By: Dylan Sikes - AllPennyStocks.com News

Friday, June 27, 2014

According to Ukrainian President Petro Poroshenko at a European Union summit in Brussels on Friday, pro-Russian separatists aren’t exactly concerned by a unilateral agreement for a ceasefire between Russia and Ukraine. Poroshenko told reporters that Ukrainian soldiers have remained targets in more than 150 attacks since the so-called ceasefire began on June 20, including five soldiers being killed on Friday. The website VoiceOfRussia.com reports that Ukrainian authorities also continue their assault, despite the truce. Russian President Vladimir Putin wants a long-term ceasefire to conduct substantive talks between Kiev and representatives of Ukrainian rebels, but Poroshenko says that he is not going to lengthen the ceasefire’s deadline if the separatists are simply going to use the time to re-stock ammunition.

By large, the markets are ignoring the war in Ukraine at this point, but it is going to have at least a minor impact on Cub Energy Inc. (TSX-Venture:KUB), due to the Houston, Texas-based oil and gas company’s interest in KUB-Gas. Cub owns 30 percent of KUB-Gas through a 30-percent ownership of KUBGAS Holdings Ltd. Cub has 244,000 gross acres in two prospective basins located on the eastern (Dnieper-Donets Basin) and western (Transcarpathian Basin) boundaries of Ukraine.

Cub dropped some good news/bad news on shareholders on Friday, although the good certainly outweighs the bad. The good news is that KUB-Gas hit a production milestone in the Dnieper-Donets Basin by achieving natural gas production of over 1 million cubic metres per day, or approximately 36 million cubic feet per day (MMcf/d), which equates to approximately 10.8 MMcf/d net production to Cub.

The bad news is that operations are being affected by the fighting in Ukraine, leading to the decision to suspend current developmental field operations as a need to ensure the safety of employees and assets. “The declared ceasefire between the Ukraine government and pro-Russian separatists has not materialized, forcing a situation where KUB-Gas contractors are refusing to support continued developmental operations at this time,” Cub said in a statement on Friday.

Testing has been halted in the O-11 well and no additional work is going to happen on the NM-4 well, which recently had surface casing set. The Vegunskoye field, which only produces less than 1 percent of Cub’s total natural gas production, has been temporarily shut in. The Vegunkoye field is near the city of Lugansk, a hotspot of war activity as the city has declared its independence of Ukraine, now going by the self-proclaimed name “Lugansk People’s Republic.”

Back to the shiny side of the coin, the four wells in the Transcarpathian Basin on the western side of the country will continue production and drilling of another well which remains on schedule.

Bay Street isn’t responding either direction to the news today. Shares of KUB are flat at 17 cents with about 130,000 shares trading hands early in the afternoon session. Shares are up 31 percent from lows late in April, but are down 26 percent so far in 2014.

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