Information from Interim report January - June 2019 Misen Energy AB (publ)
Following is a summary of the financial information given in Interim Report January - June 2019 ("H1 2019") from Misen Energy AB (publ) published today. The complete report is attached and is available in both English and Swedish on the Company's website: http://misenenergy.se/repository/Financial_reports_ENG/Misen_Energy_Q2_2019_ENG.pdf
Summary of results:
- Given that the Arbitral Tribunal rendered a final partial award to terminate the Joint Activity Agreement No.3 (the “JAA”), Misen Energy AB (publ) believes that control over the specific assets owed by the Joint Activity (the “JA”) no longer exists. Thus, Misen Energy AB (publ) continues accounting treatment of 50.01% along with Powerful United Limited and Mr Konstantin Guenevski participation interest in the JA under which assets and liabilities are not presented in the financial statements.
- Accumulated earnings per share for H1 2019 are SEK -0.02.
Key events during H12019:
- In July 2018, the Arbitral Tribunal rendered a Final Partial Award in the arbitration proceeding commenced under the JAA in accordance to the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce. The Arbitral Tribunal fully rejected the JAA’s invalidity arguments, as well as the overwhelming majority of JSC Ukrgasvydobuvannya’s arguments concerning Misen Enterprises AB and LLC Karpatygaz alleged “breaches”. The Arbitral Tribunal concluded that the JAA must be terminated as of 11 July 2018.
- In H1 2019 Misen Enterprises AB, LLC Karpatygaz and JSC Ukrgazvydobuvannya agreed on a schedule for the second phase of the ongoing arbitration proceeding. JSC Ukrgazvydobuvannya filed its submission on 22 March 2019. Misen Enterprises AB and LLC Karpatygaz filed their submission on 3 June 2019.
- In November 2018, Misen Energy AB (publ) signed the Financing Agreement with Powerful United Limited for the maximum sum up to 12 million Euros. The Agreement obliges PUL to provide financing for the Swedish operation and an arbitration proceeding commenced by JSC Ukrgazvydobuvannya under Arbitration Rules of the Arbitration Institute of Stockholm Chamber of Commerce in July 2016 against Misen Enterprises AB and LLC Karpatygaz. During H1 2019 PUL provided additional financing for the arbitration proceeding and the operations of the Swedish companies.
- Misen Enterprises AB and LLC Karpatygaz believe that starting from 11 July 2018, when the Arbitral Tribunal terminated the JAA, agreements for lease of the booster compressor stations (“BCSs”) ceased to exist.
- As of the date of this report, JSC Ukrgazvydobuvannya refused to deliver to the JA hydrocarbons produced since December 2016 until 11 July 2018 (since June 2017 excluding incremental production of natural gas from leased BCSs).
- On 21 May 2019 the hearing was held in the court proceeding in Case initiated by National Anticorruption Bureau of Ukraine (“NABU”) based on the criminal complaint submitted by JSC Ukrgasvydobuvannya in 2017. The Kyiv Economic Court of Appeal dismissed appeal claims submitted by NABU and UGV. The Court upheld the decision of the first instance court. NABU and UGV appealed against the decision of the Kyiv Economic Court of Appeal.
- On 5 June 2019, the Constitutional Court of Ukraine decided that the NABU does not have an authority to challenge validity of the JAA.
- In August 2018, Kyiv Economic Court of Appeal upheld the decision of the first instance court and resolved to recover UAH 237,507,020 (SEK 83,326,725) of lost profit and UAH 9,856 (SEK 3,458) of court costs to Financial Leasing Center in the court proceeding in Case No. 910/24412/16. This decision is subject to an immediate enforcement. LLC Karpatygaz challenged the decision in the Supreme Economic Court of Ukraine. In August 2018 Supreme Economic Court of Ukraine ruled to halt enforcement of ruling of Kyiv Economic Court of Appeal until it will be reconsidered according to cassation procedure. The hearing was held on 27 February 2019. Supreme Economic Court partially upheld cassation appeals of JSC Ukrgasvydobuvannya, LLC Karpatygaz and Misen Enterprises AB and annulled rulings of lower instance courts. The Court send Financial Leasing Center’s claim to recover lost profits for a retrial to a court of first instance. By its ruling dated 7 May 2019 the Kyiv Commercial Court decided to hold the preparatory hearing on 5 September 2019.
- Consolidated operating group loss: KSEK -6,623 (-15,225)
- Consolidated group net turnover: KSEK 12,289 (640)
- Earnings per share: SEK -0.02 (-0.07)
- Production of natural gas: at zero level (at zero level)
Key events after end of H12019:
- Misen Enterprises AB, LLC Karpatygaz and JSC Ukrgazvydobuvannya agreed on a schedule for the second phase of the ongoing arbitration proceeding.
- On 22-24 July 2019, JSC Ukrgazvydobuvannya, Misen Enterprises AB and LLC Karpatygaz attended the hearing in the arbitration proceeding held to Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce in Stockholm. The parties maintained their claims submitted to the Arbitral Tribunal respectively in their submissions earlier in 2019. The closing statements will be made to the Arbitral Tribunal at one day hearing held on 2 September 2019 in Stockholm.
- NABU and JSC Ukrgasvydobuvannya appealed against the decision rendered by The North Economic Court of Appeal (former The Kyiv Economic Court of Appeal). On 12 July 2019, the Supreme Court of Ukraine decided to open the cassation proceeding. The hearing will be held on 4 September 2019.
- By the Ruling dated 1 July 2019 the Kyiv Commercial Court resolved to re-open the proceeding in the case No. 910/21720/15 against JSC Ukrgasvydobuvannya, LLC Karpatygaz and Misen Enterprises AB seeking to enforce the contract to deliver the equipment and recover penalties to Financial Leasing LLC.
- As of publishing of this report, JSC Ukrgazvydobuvannya refused to deliver hydrocarbons extracted since December 2016 until 11 July 2018 to the JA (since June 2017 excluding incremental production of natural gas from leased BCSs).
- As of publishing of this report, JSC Ukrgasvydobuvannya failed to make the lease payments under lease agreements to the JA for the period until 11 July 2018, except the amount paid to PJSC Sberbank and set off against future liabilities under renewed lease agreements.
For further information, please contact:
Göran Wolff, MD
Misen Energy AB (publ) (formerly Svenska Capital Oil AB (publ)) is a Swedish upstream oil and gas company with operations in Ukraine. The company was founded in 2004 and its shares are traded on Nasdaq First North since 12 June 2007.In 2011, Misen Energy AB (publ) acquired Misen Enterprises AB and its Ukrainian subsidiary, LLC Karpatygaz, including the rights to 50.01% of the revenue and profit from a gas production project in Ukraine. Under IFRS rules, this transaction is classified as a reverse takeover. In consideration of the acquisition, a new share issue was carried out. The gas producing assets were acquired by production cooperation via a joint activity project governed by a Joint Activity Agreement between at that time the wholly-owned direct and indirect subsidiaries of Misen Energy AB (publ), i.e. Misen Enterprises AB and LLC Karpatygaz (together 50.01%) and PJSC Ukrgasvydobuvannya (49.99%), a subsidiary of the National Joint Stock Company Naftogaz of Ukraine. PJSC Ukrgasvydobuvannya is the largest producer of natural gas in Ukraine. The purpose of the Joint Activity Agreement is to significantly increase production of gas and oil by providing modern technologies via a large-scale investment program for the purposes of attainment of profits.
In June 2016 and in July 2017 Misen Energy AB (publ) sold respectively 37.5% and 10% of Misen Enterprises AB shares to the Hong Kong based company Powerful United Limited. In March 2018, Misen Energy AB (publ) sold 2% of Misen Enterprises AB shares to Mr. Konstantin Guenevski. Owning (the remaining) 50.5% of Misen Enterprises AB shares, Misen Energy AB (publ) maintains full control of the company and preserves a right to obtain 50.5% of the future dividends from the operations in Ukraine.
The registered office of Misen Energy AB (publ) is in Stockholm and the shares are traded on First North under identification ticker MISE. The Certified Adviser of the company at Nasdaq First North is Erik Penser Bank AB, tel.: +46 8 463 80 00, e-mail: firstname.lastname@example.org.
For further information, please visit our website www.misenenergy.se.
This information is information that Misen Energy AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 15:00 CEST on 30 August 2019.