Regal Petroleum has agreed to divest all of its Ukrainian gas production assets to Smart Energy.
Under the deal, Smart Energy will acquire Mekhediviska-Golotvshinska, Svyrydivsk and Vasyschevskoye fields from Regal in
The Ukrainian fields produce gas, condensate and LPG.
The Ukrainian government has added multiple new provisions to its tax structure over the last two years, including transfer pricing regulations for companies operating in the country.
Regal’s gas production is produced by a non-Ukrainian subsidiary due to its corporate structure, which is placing additional reporting burdens on each of the company’s potential customers who are inclined to purchase its gas or seek discounts on sales prices.
Smart Energy has agreed to purchase all of Regal’s gas production and assume responsibility for the regulatory obligations under the Ukrainian tax regulations based on the discussions between both firms.
Smart Energy has agreed to aggregate Regal’s gas production with its own gas production and sell such gas as combined volumes.
The terms of sale for Regal’s gas to Smart Energy include payment for one third of gas delivered by the 20th of the month of delivery, and the remaining payment by the 10th of the month following the month of delivery.
Regal said that it agreed to sell its gas to Smart Energy at a discount of 0.5% to the gas sales prices achieved by Smart Energy in order to cover its sales, administration and regulatory compliance costs.
Smart Energy, which is part of the PJSC Smart-Holding Group, carries out oil and gas operations in Ukraine.