Cub Energy willing to buy KUB-Gaz from Serinus

Texas-based Cub Energy (KUB CN), the owner of a 30% stake in Ukraine natural gas producer KUB-Gaz, is going to exercise its right of first refusal to buy the remaining 70% stake in the Ukrainian company, Cub Energy announced in its Jan. 6 press release. Recall, Serinus Energy (SEN PW), the holder of the 70% stake in KUB-Gaz, reported on Dec. 23 that it reached an agreement with a third-party buyer to sell its stake for “USD 30 mln plus working capital and inter-company adjustments.”

In its Jan. 7 press release, Serinus Energy confirmed that it received from a Cub Energy subsidiary a notice with its intention to purchase a 70% interest in KUB-Gaz. Serinus also stated that it “is studying and receiving advice with respect to both the validity of the notice and Cub’s press release.” Serinus also stated it is seeking confirmation from Cub-Energy on its “ability and commitment to complete the purchase,” highlighting that as of end-3Q15, Cub-Energy posted “a working capital deficit of over a million dollars”.

KUB-Gaz mined about 0.24 bcm of natural gas in 2015. All of KUB-Gaz’s wells are located in the Luhansk region of Ukraine, which is partially occupied by Russian-backed terrorists. Yet the vast majority of KUB-Gaz’s assets (and all of its producing assets in 2015) are located on territory controlled by the Ukrainian government, relatively far from the conflict zone.

Alexander Paraschiy: We can conclude from Serinus’s press release that it is not happy to sell its stake in the Ukrainian gas company to Cub Energy, possibly because Cub is unlikely to have funds readily available for that transaction. Cub Energy’s attempt to exercise its right of first refusal means there is a high chance that the sale will be postponed, due to either legal or funding reasons. That’s not good for Serinus, which was previously planning to compete the sale of the KUB-Gaz stake by the end of January. Nor does the situation looks good for the stock of Cub Energy (which surged 50% in the two days following the announcement of a possible deal), whose likelihood to buy the stake in the Ukrainian gas asset is not exceptionally high (though strong).

Источник: Конкорд Капитал