Serinus Energy Inc.

Serinus Energy Inc.

December 04, 2014 07:30 ET

Serinus Energy Inc.: Ukraine: New Government and Banking Developments

CALGARY, ALBERTA--(Marketwired - Dec. 4, 2014) - Serinus Energy Inc. ("Serinus", "SEN" or the "Company") (TSX:SEN)(WARSAW:SEN), comments on the potential impact of new decrees from the Ukrainian government and the National Bank of Ukraine.

As reported in our press release of September 29, 2014, the Management Board of the National Bank of Ukraine (the "Bank") announced Resolution No. 591, which prohibited several types of foreign exchange transactions including among other things, the ability of companies to pay dividends to foreign shareholders until December 2, 2014. The Bank has now issued Resolution No. 758 effective December 3, 2014, which extends those restrictions with some minor modifications for an additional three months to March 3, 2015. This restriction will impede Serinus' ability to redeploy capital to its various projects in Tunisia and Romania. The Company is evaluating a number of funding alternatives to ensure that its current capital program continues uninterrupted, and will comment further once a selection has been made and the arrangements finalized.

In November 2014, the Ukrainian government issued a decree which required 90 of the largest gas consumers in Ukraine (the "Naftogaz List") to purchase their gas from the state owned company, National Joint Stock Company Naftogaz ("Naftogaz"), effective December 1, 2014 until the end of February, 2015. KUB-Gas LLC ("KUB-Gas"), Serinus' indirectly 70% owned subsidiary which owns and operates the Ukraine licences, currently sells its production through local gas traders. At that time, those traders informed management that none of KUB-Gas' production was being sold to companies on the Naftogaz List.

The Naftogaz List has been expanded to 152 companies, and the traders now estimate that it now accounts for approximately 20% of KUB-Gas' sales. Management believes it will be able to continue to sell all its gas, but it is uncertain as to whether other private producers will be able to find new customers to replace those lost to Naftogaz by this legislation. This may lead to increased competition for the remaining creditworthy consumers, although with the recent increase in royalty rates from 28% to 55% and the resultant shrinking of margins, it is not clear that all private producers will be able to compete on price.

These new developments are being considered by the Company as it sets its 2015 capital budget.

About Serinus

Serinus is an international upstream oil and gas exploration and production company with a diversified portfolio of projects in Ukraine, Tunisia, Romania, Brunei and Syria and with a risk profile ranging from exploration in Brunei, Romania and Syria to production and development in Ukraine and Tunisia. The common shares of the Company trade under trading symbol "SEN" on both the WSE (Warsaw Stock Exchange) and the TSX.

In Ukraine, Serinus owns an effective 70% interest in KUB-Gas LLC through its 70% shareholding of KUBGas Holdings Limited. The assets of KUB-Gas LLC consist of 100% interests in five licences near to the City of Lugansk in the northeast part of Ukraine. Four of the licences are capable of gas production, although two are currently shut in due to security issues in the area.

In Tunisia, Serinus owns a 100% working interest in the Chouech Essaida, Ech Chouech, Sanrhar and Zinnia concessions, and a 45% working interest in the Sabria concession. Four of the concessions are currently producing oil or gas.

In Romania, Serinus has a 60% working interest in the onshore Satu Mare concession, a 2,949 square kilometre exploration and development block, in the northwestern portion of the country.

In Brunei, Serinus owns a 90% working interest in a production sharing agreement which gives the Company the right to explore for and produce oil and natural gas from Block L.

In Syria, Serinus holds a participating interest of 50% in the Syria Block 9 production sharing contract which provides the right to explore for and, upon the satisfaction of certain conditions, to produce oil and gas from Block 9, a 10,032 square kilometre area in northwest Syria. Serinus declared force majeure, with respect to its operations in Syria, in July 2012.

The main shareholder of the Company is Kulczyk Investments S.A., an international investment house founded by Polish businessman Dr. Jan Kulczyk.

For further information, please refer to the Serinus website (

Translation: This news release has been translated into Polish from the English original.

Forward-looking Statements This release may contain forward-looking statements made as of the date of this announcement with respect to future activities that either are not or may not be historical facts. Although the Company believes that its expectations reflected in the forward-looking statements are reasonable as of the date hereof, any potential results suggested by such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Various factors that could impair or prevent the Company from completing the expected activities on its projects include that the Company's projects experience technical and mechanical problems, there are changes in product prices, failure to obtain regulatory approvals, the state of the national or international monetary, oil and gas, financial, political and economic markets in the jurisdictions where the Company operates and other risks not anticipated by the Company or disclosed in the Company's published material. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties and actual results may vary materially from those expressed in the forward-looking statement. The Company undertakes no obligation to revise or update any forward-looking statements in this announcement to reflect events or circumstances after the date of this announcement, unless required by law.

Suite 1500, 700-4th Avenue SW, Calgary, Alberta, Canada
Telephone: +1-403-264-8877
Al Shafar Investment Building, Suite 123, Shaikh Zayed Road, Dubai, UAE
Telephone: +971-4-339-5212
Nowogrodzka 18/29, 00-511 Warsaw, Poland
Telephone: +48 (22) 414 21 00

Contact Information

  • Serinus Energy Inc. - Canada
    Norman W. Holton
    Vice Chairman
    Tel.: +1-403-264-8877

    Serinus Energy Inc. - Canada
    Gregory M. Chornoboy
    Director - Capital Markets & Corporate
    Tel: +1-403-264-8877

    Serinus Energy Inc. - Poland
    Jakub J. Korczak
    Vice President Investor Relations
    & Managing Director CEE
    Tel.: +48 22 414 21 00