14th Nov 2005 07:02
Regal Petroleum PLC14 November 2005 Immediate Release 14 November 2005 REGAL PETROLEUM PLC ("Regal") Response to Media Commenting upon the weekend's press commentary on its announcement made onFriday, 11 November 2005, the Board of Regal would like to make the followingstatement: Regal has made it very clear that there were two sets of legal proceedings thataffected its business operations in Ukraine. This was spelled out in theCompany's announcement made on 29 September 2005 when the second of these legalproceedings first manifested itself and again on 3 October 2005 when the outcomeof the Appeal in the first case became available. Previously on 26 September2005 Regal issued an announcement explaining the circumstances of the first casein detail. Details of the two cases: The first case involves a dispute on the dissolution and distribution of theassets of the previous joint venture in Ukraine between Regal andChernigivnaftogasgeologia (CNGG). The joint venture, 75% Regal and 25% CNGG,covered the exploration of and pilot production from what are now Regal'sUkrainian licences/assets. It is a case brought by Regal to establish theposition regarding the distribution of assets (wells and infrastructure)following the dissolution of the joint venture in June 2004, prior to the awardof the present 20 year production licences to Regal. It does not relate to thevalidity of these production licences. The initial hearing of this case found in favour of Regal directing that thephysical assets of the joint venture be acquired by Regal from CNGG with a cashcompensation payment. This payment was determined by an auditor appointed by theCourt. This ruling was appealed by CNGG and early in October 2005 this appealwas heard and the Appeal Court upheld the ruling of the original court. CNGGhave again appealed, this time to the Ukraine Supreme Commercial Court and thisfurther appeal will be held in the near future. It is at the discretion ofeither party, irrespective of the outcome of any further appeal, to take thiscase to the Ukraine Supreme Court for a final and absolute ruling. The second case has been brought by CNGG against its own parent organisation,the Ministry of Environmental Protection (MEP). Despite Regal not being a partyin this case, the Company believes that the real aim of this action is to damagethe interests of Regal. The basis of this claim is that the State Committee, thepredecessor to the MEP, when awarding the production licences to Regal did notfollow correct procedure and that therefore the production licences are notvalid. Despite not being a participant in this case, Regal and its legal counselin Kiev have followed it closely and have always been convinced that thisassertion is not valid. The Board was therefore surprised by the outcomeannounced last Friday, 11 November 2005 that the Court had found in favour ofCNGG. Regal will itself join these proceedings and launch an appeal which it nowhas a formal right to do. Regal is confident that this appeal process willresult in a favourable outcome. The Company is seeking to have both of these cases concluded with favourableoutcomes for Regal with rulings possibly at the highest level of legal standingin Ukraine, the Ukraine Supreme court. This legal process is well underway inthe first case but only at the beginning of the process in the second case. Ukraine is a country undergoing a period of massive social and political change.It is currently pursuing applications to join the WTO and the European Union. Itis taking well publicised steps to establish its political, commercial, fiscaland legal institutions as being appropriate to those legitimate aims. Therefore Regal, as a foreign investor with a large stake in Ukraine, isconfident that the legal proceedings now underway which affect its Ukraineassets will be dealt with, in a correct and proper manner. Specifically, thatits current licences will be upheld, that the decision handed down determiningthe dissolution of its previous joint venture will be ratified and that itsfuture intentions to invest further in the economy of Ukraine will be rewardedwith success. Regal will announce further updates as the above issues are concluded. For further information please contact: Regal Tel: 020 7408 9500Rex Gaisford, Chief ExecutiveRoger Phillips, Finance Director Buchanan Communications Tel: 020 7466 5000Bobby Morse / Ben Willey This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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