Serinus Energy Inc., is pleased to announce that KUB-Gas LLC (“KUB-Gas”), Serinus’ indirectly 70% owned subsidiary, has been granted a new concession in eastern Ukraine. The West Olgovskoye block was awarded to KUB-Gas Borova LLC (a newly incorporated subsidiary of KUB-Gas) by way of a Special Permit by the State Service of Geology and Minerals of Ukraine.
West Olgovskoye is located in the Kharkiv oblast, immediately offsetting the Olgovskoye and North Makeevskoye licences currently owned and operated by KUB?Gas. It covers an area of 449 km2, and surrounds (but does not include) the existing Druzhelyubovskoe gas/condensate field which is owned and operated by Ukrgasdobycha, a subsidiary Naftogaz, the state owned oil company. Since starting production in 1979, Druzhelyubovskoe is believed to have produced over 180 Bcf of gas from the same Moscovian and Bashkirian zones that produce in KUB-Gas’ Olgovskoye and Makeevskoye fields. The new permit area has several hundred kilometres of very old vintage 2D seismic data, which suggest additional undrilled structural features, although new seismic data will have to be acquired before any are upgraded to drillable prospect status.
The term of this new Special Permit is for 20 years with the right to a 20 year extension, during which KUB-Gas will be allowed to conduct both exploration and production activities. There are work commitments of 202.3 million hryvnia or approximately $9.6 million at the current exchange rate of 21 UAH/USD. These requirements include geological studies, seismic acquisition, processing and interpretation, and drilling and development. Although there are several smaller intermediate deadlines, almost 90% of the total required spending is scheduled for between 2018 and 2020. Geological studies and interpretation will commence immediately, and KUB-Gas anticipates mobilizing a seismic crew for new data acquisition in the fourth quarter of 2015.
Tim Elliott, President and Chief Executive Officer of Serinus said “West Olgovskoye more than doubles our land base in Ukraine and should provide us with a multi-year inventory of exploration and development opportunities. The unique aspect of this new permit is the presence of the very large Druzhelyubovskoe field, which provides very strong evidence that the hydrocarbon fairway present in our Olgovskoye and Makeevskoye fields continues into West Olgovskoye. We believe the terms of the permit are fair and reasonable. The bulk of the work commitments are not required until 2018 to 2020. In the interim, we hope that the political issues in the eastern part of the country will gradually improve, allowing the Ukrainian government to return to more growth oriented fiscal policies with respect to the energy industry.”
