Business
Amendment Agreed for Gas Sales to Related Party
Amendment Agreed for Gas Sales to Related Party.
About this update from Enwell Energy Plc
[{"type":"text","content":"\n \nRNS Number : 1346K Regal Petroleum PLC 27 August 2019 \n\n \n27 August 2019\n \n \nRegal Petroleum plc\n(\"Regal\" or the \"Company\")\n \nAmendment to Agreement for Gas Sales to Related Party\n \nRegal Petroleum plc (AIM: RPT), the AIM-quoted oil and gas exploration and production group, announces that it has agreed an amendment to the terms upon which it sells its gas production to LLC Smart Energy (\"Smart Energy\"). \n \nAs announced on 30 June 2017, Regal entered an agreement to sell all of its gas production from its Mekhediviska-Golotvshinska (MEX-GOL), Svyrydivske (SV) and Vasyschevskoye (VAS) fields in Ukraine to Smart Energy.\n \nSmart Energy has oil and gas operations in Ukraine and is part of the PJSC Smart-Holding Group, which is ultimately controlled by Mr Vadym Novynskyi, who also controls an indirect 82.65% majority shareholding in Regal. As such, Smart Energy is considered to be a related party of Regal pursuant to the AIM Rules for Companies (\"AIM Rules\").\n \nThe arrangement came about following the introduction of a number of new provisions into the Ukrainian Tax Code by the Ukrainian Government, including transfer pricing regulations for companies operating in Ukraine. The introduction of those new regulations meant that there was and continues to be an increased regulatory burden on affected companies in Ukraine who have to prepare and submit reporting information to the Ukrainian Tax Authorities. \n \nDue to the corporate structure of the Regal Group, a substantial proportion of Regal's gas production is produced by a non-Ukrainian subsidiary of the Company, which under the revised tax regulations, placed additional reporting burdens on each of Regal's potential customers who may have been less inclined to purchase Regal's gas and/or may seek discounts on sales prices.\n \nAs a result, an agreement was reached in June 2017 between Regal and Smart Energy for Smart Energy to purchase all of Regal's gas production and assume responsibility for the regulatory obligations under the Ukrainian tax regulations. Smart Energy also agreed to combine Regal's gas production with its own gas production, and to sell such gas as combined volumes, which has resulted in higher sales prices due to the larger sales volumes. The terms of sale for R...