Enwell Energy, the AIM-quoted oil and gas exploration and production group, has provided an update on its operational activities in Ukraine in respect of its Mekhediviska-Golotvshinska ('MEX-GOL'), Svyrydivske ('SV') and Vasyschevskoye ('VAS') gas and condensate fields and Svystunivsko-Chervonolutskyi ('SC') exploration licence.
Production - Q2 2025
The MEX-GOL, SV and VAS production licences are currently suspended and accordingly there was no production from those licences in the second quarter, nor at present. Further details on the suspensions are set out below.
Operations
At the SC exploration licence area, development planning is continuing, including planning for the installation of new gas processing facilities and other surface infrastructure as well as assessing the feasibility of an alternative option of a connection to existing gas processing facilities.
In general, the operating environment in Ukraine remains very challenging. The Company continues to be cautious and vigilant with its ongoing activities and is taking the appropriate measures available to protect and safeguard its personnel and business. The safety and wellbeing of its personnel and contractors is paramount and the Company will continue to take all possible steps to ensure their safety.
Cash Holdings
At 30 June 2025, the Company's cash resources were approximately US$100.7 million, comprised of US$84.1 million equivalent in Ukrainian Hryvnia and the balance of US$16.6 million equivalent in a combination of US Dollars, Pounds Sterling and Euros.
Suspension of MEX-GOL, SV and VAS Licences
As announced on 18 November 2024, the State Geologic and Subsoil Survey of Ukraine (the "SGSS") issued orders dated 15 November 2024 to suspend the MEX-GOL, SV and VAS production licences. These orders were made pursuant to Ukrainian legislation, specifically Law No. 2805-IX, under which the SGSS has legislative powers to suspend and/or revoke hydrocarbon licences where the ultimate beneficial owner is the subject of Ukrainian Government sanctions.
As announced on 11 October 2024, a Decree of the President of Ukraine numbered 698/2024 and dated 8 October 2024 (the "Decree"), made pursuant to a resolution of the National Security and Defence Council of Ukraine dated 8 October 2024, entitled "On application of personal special economic and other restrictive measures (sanctions)", was implemented, pursuant to which personal special economic and other restrictive measures (sanctions) were applied to, inter alia, Proteas Trustee Services Limited and Proteas Trustees Limited (as well as their respective shareholders Andreas Sophocleous and Konstantina Alkiviadous), Elena Iona and Afrodite Loukiadou, who are trustees of Cypriot Trusts (the "Trustees") that hold a major indirect shareholding interest in the Company.
Under Ukrainian legislation, the Company's subsidiary companies which own its hydrocarbon licences in Ukraine, namely Regal Petroleum Corporation Limited in the case of the MEX-GOL and SV production licences and LLC Prom-Enerho Produkt in the case of the VAS production licence, are required to register their respective ultimate beneficial owners in the Unified State Register of Legal Entities, Individuals-entrepreneurs and Civil Institutions of Ukraine (the "State Register"). The registration entries for each of these companies state that their ultimate beneficial owners are the Trustees, based on the notifications made by the Trustees to the Company and published to the market on 26 January 2023, 31 July 2023 and 20 March 2024.
As a consequence of such registrations in the State Register, the SGSS recognises the Trustees as the ultimate beneficial owners of the MEX-GOL, SV and VAS production licences. As a result, the SGSS issued the suspension orders dated 15 November 2024 in respect of each of the MEX-GOL, SV and VAS production licences for a period of 10 years effective from 8 October 2024 (being the date of the Decree).
As announced on 26 November 2024, the Company issued legal proceedings in the Poltava District Administrative Court in Ukraine to challenge such orders, and within such proceedings, the Company obtained interim rulings (the "Interim Rulings") to lift such suspension orders pending determination of the substantive issues in the legal proceedings.
The SGSS appealed against the Interim Rulings in the Second Appeal Administrative Court in Ukraine. By a decision dated 22 January 2025, the appeal against the Interim Ruling relating to the MEX-GOL and SV licences was allowed, and by a decision dated 27 February 2025, the appeal against the Interim Ruling relating to the VAS licence was also allowed. As a result, the respective suspension orders in respect of the MEX-GOL, SV and VAS licences were reinstated, and the Company ceased all field operations on those licences immediately following the respective appeal decisions.
The Company is continuing its legal proceedings to challenge the suspension orders, including investigating the possibility of pursuing further interim measures to allow restoration of its operations, and continuing to consult with its external legal and other advisers to seek to mitigate the risks associated with the regulatory actions of the Ukrainian authorities.
Oleksiy Zayets, CEO, commented: 'The ongoing difficult regulatory environment in Ukraine continues to be a significant challenge for the Group. We are yet to be successful in resolving the continuing suspensions of our MEX-GOL, SV and VAS licences, although our efforts to do so continue as a priority for the Group. In addition, the general operating environment in Ukraine remains extremely challenging as a result of the war.'
Source: Enwell Energy
