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Advance to buy Ukraine project
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13 June 2012
Australia-listed Advance Energy will acquire an operating interest in the Ortynytska subsoil licence in Western Ukraine through a scrip deal set to eclipse its current shareholder base.
Advance, which currently has265.8 million shares listed on the Australian Securities Exchange, will offer the owners of Celiastad Pty Ltd 500 million shares for a 100% stake in the company.
The shares, worth about A$2 million (US$1.98 million) based on the company’s 0.04 cents closing price on Monday, will be distributed among Celiastad shareholders pro-rata.
Celiastad has the rights to buy Epic Energy Ukraine, which in turn has executed a joint activity agreement (JAA) with licence-holder ZakhidUkrGeologiya, a subsidiary of the Ukrainian National Joint Stock Company.
The agreement would see Advance fund all capital and operational costs, receiving in return 70% of net profits from production until payback and 50% of net profits thereafter.
The Ortynytska project is about 50 kilometres southwest of the city of L’viv in Western Ukraine, near to major pipeline infrastructure and the Polish, Slovak and Hungarian gas markets, Advance said.
Located in the North Carpathian basin, the prospect is south of the Zaluzhany gasfield which was discovered in 1969 and had over 27 wells producing from 13 horizons at its peak.
The prospect is a Miocene gas play comprising thermogenic and microbial gas, while the primary target is the Lower Dashava 15 sand located at about 3500 metres down hole.
Gas was discovered in the target sand by the Ortynytska-3 well, which was drilled to 3577 metres in 1993 and 1994, but was not brought into production due to mechanical problems, Advance said.
Advance said it planned to sidetrack the well to hit the optimum entry point to the target sand, with re-entry to start in the third quarter of 2012
The company will seek to raise A$3 million to fund the plan, noting that Celiastad had invested US$900,000 in securing the license and JAA, as well as commissioning an independent report and constructing a road to the Ortynytska-3 well.
Advance’s US in-country manager Steve Fast would join the JAA committee following the acquisition, with the company also acquiring an in-country technical team as part of the acquisition.
The deal and the capital raising are subject to Advance shareholder approval.
Source: Upstreamonline
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