Petroneft Resources PLC Heads of Terms for Potential Disposal (7977H)

TIDMPTR

RNS Number : 7977H

Petroneft Resources PLC

01 August 2023

PetroNeft Resources plc

1(st) August 2023

PetroNeft Resources plc ('PetroNeft' or 'the Company')

WorldAce Investments Limited & OOO Granite Construction

Heads of Terms for Potential Disposal

Further to our previous announcement on 14 June 2023, PetroNeft announces that it has entered a non-binding conditional Heads of Terms (the "HoT") with Pavel Tetyakov (CEO and Executive Director of the Company) to sell its entire interests in WorldAce Investments Limited ("WAIL") and OOO Granite Construction ("Granite Construction") for a nominal consideration of RUR10,000 (approximately USD110 based on current exchange rates). The HoT is in addition to the Heads of Terms that have been signed in respect of the disposal of the Company's entire interest in Lineynoye LLC ("Lineynoye") which was announced on 14 June 2023.

The proposed disposal of interests in WAIL, Granite Construction and Lineynoye is subject, inter alia, to the execution of formal binding sales and purchase agreements. If agreed, the proposed disposals would be subject to all applicable corporate and government approvals, as well as approval of independent shareholders of the Company under AIM and Euronext Growth Rules. Moreover, the proposed disposals would be classified as a related party transaction for PetroNeft under AIM and Euronext Growth Rules.

Completion of the sale of the Company's interest in these entities would mark the Company's full exit from the Russian market.

Further announcements will be made, as appropriate, in due course.

Background

WAIL is a 50/50 Joint Venture company with Oil India International B.V. ("OIL") and owns 100% in Stimul-T LLP, a Russian entity owning and operating Licence 61. Granite Construction is a Russian 100% owned subsidiary of PetroNeft, which was set up post the farm in by OIL (2016) to manage small scale infield construction projects for the Licence 61 operator.

Pavel Tetyakov previously expressed an interest in acquiring 100% of Stimul-T LLP (which owns and operates Licence 61), but the Company's joint venture partner in respect of Licence 61, OIL BV rejected the offer. OIL BV also rejected the option to buy out PetroNeft's interest for the equivalent amount offered by Pavel Tetyakov. OIL BV have been provided with notice of Pavel Tetyakov's intent to purchase PetroNeft's interest in WAIL. Under the terms of the Joint Venture Agreement, OIL BV has rights of first refusal and tag along rights. This right expires on 30 August 2023.

In September 2022 production was halted at Licence 61 following a long running dispute with the pipeline operator (Nord Imperial). Due to the lack of revenue and increasing debts, in May 2023 Stimul-T LLP was required by law to file for voluntarily bankruptcy administration in Russia as the result of its inability to serve its considerable debts to third parties which are now in excess of US $11M.

All activities at Granite Construction have ceased and as of December 31(st) , 2022, Granite Construction had negative net assets (unaudited) of $0.256M with receivables outstanding of $0.126M of which $0.119M was due from Stimul-T. LLP

Considering the considerable debts of Stimul-T LLP combined with the ongoing bankruptcy administration process, neither Stimul-T nor Granite Construction can be considered to be going concerns and, as the result, the recoverability of the Company's investments is not deemed viable.

For further information, contact:

 
 David Sturt, Executive Chairman, PetroNeft Resources    +353 1 647 
  plc                                                     0280 
 Brian Garrahy/Ciara O'Mongain, Davy (NOMAD and          +353 1 679 
  Corporate Broker)                                       6363 
                                                         +353 1 498 
 Douglas Keatinge, Murray Consultants                     0300

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August 01, 2023 02:00 ET (06:00 GMT)

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