Regal goes it alone in Ukraine

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Regal Petroleum took an-other step towards rehabilitation on Tuesday after it announced reduced losses and progress in plans to develop Ukrainian gas assets without bringing in a partner.

David Greer, who became chief executive last November, said 2007 had arguably been the most significant in the company’s history as Regal devised a plan “aimed at distancing itself from its chequered past”.

Aim-listed Regal had previously found itself in dire straits with its Ukrainian production licences challenged in court and regulatory scrutiny of a foray into Greece. These problems resulted in its share price collapsing and Frank Timis, Regal’s colourful founder, being ousted in 2005.

Mr Timis remains a 14 per cent shareholder in Regal but the company said he had no role in running it. He is the chairman of another exploration company – the unlisted Eastern Petroleum – of which Mr Greer is chief executive.

The surprise appointment of Mr Greer and two other directors at Regal resulted in the abandoning of a plan for Shell to take a majority stake in the Ukrainian assets for $410m (£210m).

Regal has since set a new course, prioritising the solo development of the Ukrainian gas reserves through a successful $165m placing in February. Fast-rising domestic gas prices in Ukraine have aided the cause.

Mr Greer is targeting a 10-fold rise in production to 7,500 barrels of oil equivalent a day by the end of 2009. Appraisal drilling will provide data for an upgrade in reserves in the second quarter of next year. In the longer term, full field development will require financing of $800m to $1.4bn.

Turnover rose 32 per cent to $14.3m and losses were trimmed to $22m from $115m. The loss per share was 16.2 cents.

Robert Wilde, finance director, said the figures did not yet represent Regal’s change of direction, but production and revenues could be expected to rise significantly within the first two years of its five-year development programme.

Regal’s shares, which have risen strongly since March, were down 2.1 per cent at 286p.

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