operates Licence 61), but the Company's joint venture
partner in respect of Licence 61, OIL BV rejected the offer. OIL BV also
rejected the option to buy out PetroNeft's interest for the equivalent
 amount offered by Pavel Tetyakov. OIL BV have been provided with notice of
Pavel Tetyakov's intent to purchase PetroNeft's interest in WAIL. Under the
terms of the Joint Venture Agreement, OIL BV has rights of first refusal and
tag along rights. This right expires on 30 August 2023.

 

In September 2022 production was halted at Licence 61 following a long running
dispute with the pipeline operator (Nord Imperial). Due to the lack of revenue
and increasing debts, in May 2023 Stimul-T LLP was required by law to file for
voluntarily bankruptcy administration in Russia as the result of its inability
to serve its considerable debts to third parties which are now in excess of
US $11M.

 

All activities at Granite Construction have ceased and as of December 31(st),
2022, Granite Construction had negative net assets (unaudited) of $0.256M with
receivables outstanding of $0.126M of which $0.119M was due from Stimul-T. LLP

 

Considering the considerable debts of Stimul-T LLP combined with the ongoing
bankruptcy administration process, neither Stimul-T nor Granite Construction
can be considered to be going concerns and, as the result, the recoverability
of the Company's investments is not deemed viable.

 

For further information, contact:

 David Sturt, Executive Chairman, PetroNeft Resources plc            +353 1 647 0280
 Brian Garrahy/Ciara O'Mongain, Davy (NOMAD and Corporate Broker)    +353 1 679 6363
 Douglas Keatinge, Murray Consultants                                +353 1 498 0300

 

 

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