Advance Energy Secures Gas Project in Western Ukraine

Australian-listed Advance Energy is set to acquire an operating interest in the Ortynytska Subsoil Licence in Western Ukraine, a licence area that is estimated to hold around 20 billion cubic feet of undiscovered gas.

The licence area, which the U.S. Geological Service estimates to have approximately 75 undiscovered fields, is located around 50 kilometres southwest of the Western Ukrainian city of L'viv. From this location, Advance says it has access to several European gas markets, including Poland, Slovakia and Hungary.

The massive prospect, located in the Carpathian Basin, gives the company access to a potential 20 billion cubic feet of gas, 37 per cent of which is estimated to be located in Ukraine. 

The deal for the prospect will be made with Celiastad Pty. Ltd.. Advance will offer that company 500 million shares in order to acquire the 100 per cent interest in that company..

Celiastad has the rights to acquire 100 per cent of Epic Energy Ukraine, which holds a Joint Activity Agreement (JAA) with ZakhidUkrGeologiya (ZUG), a subsidiary of Ukrainian National Joint Stock Company (Nadra Ukrainy), is the licence-holder of the 19 sq km Ortynytska subsoil licence.

Through the agreement, Advance will fund all capital and operational commitments and expenses, receiving 70 per cent of net profits from production until payback, and 50 per cent of net profits thereafter.

Following shareholder approval of that deal, Advance will seek to raise $3 million to re-enter the Ortynytska-3 well. The Ortynytska-3 well, which was first drilled to a depth of 3,577 metres over 1993 and 1994, was abandoned at that time, despite a positive gas discovery, due to mechanical difficulties. Advance says it plans to side-track this well, with work expected to take place by the third quarter of this year.