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Ukraine: Unexpected Oil Find, Major Gas Interest

Bottom Line: We see a flurry of activity in Ukraine, with a $735 million Black Sea commitment by Exxon, an unexpected 100 million barrel oil find in the Poltava region and new estimates that the country could achieve annual gas production of 45 billion cubic meters by 2020.

Analysis: First, Ukraine’s state-run oil and gas company Naftogaz on 11 July announced the discovery of an oil field in the eastern/central Poltava region that reportedly contains some 13 million tons of oil, or 100 million barrels of oil. This is the biggest oil find in Ukraine in a decade and a half. The Budishchansko-Chutovskoye oil field is fully owned by Naftogaz, and is the only field fully owned by the state-run company. 

The news for Ukraine gets even better this week, though. Exxon Mobil Corp is ready to invest $735 million to drill two deep-water wells offshore Ukraine in the Black Sea ($335 million in a signing bonus for the government and a $400 million commitment for seismic surveys and drilling). This is an amazing show of confidence by Exxon in Ukraine’s Black Sea.

Finally, ExxonMobil has given Ukraine another public boost with a new estimate that the country’s onshore and offshore gas reserves could help it reach production of 45 billion cubic meters by 2020.

Recommendation: We suggest very closely monitoring Exxon’s progress as it prepares to explore in Ukraine’s Black Sea, in the deep marine Skifiske gas field. (Right…

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