Yesterday saw Regal Petroleum (LSE:RPT) announce a remarkable 1,360pc increase in proven reserves at its Ukraine fields, leading shares to skyrocket 73.6pc to 32.3p and give the firm a market cap of more than £100m.
Following an updated assessment, the business announced that proved reserves at its MEX-GOL and SV fields have risen from 1.9MMboe as of 2013 to 27.8MMboe as of 31 December 2017. Meanwhile, total proved and probable reserves (2P) rose to 50MMboe from 11.7MMboe. The report also estimates that the fields contain total 1C contingent resources of 3.8MMboe and 2C resources of 9.6MMboe.
The upgrades are likely to enable Regal to increase production significantly going forward from the 2,800bopd it recorded at its results in April. At today’s production and cost, these proved reserves would deliver around $500m cash before upside from 2P and contingent resources. The company also has a healthy cash balance of more than $40m and no debt as it stands.
The MEX-GOL and SV fields contain two main prospective reservoir intervals- the principal reservoirs in the Carboniferous Visean and the deeper Carboniferous Tournasian. The report found that the Viseanreservoirs held the vast majority of reserves and resources.
Regal said the increase in reserves since 2013 estimates reflect a higher level of confidence in the understanding of the fields as a result of a re-evaluation study and new data. Separately, this has led to a revision of the development plan for the areas, including an increase in the number of new wells -from 10 to 24 – and an acceleration of the phasing of these new wells.
Sergii Glazunov, chief executive of Regal, said: ‘Based on this independent assessment, a significant volume of remaining reserves has been estimated in the MEX-GOL and SV fields. Among other data, the report takes into consideration the positive outcomes of the latest drilling and workover projects, derived from the successful implementation of efficient drilling and operations technologies.
‘This, in turn, makes us optimistic about the future prospects for the fields. In light of this, we are continuing with further work aimed at providing a comprehensive understanding of our reservoirs, so as to continue to improve the level of confidence in our field development programme.’