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(Sharecast News) - Enwell Energy said in an update on Friday that it recorded no production in the fourth quarter of 2025 as its three Ukrainian production licences remained suspended, while it continued development planning at its Svystunivsko-Chervonolutskyi exploration licence amid what it described as a highly challenging operating environment.
The AIM-traded oil and gas group said its Mekhediviska-Golotvshinska, Svyrydivske and Vasyschevskoye gas and condensate production licences remained suspended throughout the quarter and remained so currently, resulting in no output from those assets.
It said work was continuing at the SC exploration licence area, where it was planning new gas processing facilities and surface infrastructure, alongside assessing the feasibility of connecting to existing facilities.
Temporary gathering, separation and compression equipment was also being installed to enable gas and condensate from the SC-4 well to be processed on site and trucked to Enwell's facilities at MEX-GOL and SV for treatment and sale.
The company reiterated that its gas processing facilities at the VAS field were hit by Russian military drones on the evening of 18 December, resulting in significant damage.
It said the facilities had been mothballed since the reinstatement of the licence suspension in February last year, with Enwell adding that there were no casualties as only security staff were present at the time.
An assessment of the damage was underway to prepare a plan for repair and restoration.
Enwell said the operating environment in Ukraine remained very difficult and that it was continuing to act cautiously, taking measures to safeguard its personnel and business.
"The safety and wellbeing of its personnel and contractors is paramount," the company said, adding that it would continue to take all possible precautionary measures.
As at 31 December, Enwell reported cash resources of about $97.1m, comprising $81.7m equivalent held in Ukrainian hryvnia and $15.4m equivalent held in a mix of dollars, sterling and euros.
The suspensions of the MEX-GOL, SV and VAS licences stemmed from orders issued by the State Geologic and Subsoil Survey of Ukraine in November 2024 under Ukrainian legislation that allows licences to be suspended where the ultimate beneficial owner is subject to Ukrainian government sanctions.
Those sanctions were applied under a presidential decree in October 2024 to trustees of Cypriot trusts identified as holding a major indirect shareholding in Enwell.
As a result of how those interests were registered in Ukraine's state register, the regulator recognised the trustees as the ultimate beneficial owners of the licences and imposed 10-year suspensions effective from 8 October 2024.
Enwell had challenged the suspension orders in the Ukrainian courts and initially obtained interim rulings lifting them, but those rulings were overturned on appeal in January and February last year, leading to the reinstatement of the suspensions and the cessation of field operations.
The company said it had also initiated arbitration proceedings against Ukraine under the bilateral investment treaty between the UK and Ukraine, seeking monetary damages, reinstatement of the licences for their remaining terms and recovery of costs.
Those proceedings had been registered with the International Centre for Settlement of Investment Disputes.
"The recent drone attack at the VAS field further compounds the challenging and problematic situation with the continuing suspensions of our MEX-GOL, SV and VAS licences and the effect that these are having on the group's business," said Oleksiy Zayets, Enwell's chief executive.
"While we are maintaining our efforts to find a resolution with the Ukrainian Government, the limited progress to date means that we are continuing other steps to protect our business and assets through ongoing legal proceedings, both in Ukraine and internationally through arbitration proceedings under the bilateral investment treaty between the United Kingdom and Ukraine."
At 1129 GMT, shares in Enwell Energy were up 9.09% at 18p.
Reporting by Josh White for Sharecast.com.
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