Information from Year-end Report January - December 2018 Misen Energy AB (publ)
Following is a summary of the financial information given in Interim Report January - December 2018 ("12M 2018") 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_year_end_2018_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 12M 2018 are SEK -0.08.
Key events during 12M 2018:
- 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 August 2018, Misen Energy AB (publ) signed the Loan Agreement for KEUR 500 with Powerful United Limited.
- In October 2018 Misen Energy AB (publ) signed the Loan Agreement with SP Holding Limited for EUR 250,000.
- In October 2018 Misen Energy AB (publ) signed an amendment agreement to the Loan Agreement of 16 August 2018 with Powerful United Limited for EUR 100,000.
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 commented 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 Under the Financing Agreement, PUL agreed to provide financing on a non-recourse, unsecured and unguaranteed basis. Misen Energy AB (publ) agreed to pay 20 % of any final settlement of the arbitration claim to PUL. Such fee shall only become payable upon a final settlement of the arbitration claim. If Misen Energy AB (publ) does not achieve success in the arbitration proceeding, PUL shall not be entitled to any fee.
- In May-August 2018, the preparatory hearings were held in the civil court proceeding commenced by the National Anticorruption Bureau of Ukraine (“NABU”).
- In October 2018 Kyiv Economic Court dismissed NABU’s claims what regards, among other issues, invalidation of JAA.
- 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.
- During 12M 2018 and before the Arbitral Tribunal rendered a final partial award to terminate the JAA, JSC Ukrgasvydobuvannya failed to make the lease payments to the JA under the previously signed lease agreement.
- In June 2018 the settlement agreement was reached among JSC Ukrgasvydobuvannya, LLC Karpatygas as Operator of the JA, Misen Enterprises AB and PJSC Sberbank, subsidiary bank of Sberbank of Russia. According to the agreement the principal amount of loan, interest and the court costs accrued by PJSC Sberbank, subsidiary bank of Sberbank of Russia, were repaid via the funds JSC Ukrgasvydobuvannya owed to the Joint Activity in accordance to the renewed agreements for lease of the BCSs as well as own funds of the JA.
- As of 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).
- In June 2018, Kyiv Economic Court ruled to halt the court proceeding in Case No. 910/21720/15 against Center of Financial Leasing LLC (previously Sberbank Leasing) until the court finally decides on the claims brought by NABU. Financial Leasing Center appealed against the ruling of Kyiv Economic Court in June 2018. In July 2018 Kyiv Economic Court of Appeal upheld the decision taken by Kyiv Economic Court.
- 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 79,678,618) of lost profit and UAH 9,856 (SEK 3,306) 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 is scheduled for 27 February 2019.
- Consolidated operating group loss: KSEK -10,628 (-1,071,529)
- Consolidated group net turnover: KSEK 13,787 (35,549)
- Earnings per share: SEK -0.09 (-3.95)
- Production of natural gas: at zero level (at zero level)
Key events after end of 12М2018:
- Misen Enterprises AB, LLC Karpatygaz and JSC Ukrgazvydobuvannya agreed on a schedule for the second phase of the ongoing arbitration proceeding. JSC Ukrgazvydobuvannya shall file its submission by 14 March 2019. Misen Enterprises AB and LLC Karpatygaz shall file their submission by 24 May 2019.The hearing shall take place in July 2019.
- 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 JSC Ukrgasvydobuvannya (49.99%), a subsidiary of the National Joint Stock Company Naftogaz of Ukraine. JSC 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.
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 12:00 CET on 28 February 2019.