Wednesday May 14, 06:20 PM
Ukrainian gas group to raise £125m via London listing
By Ed Crooks in London and Roman Olearchyk in Kiev
A Ukrainian gas exploration and production company will on Thursday announce a plan to raise £125m by floating on the main market in London, the latest sign of growing interest in the country's natural resource potential. Cadogan Petroleum,
founded in 2005, should be valued at about £600m. It is based in Kiev, but most of the company's board members are British.It will join two other London-listed companies also developing gas fields in Ukraine: Aim-listed Regal Petroleum (LSE: RPT.L - news) , led by former Shell (LSE: RDSB.L - news) executive David Greer, and JKX, which is part of the FTSE 250 (news) index. Regal's shares had been declining steadily since last summer, but have almost doubled since March and are now up 31 per cent over the past 12 months. JKX is up 63 per cent over the same period. Ukraine has one of Europe's biggest gas reserves - behind only Russia, Norway, the Netherlands and Azerbaijan - but is the Continent's third-biggest gas importer, after Germany and Italy. It has been dependent on gas from Russia and central Asia sold at well below prevailing European market prices; a position that has been at the heart of regular disputes with Gazprom, Russia's state-controlled gas company. Prices are being brought into line with western European levels, however, lifting the profitability of Ukrainian gas producers. Late last year Gazprom agreed with Ukraine that by 2011 it would sell its gas in Ukraine at the same price as in western European countries, less the transport costs for reaching those countries. Cadogan, which is backed by investors including the private equity funds of JPMorgan and Deutsche Bank (Frankfurt: DB9999 - news) , started buying assets in Ukraine in December 2005 when prices were much lower than today. Just weeks after the first deal, the dispute between Gazprom and Ukraine flared up and the gas price was raised from $50 per thousand cubic metres to $95. The price is now $180. The company has proved and probable reserves of 80.4m barrels of oil equivalent, almost three-quarters of those in gas, which is 320bn cubic feet. It has much greater potentially available resources of 1,583bn cubic feet in its 14 fields. All money raised in the float will be spent on its development programme, including wells and other facilities. It has very little production today, but the first of its main fields is expected to come on stream later this year. Mark Tolley, chief executive, who has worked for several companies in the former Soviet Union including JKX, said Cadogan "needs reliable funding that will take us through to positive cash flow". Cadogan's brokers are UBS (Virt-X: UBSN.VX - news) and Fox Davies.
Click here for more from FT.com
|
Send Article by Email
