| 07/12/2009 |
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Urals Energy Public Company Limited (“Urals Energy” or the “Company”)
Annual Financial Report
Urals Energy (LSE: UEN), an independent exploration and production company with operations in Russia, today announces its audited financial results for the year ended 31st December 2008.
Strategy- Following divestiture of Dulisma and Taas Yuriakh, Urals now well positioned to recommence development programmes on two producing fields, Arcticneft and Petrosakh.
- Restructuring of Petraco indebtedness is Company's immediate priority as it seeks to advance its strategy.
Operational
- Average 2008 production decreased to 6,285 BOPD (8,857 bopd in 2007) due to divestiture of the Komi assets in April 2008.
- Production from Arcticneft and Petrosakh decreased to 1.126 million barrels in 2008 from 1.262 million barrels in 2007.
- Current daily levels of production at Petrosakh and Arcticneft decreased in 2008 to 1,672 BOPD and 648 BOPD from an average of 2,246 BOPD and 829 BOPD in 2008.
Financial
- Gross Revenues excluding crude oil purchased for resale decreased by $24 million to $134 million, largely due to the divestiture of the Komi region assets in April 2008.
- An operating loss of $132 million was recorded, largely due to the impairment losses recognized with respect to production assets in the amount of $95 million.
- Subsequent to year end, the Company sold Dulisma and Taas Yuriakh for the full discharge of $630 million of debt owed to Sberbank.
- The Company also terminated a Put option agreement with Limenitis Holdings (an affiliate of the Ashmore Funds).
- Net debt to Petraco, the second largest creditor, was $41.3 million at 10 November, 2009 ($50.5 million at 31 December 2008).
- Subsequently the Company received additional prepayment from Petraco to finance two more export deliveries. These prepayments to be offset against gross proceeds.
- Extensive cost reduction programme introduced subsequent to year end.
Corporate
- Completed significant corporate transactions:
- Subsequent to year-end divestiture of Dulisma and Taas Yuriakh for full discharge of $630 million of debt.
- Divestiture of Komi region assets during 2008.
- Divestiture of Chepetskoye NGDU.
- Significant Board and Senior Management changes including appointment of Alexei Maximov as Chief Executive Officer and a Director post period end.
Outlook
- Main priority is to agree restructuring of Petraco indebtedness.
- Concentrate on early production increase from existing wells.
- Complete geological studies in 2010 to develop a drilling program.
- Look for possible corporate transactions to derive maximum value to shareholders.
Alexei Maximov, Chief Executive, commented:
“We are pleased to be able to release our results today, which marks a significant milestone in the turnaround of the Company. We are now focused on refinancing the remaining Petraco debt, which has been reduced further in the last few months through our ongoing crude sale agreements.
The Company is now considering different options to increase production from the existing wells by means of side track drilling and installation of down hole pumps.
“The Company has started geological studies for both remaining fields with the aim of reviewing and approving new development schemes with the governmental bodies. This work is anticipated to be completed during 2010. Depending on the results of the studies and the restructuring of indebtedness with Petraco, the Company will develop a drilling programme and will announce it during 2010.
“Cost control also remains a priority and we are pleased with the progress made to date in this regard.
“With the Sberbank debt restructuring now resolved and the right team in place, Urals Energy is well set to maximize the potential of its existing assets and recommence development programmes, whilst also looking to increase further production by identifying new acquisition opportunities, in order to return to the creation of shareholder value.“
Enquiries:
Allenby Capital Limited +44 (0)20 3328 5656
Rod Venables / James Reeve
Pelham PR +44 (0)20 7337 1500
Mark Antelme / Evgeniy Chuikov
Urals Energy will be holding an investor conference call on Thursday 10th December at 9.30am (GMT).
To participate please dial +44 (0)20 7190 1596 or +1 480 629 9724.
Investors wishing to submit questions should email them in advance to uralsenergy@pelhampr.com
 Click here to download a PDF file of the full Annual Financial Report.
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