Anglo-Dutch oil major Shell has gone out of a deal to take a 51% stake in the Ukrainian gas assets of UK’s explorer Regal Petroleum PLC. This decision followed Regal’s appointment of a new chief executive, and was explained in Shell’s statement by the fact that the management change at Regal was not expected by Shell, and their memorandum of understanding was agreed with the previous management team.
Last week, Regal announced that chairman Francesco Scolaro and chief executive Neil Ritson had resigned, and both posts will be taken by David Greer – until recently a senior Shell employee.
Regal lost two appeals against the above ruling, before entering into an agreement with British Virgin Islands-registered company Alberry Ltd, to help have the licences upheld. In return for this service, Alberry was invited to purchase ordinary shares of Regal Petroleum Corp. Limited (RPC), making 15% of RPC share capital, for £100,000 in cash. Keeping the remaining 85% of RPC, Regal agreed to buy this stake back for $51 million in case the BVI company would be successful.
In December 2006, the UK company announced that all actions had been dismissed by the Ukrainian supreme court; in June 2007, Regal said it paid Alberry 13,910,623 Regal shares £30 million worth to buy back the stake.
RPC is an indirect subsidiary of Regal Petroleum PLC and the holding company for Regal Petroleum PLC in Ukraine. Regal re-commenced the production from its operations in Ukraine in August 2006, but the Ukrainian assets of the company are still in the centre of legal disputes, already for two years.