Cub Energy Inc. Comments on Temporary Resolution Passed by the National Bank of Ukraine

Cub Energy Inc. ("Cub" or the "Company") (TSX VENTURE:KUB) comments on the material impact of a temporary resolution of the National Bank of Ukraine ("NBU"), which among other things, prohibits the payment of cross-border dividends through December 2, 2014. On September 22, 2014, the Management Board of the NBU issued Resolution No. 591, to take effect on September 23, 2014. The resolution temporarily prohibits several types of foreign exchange transactions, including the ability of KUB-Gas LLC ("KUB-Gas"), Cub's 30% indirectly owned subsidiary, which owns and operates the eastern Ukraine licences, to pay dividends to its shareholders. Details regarding the practical administration of these new regulations have not yet been provided, and Cub and its partners will continue to monitor new information as it becomes available. To overcome this temporary restriction on transferring dividends out of Ukraine, Cub and its partners are reviewing alternatives for issuance of dividends for use within Ukraine which in Cub's case, may be used for its in western Ukraine licences.

 

Assuming Resolution No. 591 does expire on December 2, 2014, Cub has sufficient cash reserves to carry on its minimum operations through December 2014, but may choose to delay drilling the RK-23 well in western Ukraine to preserve its capital options.

 

If these restrictions on foreign exchange are renewed or extended, the Company will reconsider its 2015 capital programs in eastern and western Ukraine. A continued ban on cross-border dividends would result in the build-up of idle cash balances at Kub-Gas. The restriction of dividends beyond December 2, 2014, would have a material adverse effect on Cub and its cashflows. During the six months ended June 30, 2014, Cub received dividends of $4.1 million which represented the largest source of cash for the Company during the period.

 

Resignation of Officer

Mr. Bruce Vasseur, the Company's Vice President of Operations, has resigned effective September 30, 2014.

 

Mikhail Afendikov, Cub's Chief Executive Officer said, "We thank Bruce for his contributions to Cub and wish him luck in his future endeavors. With respect to the temporary currency restrictions on cross-border dividends, we are disappointed in this short-sighted approach by the NBU but we understand that it was done for stabilization of the Hryvna and to ultimately improve the Ukrainian economy in the long-term. We are reviewing our capital expenditures to preserve our capital options."

About Cub Energy Inc.

 

Cub Energy Inc. (TSX VENTURE:KUB) is an upstream oil and gas company, with a proven track record of exploration and production cost efficiency in the Black Sea region. The Company's strategy is to implement western technology and capital, combined with local expertise and ownership, to increase value in its undeveloped land base, creating and further building a portfolio of producing oil and gas assets within a high pricing environment.