Ukrnafta considers selling gas production assets to repay tax debts

Ukraine’s leading crude oil producer Ukrnafta (UNAF
UK) is discussing with the government a possibility to sell some of its natural
gas producing assets to accumulate funds needed to repay its huge tax
obligations, the nv.ua new site reported on Nov. 19, citing the company’s CEO
Mark Rollins. “Potentially, the deal could look like this: we will sell some of
our gas-producing assets to Naftogaz, and the raised money will go for
repayment of tax debt,” Rollins explained. He also said that an option to agree
on long-term debt restructuring, initiated by Ukrnafta in 2016,
also could be considered. Ukrnafta’s total debt to tax authorities is less than
UAH 11 bln at the moment, Rollins said.

State holding Naftogaz controls a 50%+1 share in
Ukrnafta, while over 40% of its shares are held by entities related to Igor
Kolomoisky, who has retained large influence in Ukrnafta’s business. The
company’s UAH 11 bln debt to tax authorities emerged mostly in 2015, putting
the company on the verge of bankruptcy.

Alexander Paraschiy: Ukrnafta’s gas producing assets seem to be worth more than UAH 11 bln
(USD 400 mln), if we base our estimate on the publicly listed natural gas
producing company Regal Petroleum (its market-based EV is USD 166 mln, it is
producing 6x less gas than Ukrnafta and its 2P reserves are about 4x less than
for Ukrnafta’s gas deposits). Therefore, such a deal can indeed fully resolve
Ukrnafta’s tax debt issue. The key question is whether such a deal will be
approved by the government, and whether both de jure state-controlled companies
will agree on the deal’s price.