Urals Energy (LON:UEN) Market Cap £16 million.
It’s “tough at the top” is a well-worn humourous phrase used in every day parlance by those at the top. But let me tell you a self-evident truth, it’s a lot tougher at the bottom! It is to the bottom of the pile that we head for our second onefreesharetip.
Urals Energy have had a torrid time over the last 3/4 years the history is one of internecine warfare. Too many c(r)ooks spoilt the broth. It’s not been pretty and the effects of long drawn out court cases with what are euphemistically termed “Legacy issues” has cratered the sp.
The company was incorporated in Cyprus in 2003 as a limited liability company then capitalized with a cash investment of $80 million by a group of experienced Rusky oil investors, who had sold a portfolio of Russian oil assets to LUKOIL in 2003 at a multiple of their initial investment, much of which still remains invested in the Company today. They listed in August 2005 trading on the London Stock Exchange’s AIM market.
Their main exploration and production operations are in Timan Pechora and on Sakhalin Island. According to DeGolyer & MacNaughton the Company’s independent reserves auditors, as at 31 December 2007 the company had 2P (proved and probable) reserves of 58.5 mmboe. Current production as of today is 1,440 bopd from Petrosakh and 715 bopd Arcticneft with 70% and 100% of production being exported respectively. Total production is 2,155 bopd
The Company operates its Russian holdings and directs the management of their operations through its Moscow subsidiary, OOO Urals Energy (a Russian limited liability company). In addition, the Company maintains its head office in Nicosia, Cyprus.
Get researching Urals Energy.
There’s an awful lot going on over the next 12 months as the company are in full Recovery mode. Urals finished 2012 with a flurry after shipping 231,594 barrels of crude oil; thus further strengthening an already strengthening Company balance sheet. By my calculations they are now debt-free. This is a terrific achievement bearing in mind the problems that have beset the company. Remember at this level it is the competence and ability of management that you should be investing in. (I’ve said it before and I’ll say it again) “A management that are prepared to roll their sleeves up and get down & dirty are worth their weight in gold”
The new man at the helm, Alexei Maximov, has certainly made a huge difference both in & out of the Board-room. He has ushered in a new management team which saw Andrew Shrager, Stephen Buscher and Torbjörn Ranta joining the company, their experience and contacts, should help Urals identify further assets & opportunities for growth. The new team has ripped through the whole company reviewing the operational base while implementing changes that are now beginning to bear fruit.
It was Maximov who faced down Petraco’s charge over Petrosakh which was a “pivotal point in the Urals’ recovery” & it was Maximov who won the Arbitration case against Vyatcheslav Rovneiko. Rovneiko is now liable to pay to Urals Energy the sum of US$3,730,000.Plus interest & costs.
For the first time in years Urals anticipate that they will be free of all major debtors. This is what will enable them to crack on with stabilising & increasing production at both assets; While at long last having some much-needed cash coming into the company coffers to further grow the company from new assets while increasing production from producing assets. It is a win, win situation.
According to DeGolyer & MacNaughton (D&M), the Company’s independent reserves auditors, as at 31 December 2007 the company had 2P (proved and probable) reserves of 58.5 mmboe. As at 30 June 2012 the Company had net debt of US$6.6 million (calculated as Long-term and Short-term debt plus finance lease obligations less cash in bank and less Loans issued to related parties). As of today they are debt-free. With cash now coming in to the company.
Maximovs’ main goal now is to add reserves by all means possible – by drill bit, by auction participation and/or through acquisitions. As well as increasing production at existing producing assets. This should see the bopd continue to rise over the coming months as Urals implement new well drilling with existing well optimisation programs being rolled out over 2013 There’s also an “Anticipated tax break from 2013 for companies located in the far northern territories of Russia which will benefit the Company’s operations in Arcticneft”
In my opinion Urals Energy are a recovery stock which represents terrific value at the moment. I’l leave you with a comment from their Top man Alexei Maximov; “The board is happy to be close to turning the final page on Urals’ legacy issues, including, prevailing in court over the unfounded allegations of a former director. With an ongoing strong operational performance, Urals is moving full steam ahead to 2013 and we remain confident of our ability to further increase production on our existing acreage, whilst seeking new ways to create value for our shareholders.” It’s my opinion that the page has now been turned. “Hail Maximov!”
Get them on your watch-lists they should breach 10p some-where along the line. Possibly edging up to 18/20p depending on how high they can increase their bopd. They are off the radar at the moment but should come on-screen soon enough. A 12 month 15p target for my personal holding here.