Australia-based Advance Energy has agreed to acquire an operating stake in the Ortynytska subsoil licence in Western Ukraine.
As per the deal, the company will issue 500 million shares to owners of Celiastad to acquire 100% in the company, which has the rights to acquire Epic Energy Ukraine.
The shares, worth about AUD$2 million ($1.98 million) based on the company's 0.04 cents closing price on Monday, will be distributed among Celiastad shareholders pro-rata.
Epic has executed a joint activity agreement (JAA) with ZakhidUkrGeologiya, the holder of the Ortynytksa natural gas licence and a subsidiary of the Ukrainian National Joint Stock Company.
Under the terms of the JAA, Advance will fund all capital and operational costs, receiving in return 70% of net profits from production until payback and 50% of net profits thereafter.
The Ortynytska Project is located 50km south-west of the city of L'viv in Western Ukraine and is close to the major European gas markets of Poland, Slovakia and Hungary as well as key pipeline infrastructure.
The project is located in the Carpathian Basin, where 500 fields have been identified with more than 2.1 billion barrels of oil and 11.2 trillion cubic feet of natural gas.
The Ortynytska Prospect is identified as a Miocene gas play with thermogenic and microbial gas, where the primary target is the Lower Dashava 15 (LD-15) sand located 3,500m deep.