Q. There are a number of holders that are not happy with the current board but the majority are supportive of them but need to know that Urals Energy is now a growth story and how the board intends to put that strategy in place?
A. There are plans to drill two new wells at Petrosakh and one new well at ArcticNeft in 2013. At ArcticNeft the Company has entered into a contract to carry out a passive seismic study for the identification of potential hydrocarbon pools with Geodynamics Worldwide Srl. The technology will be utilised with the aim of increasing the efficiency of drilling via detailed interpretation of hydrocarbons within a specific area. Possible additional wells maybe drilled in the future, based on success of the planned 2013 drilling programme. The aim of further drilling is to increase production at both sites.
In addition and as mentioned in the update on strategy and trading announcement on 7 February 2013, the Board are also looking at ways of utilising the upside potential in downstream and marketing opportunities at the Company's existing assets; and, evaluating possible acquisitions and joint venture targets.
Q. I was dismayed to read that having spent so much time and effort in clearing debt the Company is now talking about acquisitions and potentially increasing the equity. Surely in the short term the Company should be focusing on exploiting the existing resources and generating positive cash flows to improve the share price and strengthen the current assets on the balance sheet?
A. The management team are currently working on maximising the existing assets and are looking to increase output through the 2013 drilling programme, which in turn will have a positive effect on cash flow.
Whilst there are currently no specific targets for an acquisition, if and when targets are found, the Board will look to structure the deal to leverage off its existing assets so far as possible (although there can be no guarantee on whether any acquisitions will in fact be completed and how any such acquisitions will be funded).
Q. The market capitalisation of the Company is low compared to others in the sector, how does the Board propose to increase this to give shareholders true value?
A. The Board shares the frustration of its shareholders and there are of course a number of macro economic factors that effect the market capitalisation of the Company. The Board are committed to making sure the market understands the turnaround story and that now the legacy issues are over the foundations for growth are in place. The Board has announced its 2013 drilling programme and looks forward to updating the market on the success of this later in the year. In time the Board fully expects a full re-rating of the business.
Q. We would like to know why the recent independent valuation of Petrosakh asset was never made public?
A. As part of the agreement with Petraco, following the repayment by Urals Energy after the Taas loan assignment, Petraco was required to release one of Company's assets. Although one was formally required, the Urals Energy Board convinced Petraco to waive the valuations requirement resulting in a significant cost saving to the Company.
Q. Are the present management invested in the company, if so at what price?
A. Andrew Shrager, Non Executive Chairman, currently holds 0.0207% of the issued shared capital. 75,000 of his shares were purchased at the float price of £2.40 and on the 24th of January 2013, 450,000 shares were bought at 6.5p per share.
Alexei Maximov, Chief Executive, currently holds 1.92% of the issued share capital, 439,000 shares were bought at the float price of £2.40, but he has been receiving shares since 2011 as granted stock options since joining the Board in 2009.
Leonid Y. Dyachenko, Executive Director, currently holds 2.33% of the issued share capital, the majority of his stock was bought at the float price of £2.40, but he has been receiving shares since 2006 as granted stock options.
Aleksey V. Ogarev, Executive Director, currently holds 1.40% of the issued share capital, the majority of his stock was bought at the float price of £2.40, but he has been receiving shares since 2006 as granted stock options.