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Company Information for Volga Gas plc
Company stock charts - 6 Month chart
 AIM; VGAS
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Company Statement
Volga Gas is principally focused on the exploration, development and production of oil, gas and condensate in the Volga region of European Russia. It has four exploration and production licences in the Saratov and Volgograd regions, which it aims to bring into production to take advantage of increasing Russian domestic gas pricing and demand. Each of the licence areas is located close to pipelines and other infrastructure and to major centres of demand in European Russia. Volga Gas aims to become a leading independent gas producer through organic growth and acquisitions.
Operations and Technology
Russian assets with exploration and production potential
The Karpenskiy licence area covers approximately 4,180km² and is situated on the northern edge of the North Caspian Basin in the Saratov region (the “Karpenskiy Licence Area”). As a result of 2-D seismic acquired and wells drilled by LUKoil group companies, Volga Gas has identified the Yuzhny-Ershovskoye sub-salt structure which is estimated to contain best estimate prospective resources, before the application of risk factors, of 56.0 bcm of gas (approximately 330 mmBOE) and 64 mmbbls of condensate. 2D seismic also indicates a second structure, Yuzhny-Mokrousovskoye where 3D seismic has been acquired.
The Company acquired and processed 400 km2of 3-D seismic in the Karpenskiy License Area ('KLA'). This enabled the company to refine the mapping of the prospects and to select its first drilling location – Grafovskaya #1 on the Yuzhny-Ershovskoye structure. A high quality western rig has been assembled on location, service contractors, equipment and supplies mobilized and drilling commenced on 28 August 2009. It is expected to take up to 250 days to reach the 5,200 metre total target depth.
The Company has also been successful with its supra-salt drilling activities. To date a total of ten wells (including one sidetrack) have been drilled, eight encountered oil bearing reservoirs, four are in production now and a further two are to be put on production before the end of September 2009. In early 2009 official Russian C1/C2 reserves of 13.9 mmbbl were certified on these fields. Production has risen steadily since starting on a full time basis in November 2008 and is expected to exceed 2,500 b/d before the end of 2009. Further sub-salt exploration and appraisal and development activity is anticipated in the medium term.
The Vostochny-Makarovskoye licence area covers 18km² and is situated in the Volgograd region and contains certified Russian C1/C2 reserves of 7.1 bcm of gas (approximately 42.4mmBOE) and 12,851mbbls of condensate (the “Vostochny-Makarovskoye Licence Area”).
• Volga Gas has drilled two initial production wells (VM#1 and VM#2) which have been connected by intra-field pipeline to a gas processing unit (“GPU”) on the Dobrinskoye field. • Volga Gas expect shortly to conclude the transfer of the GPU to a joint venture company in which it has a 75% interest. • Applications have been made to commence gas and condensate production.
The Pre-Caspian licence area covers 1,437km² and is located close to the Karpenskiy Licence Area (the “Pre-Caspian Licence Area”). Volga Gas believes that, by analogy with the geology of the Karpenskiy Licence Area, the Pre-Caspian Licence Area may have both sub-salt and supra-salt resources. By the end of 2008, the Company had acquired and processed 1,000km of 2-D seismic. During 1H 2009 acquired 78 km² of 3-D seismic to improve definition of a sizeable exploration lead identified with the 2-D seismic.
The Urozhainoye-2 licence was acquired in September 2007. The licence contains an unappraised oil discovery with one well that flowed oil and gas at over 1,500 boe/d. The company has acquired synthetic 3-D seismic data and processing is under way before appraisal drilling, planned in 2010-2011.
Volga Gas has already secured separate gas off-take agreements for the Karpenskiy Licence Area and the Vostochny-Makarovskoye Licence Area.
Volga Gas will be able to sell its gas domestically at unregulated prices. Russian domestic unregulated gas pricing is growing due to domestic demand and a need for non-Gazprom gas producers to supply the domestic market. Domestic demand for gas is expected to rise by 19.0 per cent. by 2015 from 460.0bcm in 2006 to 547.4bcm in 2015. Of this, the share of non-Gazprom Russian producers is expected to grow from 25.0 per cent. to 38.0 per cent.. In November 2006, the Russian government approved a plan which should lead to increases in regulated gas prices between 2007 and 2015 for domestic industrial customers.
Proximity to markets and infrastructure
The Company’s licences are located in the Volga region of European Russia. Each of the three licence areas are located close to major pipeline infrastructure, with the Central Asian Centre (“SAS”) pipeline running through the Karpenskiy Licence Area.
Experienced Russian and western management
Volga Gas has an experienced management team which it believes has the diverse and complementary skills and local market knowledge required to manage and grow an oil and gas exploration and production company in Russia.
Mikhail Ivanov, Chief Executive Officer, has over 15 years experience in the oil and gas industry which includes 10 years working for the Schlumberger Group, beginning his career with Schlumberger Limited as a Field Engineer in Siberian Russia. During his time with Schlumberger he assumed various management and technical positions in Russia, the USA and the United Kingdom. He was responsible for Schlumberger’s operations in Iran, Georgia and Azerbaijan. He is the co-founder of a number of successful venture companies. Mr Ivanov holds an M.S. degree in Geophysics from Novosibirsk State University and an M.B.A. from the Kellogg School of Management of Northwestern University. He is an elected member of SPE. Mr Ivanov is 40 years old.
Vyacheslav Lepilin, Regional and Exploration Director, has 35 years of experience in the oil and gas industry in the Soviet Union and Russia. He has worked for most of that time in the Volga region in both field operations and seismic processing and interpretation. From 1994 to 2003 he worked for OAO LUKOIL and the predecessor companies to OAO LUKOIL. He was the Chief Geologist at LUKoil-Nizhnevolzhskneft and was a member of the team responsible for discovering the sub-salt structures on the Karpenskiy Licence Area.
Tony Alves has had close experience with the independent the oil and gas industry for over 20 years as one of the leading equity analysts covering the sector. Prior to joining Volga Gas, he was head of oil and gas research for KBC Peel Hunt and was closely involved with the company’s 2007 IPO. He read mathematics at Cambridge University between 1977 and 1983 both as an undergraduate and a post-graduate research student. Mr Alves is 49 years old. He was appointed as Chief Financial Officer and Company Secretary effective 12th January 2009.
The involvement of Alexey Kalinin and Michael Calvey, co-managing partners of Baring Vostok, as non-executive directors and the involvement of Baring Vostok will be important in the pursuit and implementation of its strategy through, among other things, their in-depth knowledge of the Russian market.
Focus on organic growth and further acquisitions
Volga Gas intends to increase shareholder value through developing and bringing into production the Company’s existing fields and identifying, acquiring and exploiting further oil, gas and condensate fields in Russia. The acquisition of licences will be pursued on an opportunistic basis, whether through government auctions, such as the recently acquired Pre-Caspian Licence, or through corporate acquisitions, where the Company believes such assets are undervalued, create synergies with existing assets or can yield greater value through the application of the latest technology.
Board of Directors and Key Management
| Non-Executive Chairman | Alexei Kalinin |
| Chief Executive Officer | Mikhail Ivanov |
| Chief Financial Officer | Tony Alves |
| Non-Executive Director | Ronald Freeman |
| Non-Executive Director | Stephen Ogden |
| Non-Executive Director | Michael Calvey |
| Non-Executive Director | Vladimir Koshcheev |
Company Address3rd Floor, Regal House
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Additional Address/Key ContactIR contact |
CapitalNumber of Shares in issue (as of July 7, 2009) 81,017,800 |
Year End31st December |
Nominated BrokersRenaissance Securities (Cyprus) Limited | Nominated AdvisorsOriel Securities Limited |
Major Shareholders
| Cavendish Nominees (Baring Vostok PEF III) | 48.9% | 39,620,000 shares |
| Dehus Dolmen Nominees (Baring Vostok PEF IV) | 9.76% | 7,906,889 shares |
| Capital Group Int. Inc | 5.62% | 4,552,516 shares |
| HQ Fonder Sverige AB | 5.55% | 4,499,633 shares |
Related News
25/08/09 - Successful Development Drilling Ensures 2009 Production Hike For Volga Gas15/07/09 - Volga Gas Prepares For Key Sub-Salt Spud On Its Karpenskiy Licence In Russia
17/12/08 - Volga Gas Drilling Efforts Rewarded With 2009 Production Tipped To Climb
Most Recent Statement
23/11/09 - Operational Update16/09/09 - Interim Results
28/08/09 - Drilling commences on sub-salt Grafovskaya #1 well
25/08/09 - Karpenskiy supra-salt operational update
07/07/09 - Result of Placing - Dealings by Directors and Significant Shareholders
10/06/09 - Drilling update - Karpenskiy supra-salt