PJSC UkrGasVydobuvannya (hereinafter referred to as the Company) realises its strategic significance in implementing the Concept of Oil and Gas Industry Development approved by the Cabinet of Ministers of Ukraine, and actively introduces it. In 2017, the Company increased its own production to 15.25 billion cubic meters (+ 4.4% until 2016), and has ambitious targets for increasing its own production until 2018. At the same time, the Company understands the importance of increasing production by other companies in the sector to implement the Concept and ensure energy independence of Ukraine.

According to the law, the mineral resources can be extracted only by companies that have a special authorization for the use of the relevant area.

At the moment, the Company has quite a lot of plugged and abandoned wells, some of which have been drilled in Soviet times. Note that these wells are located in subsoil areas, for which the other companies have special authorizations. Consequnetly, the Company is prohibited to extract hydrocarbons from these wells.

Therefore, in order to increase production by other companies, according to the law, the Company launches a project to attract potential partners for recovery of own wells located in subsoil areas, for which the other companies have special authorizations.

The Company offers to the enterprises that have special authorizations for the use of subsoils within subsoil areas, where the said wells are located, to consider the possibility of cooperating on recovery of 268 plugged and 38 abonded wells. The list of wells offered within the framework of cooperation is available at the following link: plugged wells, abonded wells.

The prerequisite to cooperate for recovery of plugged or abonded wells is to undergo the verification procedure (compliance) by the National Joint Stock Company ‘Naftogaz of Ukraine’.

The Company has developed and is offering to the potential partners the following mechanism for cooperation and profit distribution. According to the mechanism, the partner, who has a special authorization for the use of subsoil, shall service (repair) wells of the Company using his own resources and at his own expense. Provided that the wells are successfully recovered, the Company will receive a part of profit in the form of payment for services associated with extraction and supply of raw hydrocarbons rendered to the partner.

The obligation to pay rental payments for the use of subsoil is the responsibility of the holder who has a special authorization and is fulfilled in accordance with the Tax Code of Ukraine.

The proposed financial terms and conditions of cooperation provide for the distribution of profit from each unit of extracted commercial raw hydrocarbons. On a monthly basis, the partner shall pay in favour of the Company the fixed value adjusted according to the price changes compared with the price of December 2017.

However, it is expected that the activities related to the extraction, keeping of the well in good condition, maintenance and repair operations on the well and/or associated equipment will be carried out using the resources and at the expense of potential partners.

The basic payment terms based on the price level of hydrocarbons in December 2017 are presented in table below (ex VAT).

Formation depth	Natural gas	Condensate	Oil
< 5 000 meters	1 610 UAH/thousand m3	5 018 UAH/tonne	4 854 UAH/tonne
> 5 000 meters	2 124 UAH/thousand m3	6 574 UAH/tonne	5 827 UAH/tonne

The potentially interested partners shall send their official letters to the following address: 26/28 Kudriavska Street, Kyiv, PJSC UkrGasVydobuvannya; the contact person is Ivan Yachechak. The official letters shall contain the candidate wells, for which the partners see the potential for recovery and which are located at the areas for which the partners have the right to use. The deadline for receipt of the offers is 1 May 2018.

Upon receipt of the official letters, the Company will begin to negotiate the contracts on protection of the trade secrets with potential partners, consultations on the research of candidate wells based on the information available in the Company, and sign the contracts for recovery of the wells in compliance with the internal documents approved by the Company.