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Cub Energy to Add Ukrainian Gas Assets as 60% Expansion Targeted

Feb. 26 (Bloomberg) -- Cub Energy Inc., a Canadian natural-gas producer in Ukraine, plans to buy more assets in the country this year as it targets a 60 percent increase in output, the company’s largest shareholder said.

Cub Energy is studying assets in eastern and western Ukraine where it already has wells, said Rob Bensh, managing director of Pelicourt Ltd., which owns 50 percent of the company. It plans to announce one acquisition within 30 days.

Ukraine is urging gas producers to boost output as it seeks to cut dependence on imports from Russia. The eastern European country has agreed to let Royal Dutch Shell Plc develop its shale reserves and may sign a similar deal with Chevron Corp. by May. Cub Energy sells its gas locally at open auctions.

“I always kept my eyes on Ukraine because Ukraine has a significant amount of gas, of tight gas that needs to be fractured, and significant amounts of shale gas,” Bensh said today in an interview in Kiev. “I would like to see more shale assets tendered.”

Cub Energy, which plans to drill five to six wells in eastern Ukraine and three to four in the west this year, will increase production 40 percent to 60 percent in the period, according to Bensh. It will spend $25 million to $35 million this year, he said. The company drilled five wells in 2012.

“We like to have equity deals with our Ukrainian partners,” Bensh said, without identifying any of the assets under consideration. They’re all privately owned, he said.

Shares of Cub Energy, which is based in Toronto, have dropped about 10 percent in the city in the past year.

To contact the reporters on this story: Kateryna Choursina in Kiev at kchoursina@bloomberg.net; Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net

To contact the editors responsible for this story: James M. Gomez at jagomez@bloomberg.net; Balazs Penz at bpenz@bloomberg.net

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