Tuesday, February 2, 2016

More positive news on Cub Energy

A few days ago I wrote a post about how I had retaken a position in Ukrainian gas producer Cub Energy (KUB.V). More news has come out on Cub that makes this speculation even more lucrative.

One of the major assets of Cub is a 30% stake in a gas producing entity called Kub-Gas. The other 70% was owned by a company called Serinus Energy. Earlier this year Serinus decided to exit Ukraine and sell its 70% stake in Kub-Gas. Cub Energy has the right of first refusal on any sale meaning that Cub gets the first crack at buying the assets.

Cub did not have the money to buy the Serinus assets. A private gas producer in Ukraine called Burisma is going to buy the Serinus share of Kub-Gas. Cub Energy will forgo its claim on right of first refusal and will earn an additional 10% share of Kub-Gas at no cost. Cub can also earn an additional 2.5% within a year.

This is great for Cub as it did not have the money to purchase the 70% that Serinus was selling. This will also partner Cub with the largest privately owned gas company in Ukraine. With the reduction in royalty rates Burisma should be interested in accelerating the development of the Kub-Gas assets.

Here is the press release from Cub Energy.

This is all happening as the government in Ukraine is pushing for more development of the gas resources in Ukraine.

I have consistently advocated for Ukraine’s energy independence to be the main priority for state and executive authorities over the long run. In fact, it does not matter from whom we areimporting, since any dependence on imports will be harmful. The key is to either consume less or produce enough to cover our state’s needs, and perhaps even allow us to export.

Another strategic dimension is to increase energy efficiency and minimize corruption in energy markets. But all our strategies, plans, and steps should pursue the common goal - to ensure that the energy sector becomes a model for its national economic contributions, sustainable development, economic and environmental efficiency, responsible attitude to resources, and transparency of all payments.


In 2015, Ukraine adopted new energy laws and lowered royalty rates for oil and gas extraction, opening the space for the development of our energy sector. But, unfortunately, these efforts have not been enough. In this article, I will prioritize the 10 steps that we need to take over the next 12 months in order to continue developing the energy sector over the next 5 to 10 years.

This speculation just got better with this news and things continue to set up for a reversal of all the negatives we saw last year that drove down the price of this stock. I am accumulating shares.

Update: I misread the press earlier release on the earn in on Kub-Gas. It appears the first 5% can be earned by Cub Energy for no consideration. The other 5% of Kub-Gas can be earned "subject to certain benchmarks and optional payments." 






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