Ukraine-focused Regal Petroleum (LON:RPT) has a new non-executive after Energees nominated Sergii Glazunov as one of its representatives on the board.

Glazunov takes over with immediate effect from Denis Rudev, who has resigned from the board.

Energees took a 54 per cent stake when it emerged as a white knight for the Ukraine-focused company in March.

Energees is part of Ukrainian conglomerate the Smart Group (JSC Smart) is allowed to nominate three directors to the board as long as it holds over 50.1 per cent of the shares.

Glazunov, 41, is a Ukrainian national and is currently the Director of Corporate Development at JSC Smart.

He is a qualified Chartered Financial Analyst with an MBA from Wayne State Univeristy and is currently a director of CFA Ukraine and Veres Group.

Regal has two fields in the Ukraine, the Mekhediviska-Golotvschinska (MEX-GOL) field and the Svyrydivske (SV) field. Production resumed from the two gas fields in July.

Regal Petroleum (LON:RPT) this afternoon told investors that it has now finalised its investment programme for the coming year in the Ukraine.

It plans to drill new wells, work-over existing wells and upgrade its processing facilities. These investments will be funded from existing cash and operational revenues, the company said.

Regal also confirmed that it has entered into drilling contracts with local Ukrainian contractors for the drilling of two new wells. Drilling preparations are now underway. 

The first well, SV-53, will be spudded in late February 2012 and the MEX-105 will follow in mid-March. The SV-53 well will take 400 days to reach its target depth of 5,450 metres and MEX-105 is expected to take 350 days to reach 5,250 metres.  

The work-over programme will focus on enhancing production in 3 wells. Meanwhile methanol equipment will be upgraded in 2 wells.

The gas treatment facility will be upgraded to enhance the facility's overall efficiency and incorporate compression equipment, Regal said. Also it explained that additional upgrade work will provide LPG recovery.

Regal added that in December, production averaged 231,634 million cubic feet of gas and 49 cubic metres of condensate per day.

Regal Petroleum (LON:RPT) this afternoon confirmed its production numbers from its operations in Ukraine.

Production resumed from the MEX-GOL and SV gas fields in July.

Today it revealed that gas production averaged 212,367 cubic metres of gas per day and 49 cubic metres of condensate per day – equating to 1,632 barrels oil a day – in October.

Meanwhile in November it produced an average of 228,799 cubic metres of gas per day and 52 cubic metres of condensate per day – which equates to 1,751 barrels of oil per day.

These rates represent a notable increase from the 207,205 cubic metres of gas and 52 cubic metres of condensate produced each day over the seven day period during September, as reported in the group’s interim results statement.

In September’s interims Regal said that it was receiving a gas price of US$379 per thousand cubic metres in Ukraine, which is up 48 per cent on the average price from 2010.

On Tuesday evening the firm announced that it had received a written decision – dated 18 July 2011 – from the District Administrative Court of Kiev that ruled the order, from the Ministry of Environmental Protection (MEP), was unlawfully issued.

The court also ruled the cancellation of the order.

Although this decision could be appealed during the next nine days, the ruling is a further positive development for Regal in a long-running saga that began when the MEP told the firm to suspend operations at its Mekhediviska Golotvshinska and Svyrydivske gas and condensate fields in May last year.

At the time, the MEP said it had identified certain matters requiring rectification in relation to Regal’s compliance with legislation in the Ukraine that related to the operations.

On 7 July, Regal filed its latest proceedings in the District Administrative Court against the MEP and the Ukraine’s State Geological Service, while at the same time making an interim application seeking a suspension of the MEP’s order.

A day later the court granted a suspension of the order so that Regal could restart production at the Mekhediviska Golotvshinska and Svyrydivske the fields, and first production recommenced on 22 July.

Regal Petroleum (LON:RPT) has sold its 25 percent stake in the East Ras Budran concession in Egypt.

The AIM-listed firm will receive US$640,344 from the sale, which was agreed with its joint venture partner the Apache East Ras Budran Corporation.

The sale price was set at US$1,100,000, but this was subject to certain accounting adjustments under the terms of the joint venture partnership.

Regal has had a turbulent time since a regulatory dispute put the group’s primary project in jeopardy in the tail end of 2010. Furthermore a long protracted takeover battle, which concluded with the Smart Holding Group becoming a major shareholder (with a 54 percent stake), also distracted during that period. 

But now, with Smart’s backing, the company believes it is now on a stronger footing to deal with the challenges ahead.

In last month’s full year results statement Regal said that it now has access to a management team which, it believes, is well placed to deal with the suspension order that was issued by Ukraine's ministry of environmental protection last year.

Regal has assets in Ukraine, Romania and Egypt but its main assets are in Ukraine, where it has not produced any gas from its Mekhediviska-Golotvshinska or Svyrydivske fields since November 2010 after an order was issued to suspend operations.

In June, Regal's chairman Keith Henry said today: "Smart recognises that in order to develop the Regal business, investment of further capital will be required.

"While Smart management has made no firm decision on the form of such investment, it is anticipated that further investment to fund Regal's capital expenditure programme would take the form of shareholder loans. 

“Smart has stated its intention to inject such further capital to enable the company to continue work on the MEX-GOL and SV fields and to explore other options to acquire assets and grow production in Ukraine."

The Ukrainian investment group, which is part of the larger Smart Holdings group, emerged as the victor earlier this month when Heamoor and Geo-Alliance – two investment vehicles controlled by Ukrainian oligarch Victor Pinchuk - walked away.

The two groups of Ukrainian businessmen had been embroiled in a long running tug-of-war over Regal during the past few months and ultimately Energees upped the original 24 pence a share bid considerably, to 38 pence in early January.

Pinchuk’s companies, who didn’t table a formal bid at any point, declared they would not make an offer for Regal a few days later.

Since then the majority of Regal shareholders have accepted the Energees bid and now the group has 51 percent approvals.

Under the terms of the latest deal Energees, which owns the Smart Holdings Group, will acquire 224.5 million Regal shares, or the equivalent of 70 per cent of Regal’s equity base.

The partial offer structure allows investors who don’t want to cash in their shares to retain a stake in the company.

Recommending the revised bid, Regal chairman Keith Henry said: "Against the background of operational, legal and funding challenges faced by the company, your board is pleased to have reached a much improved agreement with Energees Management that allows Regal shareholders to receive a substantially increased cash element of consideration as well as retaining the option of maintaining equity exposure in Regal.”

In the background during the unfolding Regal drama has been local businessman Victor Pinchuk, who was expected to table a counter-bid via his companies Heamoor and Geo-Alliance.

However so far a definitive offer has yet to materialse, so Henry said he has opted for the only deal on the table. 

Alexey Pertin, director of Energees and chief executive of the Smart Holding Group, said: "Our increased partial offer is a carefully considered means of providing all shareholders a complete solution today. 

“Those seeking ongoing equity exposure can select equity and maximise their ongoing stake in Regal, knowing exactly what they are investing in - a re-energised Regal with the committed local country backing of Energees Management - without taking risk on assets, strategy and management which may be unfamiliar to Regal shareholders.

“In addition, with the 147 per cent one month average premium available under the increased partial offer, Energees Management is providing Regal shareholders the option to enjoy a highly attractive and quickly realisable cash exit (potentially for up to 100 per cent of their shareholding) at highly compelling valuation levels.

“We are excited about supporting Regal in the next stage of its journey and look forward to working to realise value for all stakeholders, today, tomorrow and in the future." 

Ukraine focused Regal Petroleum (LON:RPT) revealed this morning that it is selling its 25 percent stake in the East Ras Budran oil concession to Apache East Ras Budran Corporation, the operator and majority owner.

The amount payable is US$1.1 million, but Regal will receive US$649,402 after accounting adjustments.

The sale agreement is subject to Egyptian government approval, which is expected to take a number of weeks to obtain. 

Regal is currently the subject of a 24 pence a share bid from Energees Management, though there is still the prospect of counter offer from Ukranian oligarch Victor Pinchuk.

It was revealed last week that Pinchuk, via Cyrus incorporated vehicles Heamoor and Geo-Alliance, is prepared to pay 25 pence per Regal share via two alternative proposals.

One proposal sees a reverse takeover into Geo-Alliance - which itself owns 16 oil and gas fields in Ukraine - with an option for shareholders to sell their shares at 25 pence for three months. The other would be a straight cash takeover.

Regal is focused on two gas condensate fields in Ukraine. It made huge progress in recent years on the Ukrainian assets.  

After a significant period of investment and drilling, Regal took production to almost 3,000 barrels of oil equivalent a day, in June of this year.

However it has also experienced a number of problems. Firstly it ran into technical gas recovery issues, with gas output from new wells failing to meet expectations. It has since carried out a full review of its operations.

The company has also been involved in a drawn out dispute with the Ukrainian authorities, which resulted in a suspension order being issued by the Ukrainian Ministry of Environmental Protection.

Consequently the Ukrainian assets are currently shut-in and production and development work is suspended.

Pinchuk, via Cyrus incorporated vehicles Heamoor and Geo-Alliance, is prepared to out-bid Energees Management’s recommended takeover bid, albeit by just one pence per share.

The oligarch is prepared to pay 25 pence per Regal share through two alternative proposals.

One proposal sees a reverse takeover into Geo-Alliance - which itself owns 16 oil and gas fields in Ukraine - with an option for shareholders to sell their shares at 25 pence for three months.

The other would be a straight cash takeover, also priced at 25 pence.

Crucially however this is not a firm offer and with the Energees offer set to close on 24 January 2011 the clock is ticking for Pinchuk.

Furthermore Regal stressed the uncertainty of its current position.

It cautioned that its stock may be adversely effected if the Energees offer lapses and the alternative proposals do not result in a firm offer. Regal warned that its share price may then lose any ‘bid premium’ relating to the proposed takeover.

“The board of Regal is engaged with Heamoor and Geo-Alliance with the goal of securing for Regal shareholders a superior offer to the Energees offer.

“However, there can be no guarantee that any such offer or proposal from Heamoor and/or Geo-Alliance will ultimately be put to Regal shareholders, given the complex nature of the proposed acquisition, due diligence and documentary requirements for a reverse take-over and re-admission of the enlarged group to trading on AIM, within the timetable requirements of the Code.”  

Regal adds: “Accordingly, the board of Regal continues to recommend the Energees offer until such time as a superior firm offer is put forward to Regal shareholders.

“In addition, Regal shareholders should be aware that there can be no certainty that the Energees oifer will remain open and capable of acceptance after 1.00 pm on 24 January 2011.” 

Regal Petroleum shares have now been suspended on London’s AIM market.

The stock has been buoyed in the past weeks after Regal became a potential takeover candidate. A fortnight ago, Regal announced it had received a number of takeover approaches and was in preliminary talks which may lead to the sale of company. The stock shot up around 50 percent to an intraday high at 19 pence on the day the approaches were announced.

Regal’s statement on November 25, and the ensuing rally, was prompted by an article in The Times, which cited speculation that an un-named Australian firm was interested in buying the company for up to 22p per share.  However analysts said then that interest could also come from within the Ukraine itself and possibly from Konstantin Zhevago, the influential local businessman who is the major shareholder in Ferrexpo (LON:FXPO), with a 51 percent stake.

The stock rose sharply yesterday and got a further boost today after regal confirmed the possible cash offer at lunchtime.  Shares were trading up 21.62 percent shortly afterwards at 22.5p.

“It is emphasised that there can be no certainty that an offer for the company will ultimately be made or as to the terms on which any such offer might be made.  This announcement is being made with the consent of the potential offeror,” the company said.

Regal has had a rather bumpy time of late following the departure of chief executive David Greer and ongoing problems with the environmental ministry in the Ukraine, which has led to the shutdown of its operations there.

The company began a strategic review of its business at the end of September.

Although Regal contested the order it separately decided last month to suspend operations, whilst it conducts a strategic review which it started in September.

There has been a stand-off with Ukraine’s Ministry of Environmental Protection. It dates back to May when Regal was claimed to be in breach of local legislation and ordered to suspend gas production.

The firm’s sole customer, Ukrzakordongeologia OJSC, successfully challenged the order, which was suspended. 

However a hearing last month in a Kiev court found in favour of the ministry.

At the same time the company provided evidence that it had addressed the environmental concerns and implemented the changes required.

Back in November, a statement by Regal read: “(This) resulted in written confirmation that all matters referable to the ministry order had been rectified and eliminated,” 

“Despite receiving such confirmation and despite the expectation that this would lead to the matter being resolved expeditiously, to date the company has not received a definitive timeframe from the Ukrainian authorities for the progression of the ministry's standard procedures required to bring this matter to a conclusion.” 

A quick glance at the share price tells you that many investors saw the latest disappointment coming, with the decision apparently priced-in to the current share price. 

Regal shares closed Wednesday’s session with a 5 percent gain to 16.5 pence and it was up marginally by mid-afternoon on Thursday.

The stock has also been buoyed recently after Regal became a potential takeover candidate.

Last Thursday Regal said it had received a number of takeover approaches. It is now in preliminary talks, which may lead to the sale of company.

Last week, on 25 November, news of early-stage takeover offers sparked new life into the stock that had previously been hit by uncertainty after a number of problems in the Ukraine. It is now in preliminary talks, which may lead to the sale of company.

Today, Regal said it was notified about a number of transactions that saw 55 North Capital take a 4 percent stake on the 23 November.

The investment firm - named after Moscow’s latitude, 55 degrees north - is a Cayman Islands based specialist fund management group with particular expertise in Russian markets, as well as the Commonwealth of Independent States (CIS), Eastern Europe, Turkey and the Middle East.

The investment was made by 55 North Capital's 55 North Emerging Europe Long/Short Fund.

Initially, on 5 November, the investor became interested in around 10.25 million shares, or 3.22 percent of the company, via contracts for difference (CFDs). Then, on 23 November, it became interested in further shares through CFDs which took its holding to 12.78 million shares, or 4.01 percent of the company.

55 North Capital is run by managing director Michael Boboshko and chief investment officer Paul Collison.

Regal has had a rather bumpy time of late following the departure of chief executive David Greer and ongoing problems with the environmental ministry in the Ukraine, which has led to the shutdown of its operations there.

The company began a strategic review of its business at the end of September.