Cub Energy Inc. Executes Agreement to Increase Ownership Int
Cub Energy Inc. Executes Agreement to Increase Ownership Interest in KUBGAS Up to 40% in Return for Revocation of Right of First Refusal Notice 07:30 EST Monday, February 01, 2016 HOUSTON, TEXAS--(Marketwired - Feb. 1, 2016) - Cub Energy Inc. ("Cub" or the "Company") (TSX VENTURE:KUB) announces that pursuant to a letter agreement between the Company's wholly-owned subsidiary, Gastek LLC ("Gastek"), and Resano Trading Ltd ("Resano"), Gastek has revoked its notice to exercise its right of first refusal announced on January 6, 2016, to purchase the remaining 70% of KUBGAS Holdings Limited ("KUBGAS") held by Serinus Energy Inc. Cub, through Gastek, currently holds the other 30% of KUBGAS. In return for the revocation notice, Gastek can earn up to an additional 10% ownership interest in KUBGAS as follows: Gastek will receive a 5% ownership interest in KUBGAS from Resano following its closing with Serinus; Gastek will receive an addition 2.5% ownership interest in KUBGAS from Resano when Resano has received a cumulative US $25 million in dividends from KUBGAS; and Within one year of the above mentioned 2.5% transfer, Gastek has the option to purchase from Resano a further 2.5% ownership interest in KUBGAS at a price equal to 2.5% of the net present value of 2P reserves at the time of exercise. Resano is an affiliate of Burisma Group, the leading independent oil & gas producer in Ukraine with approximately 14,000 boe/d daily production in 2015. KUBGAS holds a 100% interest in KUB-Gas LLC, a Ukrainian entity with five production licences and one exploration licence in eastern Ukraine with current gross production of approximately 3,800 boe/d. "This transaction provides our company with a strong local Ukrainian partner in Burisma and an immediate increase in our equity position in KUBGAS from 30% to 35% for no additional consideration," said Mikhail Afendikov, Chairman and Chief Executive Officer. "Our interest in KUBGAS continues to represent a very exciting growth project for the company, particularly with the recently announced reduction in royalties from 55% to 29% effective January 1, 2016." Key Benefits to Cub Energy As a result of the transaction with Burisma, the Company will continue its participation as a 35% shareholder in KUBGAS instead of the prior 30% shareholding for no additional consideration. Based on Resano's US $30 million purchase price (the "Purchase Price") of Serinus' 70% interest in KUBGAS, the value of the increased 5% interest is approximately US $2 million and is a direct benefit to the Company and its shareholders. The US $2 million value is based on the original Purchase Price that was negotiated prior to the recently announced royalty reduction. The Company has the ability to further increase its ownership interest from 35% to 40% of KUBGAS based on the above mentioned conditions. Cautionary Statements: BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.