November 22, 2007
Nick Hasell: Tempus
Only a year or so ago, Shell and Regal Petroleum might have been seen as the two least-likely bedfellows in the oil and gas sector. The debacle surrounding Regal’s dry well in Greece, in a field previously claimed to contain a billion barrels of oil, and the promotional antics of founder Frank Timis – notorious for his two convictions for heroin possession in the 1990s – made Regal a byword for the excesses and overhyping of AIM’s natural resources stocks.
So yesterday’s disclosure that Shell had signed a deal to take a 51 per cent stake in Regal’s Ukrainian gasfields for $50 million (£24 million) and fund the first $360 million of investment marked something of a turnaround. The Anglo-Dutch giant supplants MND Exploration & Production, which until last week had enjoyed a period of exclusivity over the sale negotiations.
Shell already has eight licences in the Dniepr Donetsk basin, where Regal’s Mekhediviska-Golotvschinska and Svyrydviske fields are located. More important than proximity is Shell’s technical expertise, which should prove invaluable in accessing Regal’s reserves, which, while proven at 169 million barrels of oil equivalent, are hard to extract using conventional methods. Shell has eight weeks to conduct due diligence, meaning there is no certainty the deal will proceed in its current form. But the interest of an oil major in an asset whose value was once all but written off gives long-suffering Regal investors reason to hold on at 164p.
http://business.timesonline.co.uk/tol/business/markets/article2918379.ece
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I think both companies will benefit from the deal, though i bet Shell will negotiate on principal as Shell has alot of clout, for the log suffering Regal holders afer all (I) they have been through this could be a great result and once the market starts to play fair (on loan situation 7.85 million shares) rumoured to belond to a large fincial institute has closed out the SP will suffer but markets change quickly so until them HOLD ON!