Business
RC Update and Well Swap
RC Update and Well Swap.
About this update from Cloudbreak Discovery Plc
[{"type":"text","content":"\n Cardinal Resources plc\n10 March 2006\n\n\nCARDINAL RESOURCES PLC ANNOUNCES UPDATE ON RC FIELD REINSTATEMENT AND WELL SWAP\n\nRESERVES INCREASE BY 1.8 MILLION BARRELS OF OIL EQUIVALENT\n\nLONDON - Friday, 10th March 2006\n\nCardinal Resources plc (AIM:CDL) ('Cardinal' or 'The Company'), an independent\noil and gas production and exploration company operating in Ukraine, today\nannounces an update on the Rudivsko-Chernovozavodske (RC) Field reinstatement.\nCardinal also announces that it has concluded an agreement for a well swap with\nits Joint Activity (JAA) partner, Ukrgazvydobuvannya (Ukrgaz), a subsidiary of\nNaftogaz Ukraine.\n\nSince the end of last year, Cardinal has held intermittent negotiations and\ngeneral discussions with its Joint Activity partner, Ukrnafta, and its major\nshareholders regarding the reinstatement of Cardinal's subsidiary, Carpatsky\nPetroleum's, net profit interest in the RC Field and in four development wells\ndrilled by Ukrnafta. An agreement has not been reached and the Company does not\nexpect one until after the Ukrainian parliamentary elections on 26th March.\n\nUnder the new swap agreement with Ukrgaz Cardinal gains increased ownership and\noperational control of the Bilousivsko-Chornukhinska (BC) licence area,\nincreasing its working interest in six undeveloped wells previously in JAA #429\nfrom 50% to 100%. Cardinal also obtains 50% of one additional workover candidate\nin the North Yablunivska (NY) licence. In turn, Ukrgaz gains an increased\ninterest in four wells, reducing Cardinal's interest in them by 50%. Cardinal\nacquired the three licences - Dubrivska (DB), Bilousivsko-Chornukhinska (BC) and\nNorth Yablunivska (NY) - through its acquisition of Rudis Drilling Company\n(Rudis) in October 2005.\n\nThe net effect to Cardinal of the swap is that its average working interest in\nthe wells subject to the swap rises to approximately 76% from 64%, with a\ncorresponding net revenue increase of 16%. As part of the agreement, Cardinal\nand Ukrgaz will adjust their capital contributions to the JAA accordingly. After\naccounting adjustments and profit distributions, it is anticipated that the net\ncost to Cardinal will be a maximum of approximately $400,000.\n\nThe transaction, which is effective from 30th January 2006, increases Cardinal's\ntotal proved and probable reserves by 1.8 million b...