Shares in Regal Petroleum fell by nearly 30% after the company admitted that Ukraine ordered it to suspend operations more than a month ago because of environmental problems.
However, Regal insists that its gas production is operating normally in the Eastern European country, saying it has been allowed to continue operations while official negotiations continue.
The company was forced to make the disclosure after rumours circulated on the internet that its gas wells in Ukraine have not been producing since March. Regal vigorously rejects this suggestion, saying it was only made aware of the suspension order on May 21.
It said there was previously no need to inform the stock market about the order because operations have still not been halted. A spokesman added there were no health, safety or environmental problems and the order relates to "procedural issues".
"These discussions have resulted in an ongoing dialogue with the Ukrainian government which the company believes will result in the rectification of the issues raised by the order," he said.
Regal's share price fell 10½ to 26p, as its Ukrainian assets are considered to be its best. It operates two gas fields with five wells in the country and has reserves of 169m barrels of oil equivalent.
Yesterday's dramatic drop in Regal's share price was an uncomfortable reminder of problems in 2005, when its stock crashed from 510p to 70p. Its former chairman, Frank Timis, had told people that the Kallirachi in Greece well held so much oil that on one occasion it burst and nearly killed 100 people.
However, soon after this statement, the company was forced to admit that the well was not commercially viable, and yielded just 30 barrels a day. The LSE fined Regal £600,000 for failing to inform the market.
When David Greer, the current chief executive of Regal, joined in 2007, Mr Timis signed an agreement to cease operational involvement with the company. Mr Timis still owns an 8%.
Earlier this month, Regal's shares had jumped 13% on better than expected drilling results in Ukraine.
No comments:
Post a Comment