3P International Energy to Acquire Producing Gas Assets in Ukraine
3P International Energy has entered into a Binding Letter of Intent with Nadra Concern for the purchase of its wholly owned subsidiary Tysagaz the title holder to four gas licences in Ukraine: the Rusko-Komarivske, Stanivske, Korolivske gas fields, and the Uzhogorod exploration block in the Western Ukraine's TransCarpathian region. The Transcarpathian Basin is a 7,500km2 region bordering Hungary, Slovakia, Romania, and a subset of the prolific Panonian and Carpathian basins.
If completed, the acquisition will provide immediate cash flow to the Corporation from the Rusko-Komarivske field and an asset base consisting of multiple fields with proven reserves and significant exploitation potential.
Tysagaz is an operating company, with all the permits, technical and human resources for oil and gas exploration, production and marketing. The portfolio being acquired by 3P includes production, operations and infrastructure adjacent to one of Ukraine's main natural gas pipelines into Europe. At present, Tysagaz has one of the larger volumes of proven reserves within the Ukraine confirmed by an international reserves audit performed by Miller Lents Ltd of Houston Texas in 2006.
Based on Tysagaz's approved and permitted development plan, five shallow wells will be drilled during 2011 and early 2012. Given existing data and historical stabilized flow rates of the current wells (in excess of 1,000 mcf/d), management is excited about the development potential for all four fields. Furthermore, after a review of the available data and the proposed development plan, 3P believes the potential combined production from all four fields could be in excess of 15,000 mcf/d after full development, and expects a 2011 exit rate of approximately 5,000 mcf/d.
According to the terms of the binding LOI, the potential acquisition remains subject to a 60-day due diligence period, the execution of a definitive agreement, and involves a total cash payment of US$17 million. Completion of the acquisition remains subject to receipt of all necessary regulatory approvals, including that of the Anti Trust Committee of Ukraine. 3P is fully financed to complete this cash purchase.
The 3P team is excited by the prospects of this transaction given the strong operating base from which Tysagaz is currently operating. 'Acquiring a proven reserve base with upside potential in today's market of approx. USD$8.0 per mcf gas and netbacks north of USD$6.0 per mcf after royalties and operating costs, should immediately provide returns to 3P and position the Corporation to become a significant player in the Ukraine,' stated David Kahn, President and CEO of 3P.
Greg Cameron, Chairman of 3P added, 'The proposed transaction is a great fit to our announced strategy of acquiring conventional assets with cash flow and significant reserves to compliment or growing unconventional portfolio, which is currently focused on acquiring and farming into lands with Coal Bed Methane (CBM) potential. We are also pleased to be cooperating and expanding our relationship with such a well respected entity like Nadra.'
Source: 3P International Energy