UPDATE 2-Regal to sell 50% of Ukraine fields for $330 mln

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By John Bowker

LONDON, Sept 14 (Reuters) - Oil & gas explorer Regal Petroleum Plc agreed to sell a 50 percent stake in its MEX-GOL and SV gas fields in Ukraine to Czech-based MND Exploration and Production for $330 million.

Regal said on Friday the deal would allow the two companies to conduct due diligence on the fields, whose reserves are estimated at 169 million barrels of oil equivalent, and Chief Executive Neil Ritson said he was confident the deal would go through.

"We have had lots of interaction with MND," he told Reuters in a telephone interview, adding there were other firms competing for the deal right up to the end of the process.

He said the two firms hope to produce 40,000 barrels of oil equivalent per day (boepd) from the two sites by early next decade, up from just 1200 boepd presently.

"It's a large project. We expect to start new production by this time next year and 40,000 boepd -- although mostly gas -- by early next decade," Ritson said.

The company said in April it had appointed Tristone Capital to seek a divestment partner and Ritson admitted it had taken longer to conclude the deal than he had hoped.

"I had hoped to be in this position in early summer, but transactions take as long as they take," he said.

NOT A DONE DEAL

Regal shares have fluctuated during the summer amid speculation the deal was either on or off, but they have still risen more than 60 percent in six months. By 1131 GMT they were down 6.5 percent at 215-1/2 pence, valuing the business at 338 million pounds ($684.6 million).

"It's an odd one ... maybe it's because it's not yet a done deal, or that some people think -- ignorantly -- that a farm-out deal is somehow giving away value," said Tim Heeley, an analyst at brokerage Daniel Stewart.

Regal is still infamous for raising 45 million pounds to develop what turned out to be a dry well in Greece in 2005 and has since tried to repair its reputation.

Founder Frank Timis remains a significant shareholder but withdrew from a hands-on role at the group, which became involved in a long-running legal battle with Ukrainian authorities over the legitimacy of its licenses.

It finally won the battle almost a year ago, before launching the search for a divestment partner.

MND is a privately owned Czech group that produces around 10,000 boepd and has exploration assets in areas including Germany, Romania and Morocco. "We wanted to focus on companies in eastern Europe who have knowledge of doing business in those parts of the world, Ritson said.

Heeley added that MND looked like a strong, adequately funded partner. ($1=.4937 Pound)

Keywords: REGALPETROLEUM UKRAINE/