Regal Petroleum (LSE:RPT) fell 4.3% to 56.4p today despite revealing a healthy cash balance and considerable production growth in Ukraine.
The oil and gas group enjoyed average daily output of 4,139boped across Ukraine throughout Q4 2018. This is a 48pc jump the average daily output of 2,803boped it achieved in the final quarter of 2017.
Regal operates the Mekhediviska-Golotvshinska (MEX-GOL), Svyrydivske (SV) and Vasyschevskoye (VAS) gas and condensate fields in the country.
Digging deeper, MEX-GOL and SV produced a combined daily average of 417,921 m3/d of gas, 88 m3/d of condensate and 44 m3/d of LPG over the last three months of 2018. This was up from 76,089 m3/d of gas, 54 m3/d of condensate and 30 m3/d of LPG over the same period in 2017.
Meanwhile, average daily production from VAS came in at 111,249 m3/d of gas and 10.6 m3/d of condensate. Once again, this exceeded last year’s figures.
Regal is now preparing to bolster production at MEX-GOL further by drilling a well called MEX-119. This is due to spud next month.
At VAS, the company is acquiring 3D seismic data, which it plans to process and interpret. This will complete the last winter’s partial acquisition of a field-wide seismic data set.
Elsewhere in an update today, Regal said its cash balance came in at $53.3m as at 31 December 2018. It holds around $25.3m in Ukrainian Hryvnia and the remaining $28m in US dollars, pounds sterling, and euros.
Finally, Regal confirmed the introduction of new oil and gas legislation in Ukraine last year. From 1 January 2019, the subsoil tax rates for condensate produced from deposits above 5,000m will fall from 45pc to 31pc. The rate will fall from 21pc to 16pc for those produced from deposits below 5,000m.
The new rules were introduced to support domestic oil and gas production in Ukraine. As part of this, the government also brought in measures to simplify local oil and gas exploration and production.
On the progress, Regal’s chief executive Sergii Glazunov said: ‘We are pleased with the excellent progress achieved during 2018, with the continuing growth in our gas, condensate and LPG production volumes, our improving financial position and the upgrade to the reserve base at our MEX-GOL and SV fields announced in July 2018.
‘We look forward to further progressing the development of our gas and condensate fields in the coming year, and are continuing the planning of new wells and workover projects on existing wells utilising improved drilling and operational technologies.’