24 Aug 2010 07:00
24 August 2010
VOLGA GAS PLC
Update re: Trans Nafta
Volga Gas Plc ("Volga Gas" or the "Company"), the oil and gas exploration and production group operating in the Volga Region of European Russia, is pleased to announce it has won the legal proceedings initiated by its wholly-owned subsidiary, OOO Gaznefteservice ("GNS"), against OOO Gazneftedobycha ("GND"), a subsidiary of ZAO Trans Nafta ("TN") commenced in May 2010.
The legal proceedings were undertaken to recover from GND a sum of RUR 600 million (approximately US$ 20 million) plus interest accrued since November 2008. Volga Gas is pleased to announce that the Moscow Arbitration Court has ordered GND to pay RUR 640m (approximately US$ 21 million) to Volga Gas. The court also put a legal restriction to sell, use as collateral or dispose the GPU (gas processing unit).
The sum of RUR 600 million, which Volga Gas is seeking to recover, was originally paid by GNS to GND as a prepayment for the acquisition of a 75% interest in a gas processing unit ("GPU") which was intended to process gas and condensate from GNS's Vostochny Makarovskoye field (the "VM Field").
In 2007 and early 2008 construction was commenced of a suitably scaled processing facility for the VM Field but was put on hold in November 2008 as agreed with TN. The company is evaluating the timing and capital required to complete the construction. In the mean time, as previously disclosed, GNS has built test production facilities and commenced test production of well VM#1.
Mikhail Ivanov, Chief Executive of Volga Gas commented:
"I am pleased to be able to update our shareholders with this positive result. Based on the facts presented to the court, we have won the first stage of the legal dispute.
"Concurrently, we have started test production from VM to evaluate the production potential of the field and estimate the future production rates from well VM #1 and VM #2. We look forward to updating shareholders in due course."
For additional information please contact:
| Volga Gas plc |
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| Mikhail Ivanov, Chief Executive Officer | +7 (495) 721 1233 |
| Tony Alves, Chief Financial Officer | +44 (0) 20 8622 4451 |
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| Oriel Securities |
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| Natalie Fortescue | +44 (0)20 7710 7600 |
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| Financial Dynamics |
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| Billy Clegg | +44 (0)20 7831 3113 |
| Ed Westropp |
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| Alex Beagley |
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Editors' notes:
Volga Gas is an independent oil and gas exploration and production company operating in the Volga region of European Russia. The company has 100% interests in its four licence areas.
The information contained in this announcement has been reviewed and verified by Mr. Mikhail Ivanov, Director and Chief Executive Officer of Volga Gas plc, for the purposes of the Guidance Note for Mining, Oil and Gas companies issued by the London Stock Exchange in March 2006. Mr. Mikhail Ivanov holds a M.S. Degree in Geophysics from Novosibirsk State University. He also has an MBA degree from Kellogg School of Management (Northwestern University). He is a member of the Society of Petroleum Engineers.
Ends