Cub Energy Inc. comments on the newly enacted law reducing gas royalties in Ukraine.
On Thursday, December 31, 2015, Ukraine President Petro Poroshenko signed a new law reversing the increase of royalties on natural gas production put into place 16 months ago on August 1, 2014. Effective January 1, 2016, royalty rates are reduced from 55% to 29% for wells drilled at depths up to five kilometers. For well depths greater than five kilometers, the royalty rate is decreased from 28% to 14%.
Additionally, under the enacted law, the two-year royalty rate discount for newly drilled wells will be discontinued as it is redundant with the new lower royalty rate.
Mikhail Afendikov, Chairman and CEO of Cub said,'We have waited patiently for royalty rates to decrease to allow us return to higher netbacks and redeploy capital into our Ukraine assets.'