Shell Rumored To Have Bid USD 150 mln For Regal Petroleum

According to a local daily, Kommersant, Royal Dutch Shell is negotiating with Regal Petroleum (RPT LN: N/R), an E&P company with major assets in Ukraine, to buy Regal’s two Ukrainian licenses for about USD 150 mln. Vladimir Nesterenko: The deal comes as no surprise as Regal has been looking for a strategic investor for a long time. Currently Regal suffers from a large cash deficit, due to its large payout of nearly USD 50 mln to its partner, Alberry, for solving the company’s legal issues in Ukraine. The most surprising thing about this deal is the price mentioned in the news, which is 3.8x smaller than Regal’s MCap – too low given that the company’s Ukrainian licenses comprise around 90% of Regal’s total oil and gas assets. Additionally, the price offers only USD 0.88 per boe of Regal’s reserves in Ukraine, which is unusually low. If the price reported by Kommersant is indeed correct, we would expect Shell to only buy stakes Regal’s licenses but not the company as a whole.