EuroGas Enters Into Memorandum of Understanding to Develop Coalbed Methane and Natural Gas Reserves in Ukraine With ZNVKIF New Technologies, Subsidiary of Large Ukrainian Holding Company
2008-07-23 06:00 ET - News Release
NEW YORK, NY -- (MARKET WIRE) -- 07/23/08
EuroGas, Inc. (PINKSHEETS: EUGS) (FRANKFURT: EUG) (XETRA: EUG) (HAMB: EUG) (STUTTGART: EUG) today announced that it has entered into a Memorandum of Understanding (MOU) with OJSC ZNVKIF New Technologies (ZNT) of Kiev, Ukraine, a wholly owned subsidiary of one of Ukraine's largest Industrial Holding Groups (Holding Group), to form two gas development Joint Ventures in which EuroGas and ZNT will be equal partners.
One Joint Venture will explore and develop Holding Group's large coalbed methane (CBM) reserves in East and West Ukraine; the other Joint Venture will apply modern gas extraction technology to approximately 2,000 Holding Group wells, some of which are currently producing natural gas. EuroGas and ZNT believe that currently available gas extraction technology will be successful at rehabilitating a large number of these wells.
According to the Holding Group's technical experts, the total in situ CBM reserves in the Donetsk Basin in East Ukraine, where the majority of the Holding Group's coal mines are located, are estimated to be approximately 12 trillion cubic meters (427 TCF) of CBM gas trapped in coal deposits that are 500-1800 meters deep.
EuroGas and its predecessor company and affiliated companies have been pioneers in the exploration and development of CBM in the USA, Poland, Wales and India. EuroGas was the first foreign company to drill for CBM in Ukraine in 1998. This Joint Venture is a continuation of EuroGas' efforts to establish CBM production in Ukraine through the application of modern CBM production techniques.
The Holding Group has committed to contribute approximately 2,000 natural gas wells (with associated condensate) currently under its control to the second Joint Venture. These wells are either plugged or were abandoned due to either technical, economic or both reasons. EuroGas will provide to the Joint Venture modern natural gas reserve management technology in an effort to bring these wells back on stream.
At a recent technical meeting attended by experts of EuroGas and ZNT in Kiev, both parties agreed to immediately incorporate the Joint Venture companies and to commence the rework programs on the natural gas wells. As for the CBM Joint Venture company, EuroGas has undertaken to prepare a work proposal for the commencement of the CBM activities on the Holding Group's coal mines.
The Holding Group's core assets are in the Ukrainian coal industry, as well as in road construction and transport services throughout Ukraine where it is a market leader. Through its subsidiaries, the Holding Group also controls a large number of companies in the Donetsk and Lugansk region of Ukraine, as well as substantial industrial mineral enterprises with concessions for the exploitation of sand, talc and gypsum in Western Ukraine and the Donetsk region. In addition, the Holding Group also controls Ukrainian entities involved in the development and application of new innovative technologies in energy and energy saving enterprises and owns a bank.
About EuroGas, Inc.
EuroGas is a publicly traded oil and gas company with assets in Ukraine and Poland, as well as talc mining interests in the Slovak Republic. The company's common stock trades on the Frankfurt and Hamburg Stock Exchanges and Xetra in Germany under the symbol EUG and on the Other OTC (Pink Sheets) in the United States under the symbol EUGS.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:
This press release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995.
You can identify forward-looking statements by their use of the forward-looking words "anticipate," "estimate," "project," "likely," "believe," "intend," "expect," or similar words. These statements discuss future expectations, contain projections regarding future developments, operations, or financial conditions, or state other forward-looking information. When considering the forward-looking statements made in this press release, you should keep in mind the risks noted and other cautionary statements throughout this press release. You should also keep in mind that all forward-looking statements are based on management's existing beliefs about present and future events outside of management's control and on assumptions that may prove to be incorrect. If one or more risks identified in this press release or other filing materializes, or any other underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected, or intended.
For further information, please contact:
Wolfgang Rauball
Chairman & CEO
EuroGas, Inc.
Telephone: (212) 618-1274
