Regal secures Ukraine rigs

15/05/2008 Robert Tyerman

Recovering oil and gas developer Regal Petroleum has clinched a contract for drilling rigs for its projects in the Ukraine.

The AIM-quoted company has reached an agreement with Italian drilling contractor Saipem to take two LEWCO 2000 HP rigs for its wholly owned Ukrainian gas and condensate fields, Mekhediviska-Golotvschinska (Mex-Gol) and Svyrydivske (SV). The contract is for an initial five years, with an option for another two years, during which time Regal expects to drill more than 60 new wells.

The company, which raised £80 million after expenses at 150p in January through broker Mirabaud, has also signed a contract with Ukraine-based contractor Region for a work-over rig for Mex-Gol and SV. Drilling has begun on Mex-103, the first new well in the Mex-Gol field, and is expected to reach a target depth of 5,200 metres in August.

As at the end of 2006, Mex-Gol and SV together held an estimated 169 million barrels of oil equivalent, based on an independent reserves audit the previous year. David Greer, the Shell veteran who has been chief executive officer since last November, says everything is going ‘according to plan’.

Having lost its growth company status when a much-trumpeted well at Kallirachi in Greece proved dry, Regal saw its shares plunge from a 2005 peak of 509p to 34.5p in early 2006. Frank Timis, the company’s colourful boss and significant shareholder, departed.

Now the price is back to 229.25p, up 7.5p today. This values the company at £462 million.

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