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Enwell acquisition appealing Ukraine court ruling

Fri 31 July 2020 08:58 | A A A

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(Sharecast News) - Oil and gas exploration and production company Enwell Energy updated the market on the Ukrainian legal proceedings relating to its Svystunivsko-Chervonolutskyi exploration licence in Ukraine on Friday, which is held by LLC Arkona Gas-Energy, which it acquired in March.

The AIM-traded firm said NJSC Ukrnafta, as claimant, had brought legal proceedings against Arkona, as defendant, in which NJSC Ukrnafta made claims asserting that irregular procedures were followed in the grant of the licence to Arkona in May 2017.

NJSC Ukrnafta was the holder of a previous licence over the area, which expired prior to the grant of the licence to Arkona.

Arkona is defending the claims, Enwell said, and asserted that the claims were "unwarranted and without merit".

In early July, the First Instance Court in Ukraine announced a ruling in favour of NJSC Ukrnafta, and delivered its full decision and written judgement, which found that the grant of the licence was irregular, which would mean the licence is invalid.

"The company and Arkona have carefully reviewed this decision and written judgement with their legal advisers in Ukraine, and consider there are strong grounds for a successful appeal," the board explained in its statement.

"This view is supported by the fact that the subject matter of these legal proceedings, including the validity of the licence, has already been ruled upon by the Supreme Court of Ukraine in similar proceedings in October 2019 involving NJSC Ukrnafta and Arkona, and in which the licence was held to be valid."

Accordingly, Enwell said an appeal was filed by Arkona in the Appellate Administrative Court in Kyiv, and pending the outcome of that process, the licence remained valid.

"Under the terms of the acquisition agreement for Arkona, half of the consideration payable, split into two equal tranches, was deferred and only payable on satisfaction of certain conditions including the favourable resolution of the legal proceedings, as well as certain other conditions, with the further proviso that if the conditions for payment of the deferred tranches were not satisfied, then neither of the tranches would become payable.

"In addition, the company's offices in Kyiv and Yakhnyky, where its Mekhediviska-Golotvshinska and Svyrydivske fields are located, have been visited by officers of the National Anti-Corruption Bureau of Ukraine (NABU), who were seeking documentation in connection with a criminal investigation by the NABU against the State Geological Agency in relation to the grant of the Licence in May 2017," the board further explained.

"The documentation sought is generally related to the Company's acquisition of Arkona in March."

At 0921 BST, shares in Enwell Energy were down 7.28% at 14p.

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