A Royal Dutch Shell PLC unit has signed a preliminary deal to
buy a stake in Regal Petroleum Ltd.'s Ukrainian unit for $410
million, Regal said Wednesday.
The deal underscores the Anglo-Dutch major's focus on
Ukraine as it tries to expand its foothold in the oil and gas-rich
former Soviet Union.
The agreement drove up the share price of U.K. independent
oil company Regal by 10%. The company's shares had been hit after it
drilled a dry hole in Greece two years ago.
Shell has agreed to buy 51% of Regal Petroleum (Jersey)
Ltd., a Regal subsidiary that indirectly holds its gas and condensate
field licenses in Ukraine.
Shell's payment would be made up of $50 million to Regal for
the transfer of the 51% stake along with capital expenditure of $360
million to develop the fields.
The deal is still subject to finalization.
Regal's shares opened up 10% following the deal. At 0846 GMT, shares were up 5%, or 9p, at 180p.
Shell shares in London were up 1.3%, or 26p, at 1,994p.
KBC PeelHunt analyst Tony Alves said the deal does not justify
investors' excitement for Regal shares. He pointed out that only $50
million cash is to be paid up front by the buyer, with the remaining
$360 million paid to cover capex.
Shell has signed other deals in Ukraine. They include a
retail joint venture with OJSC Alliance Group in March and an
exploration deal with a unit of national oil and gas company NJSC
NaftogazUkrainy last year.