Regal Petroleum expands resource base with Arkona purchase

26 March 2020

Ukrainian oil and gas company Regal Petroleum (RPT LN) reported on Mar. 24 that it acquired smaller peer Arkona for a total consideration of up to USD 8.63 mln, of which USD 4.32 mln is a first tranche and the rest is contingent on certain conditions. Arkona possesses a 20-year exploration license for the Svystunivsko-Chervonolutskyi (SC) field, located 15 km from Regal’s existing SV field. The SC license has hydrocarbon reserves of 38 mln boe (C1 and C2 under the Ukrainian classification).

 

Arkona purchased the SC license for UAH 3.8 mln (USD 0.15 mln) in May 2017, according to a report by Radio Free Europe/Radio Liberty, published on Mar. 25. Arkona was controlled at the time by people from the inner circle of then-president Petro Poroshenko, the report alleged.

 

Alexander Paraschiy: With the acquisition of its SC license, Regal is going to significantly expand its resource base in Ukraine from the current 50 mln boe of 2P reserves. It is likely that most of the declared C1+C2 reserves under Ukrainian classification, controlled by Arkona, will be confirmed as 2P reserves under international classification. The acquisition will also improve the usage efficiency of Regal’s assets. As of end-1H19, 49% of its total assets, or USD 67.8 mln, was cash.

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