Cub Energy Inc. to invest some $1.6 mln to re-commence production at Rusko-Komarivske field
Interfax, Kyiv, Ukraine,
Tue, June 20, 2017
Cub Energy Inc. (the United States) with assets in Ukraine has contracted to purchase a new nitrogen rejection unit for near $1.6 million to re-commence production on its wholly-owned Rusko-Komarivske (RK) field in western Ukraine.
The new unit is manufactured in the United States by Sep-Pro Systems Inc.
"The hiring of our new COO, Kerry Kendrick, resulted in a re-evaluation of the western Ukraine operations and we collectively believe the new NRU is the best option for Cub and its shareholders to resume production and cashflow at our wholly-owned RK field," Cub Energy Chairman and CEO Mikhail Afendikov said.
Cub Energy said that the new unit is expected to be operational in Ukraine by year-end. The unit comes with manufacturer warranties on operational capabilities. Also, the unit will be skid mounted so it can be utilized on any of the company’s gas fields in the future.
The RK field production was suspended on April 1, 2016, upon the expiration of the company’s gas blending agreement. The natural gas from the existing RK wells contains nitrogen content that exceeds the allowable limit per the Ukraine Code of Gas Pipeline System.
The new unit is expected to cost approximately $1.6 million with half this amount due in the first 30 days. To fund the purchase, the company will utilize cash on hand and will borrow $1 million from an officer of the company. The loan will bear interest at a rate of 6% per annum and payable monthly. The company will also issue 2.2 million common shares to the lender as a loan bonus.