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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Urals EN. | LSE:UEN | London | Ordinary Share | CY0107130912 | ORD USD0.126 (DI) |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 35.00 | 0.00 | 00:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMUEN
RNS Number : 0414Q
Urals Energy Public Company Limited
14 February 2019
Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).
14 February 2019
Urals Energy Public Company Limited
("Urals Energy", the "Company" or the "Group")
Shareholder update, resignation of nominated adviser
and
suspension of trading on AIM
The board of Urals Energy PCL ("Board") (AIM: UEN), the independent oil and gas exploration and production company with operations in Russia, is providing an update for its shareholders in respect of the Group's operational and financial position, the resignation of the Company's nominated adviser and the suspension of trading in the Company's shares on AIM.
Trading update
The Company's production in January 2019 averaged 1,690 bbls/day (annual average of 1,794 bbls/day over 2018), of which Arcticneft averaged 873 bbls/day (annual 875 bbls/day over 2018) and Petrosakh averaged 817 bbls/day (annual average of 919 bbls/day over 2018). Production has decreased during the start of the current year primarily due to a lack of funds being available to invest in measures to maintain the Group's production and general working capital constraints. In the case of Petrosakh, some improvement in production may be possible as local temperatures improve in the Spring of 2019 and through on-going work to improve pressure in the producing wells, funding permitting. Operations at South Dagi, which were originally intended to offset the production decline at Petrosakh, are on hold due to a lack of working capital being available to proceed with removal of the blockage in Well No 1 at South Dagi.
Working capital position
As detailed in the Company's recent announcements, the Group continues to suffer a substantial deficit of working capital, primarily due to a number of loans being advanced to third parties by the Company's subsidiary, JSC Petrosakh ("Petrosakh") on the instructions of Sergey Kononov (the President of Petrosakh) without the approval of the Board. Further details of the loans that were not approved by the Board have been included in the Company's recent announcements. Notwithstanding that some small loans to employees of Petrosakh have been repaid, Crowe Russaudit, in its independent review commissioned by the Board, observed it is unlikely that these loans will be recovered from the borrowers.
Increases in Excise Taxes have not been covered by the increases in the market prices for refined products. This, combined with the effect of lower production at the start of 2018, is likely to further reduce the Group's future cash flow. As a consequence, the local management has been forced to delay the payment of salaries to some of the Group's employees, and of amounts due to contractors.
As previously announced, Articneft relies on annual or bi-annual tanker shipments to monetise its oil production and therefore does not generate regular operating cash inflows. Articneft's obligations, including its accumulating mineral extraction tax obligations, are normally financed by the Group at points throughout the year. Articneft's obligations are key challenges for the Group given the current Group working capital position.
It is clear that the Group requires a substantial injection of working capital in the near future and the Board continues to seek a solution. The Board are in discussions with a third party about a working capital facility. Discussions are at an early stage and there can be no guarantee that such a working capital facility will be made available, or on what terms, or in what timeframe. The third party has indicated to the board that should the resolutions be passed at the forthcoming extraordinary general meeting they will cease discussions with regard to this possible working capital facility.
Recent cash advance to Sergey Kononov
The Board understands that Sergey Kononov was recently advanced Russian Roubles 5 million (equivalent to approximately US$75,000) from Petrosakh, without the approval of the Board (the "Advance"). Sergey Kononov has claimed that the Advance was made in error. Following an urgent requirement of the Board for Mr Kononov to repay the Advance, the full amount has now been returned to Petrosakh.
The making of the Advance, whether made deliberately or in error, is, in the opinion of the Board, a breach of:
a) a letter of instruction to Sergey Kononov from the Board that all out of the ordinary course of business transactions by Petrosakh must be approved by the Board, whatever their scale; and
b) an undertaking ( the "Undertaking") given by Sergey Kononov in January 2019 to the Board and Allenby Capital Limited, the Company's nominated adviser, that, inter alia, he would not, in his capacity as the President of Petrosakh, cause or allow Petrosakh, or any other subsidiary of the Company to enter into any transaction, loan, asset sale, contract or commitment which is, or could reasonably be considered to be, outside of the ordinary course of the Group's oil production business in Russia (unless such loan or commitment or transaction has received the approval in writing by the Board).
In view of his earlier actions that were not authorised by the Board and the failure to repay or refinance the other loans made by Petrosakh which were not authorised by the Board, compounded by the making of this Advance, ignoring the Board's clear instructions and Company procedures, it remains the Board's position that Mr Kononov should resign immediately and have no further role in the affairs of the Group.
Extraordinary general meeting
As shareholders are aware there is to be an extraordinary general meeting of the Company held on 22 February 2019 in Cyprus (the "EGM") at which Adler Impex SA has proposed resolutions to remove the three current directors and replace them with four proposed directors (the "Proposed Directors").
The Proposed Directors have been given access to certain financial information on the Company but have not as yet provided information as to their strategy for the Group (including addressing the Company's significant working capital challenges) should the resolutions be passed at the EGM.
The Board remind shareholders that if they wish to vote at the EGM, they will need to complete a proxy instruction if they are not able to attend in person.
The Board recommend that shareholders vote against all the resolutions proposed by Adler Impex SA at the EGM for the reasons set out in the circular dated 28 December 2018.
Nominated adviser resignation and suspension of trading in the Company's shares on AIM
The making of the Advance was as a result of an override of the Group's procedures and controls and a breach of the Undertaking. As a consequence Allenby Capital Limited has informed the Board that it can no longer continue to act as the Company's nominated adviser and has therefore resigned as the Company's nominated adviser and broker with immediate effect.
Trading in the Company's shares on AIM has been suspended today. If the Company is unable to appoint a new nominated adviser within one month, then trading in the Company's shares on AIM will be cancelled.
Allenby Capital will remain as the Company's financial adviser to assist the Board with its discussions with the provider of the potential working capital facility referred to above.
- Ends -
For further information, please contact
Urals Energy Public Company Limited Andrew Shrager, Chairman Tel: +357 22 451686 Leonid Dyachenko, Chief Executive Officer Allenby Capital Limited Financial Adviser Nick Naylor / Alex Brearley Tel: +44 (0) 20 3328 5656
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
MSCEAFALFASNEFF
(END) Dow Jones Newswires
February 14, 2019 06:45 ET (11:45 GMT)
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