RE:KUB Year End Results The $11 million write down is from the NRU based on new accounting principals that the exchange implemented this year. So just like any other resource company, the asset has to be removed if it's not in production or being mined, but as soon as it's back online, then they can add it back. You can call KUB and verify this. But that's why it says they still earned $300K for the year, minus that write down. Just based on the cash, reserves and production, company is worth a lot more.
In the end, KUB still has 10 east wells to recomplete, 2 West wells from the JV, and instead of the NRU, it clearly states in the MD&A that they are looking at other methods to get that well in the RK field producing:
During the year ended December 31, 2019, Kub-Gas performed several recompletions that resulted in
an increase in initial production followed by natural decline rates. There are approximately ten other
wells with “behind pipe pays” that may be attractive recompletion opportunities. As the currently
producing intervals deplete, the production team can recomplete these additional zones in the existing
wells. Kub-Gas uses its own completion equipment and personnel.
• CNG drilled the U101 well that showed that the prospective reservoir sands were water saturated with
traces of natural gas that indicate there was gas migration, but no viable trapping mechanism in this
particular prospect. The U101 well obtained valuable subsurface geological and petrophysical data
that will be used to refine the seismic mapping and geo-modelling expected to be completed in Q2-
2020. The U101 well costs were 100% borne by the Company’s partner and the Company is awaiting
the partners review of the updated CNG data to determine the next operations at CNG.
• Subsequent to the year ended December 31, 2019, Kub-Gas drilled the Makeevskoye-30 (“M-30”).
Logging was performed on several horizons and was evaluated as having non-commercial gas shows.
• Subsequent to the year ended December 31, 2019, the Company had an independent engineering firm
evaluate the Nitrogen Rejection Unit (“NRU”) and their conclusion was the NRU required additional
investment in re-engineering and improvements to make the unit operational to meet pipeline
specifications. At the present natural gas price environment in Ukraine and the added cost and risk of
getting the NRU operational, the Company believes it would not be prudent to spend additional funds
on the NRU. The Company is looking at alternatives for the NRU and RK field, including possible natural
gas power generation
On the West Olgovskoye licence, Kub-Gas expects to commence a 270 km2 3D seismic program in 2020 to
delineate known structures found from 2D seismic.