Roxi updated on its agreement with LGI, confirming distribution of revenue from Galaz, and an update on Well NK20.
As part of the recent deal with LGI for the sale of GEBV's 40% interest in Galaz and Company LLP ("Galaz"), Roxi entered into an Inter Creditor Agreement, between the various shareholders of Galaz that sets out the basis under which the various partner loan funding arrangements put in place for the development of Galaz will be repaid to the partners as well as the subsequent profit distribution basis (Roxi owns a 59% interest in GEBV via its subsidiary Eragon Plc). The main terms of this agreement sets out how cash will flow back to the principal shareholders of Galaz, once oil production from the NW Konys field commences, as follows:
It is expected that cashflows will start to flow back to the Galaz partners as soon as pilot production commences on the NW Konys field, the timing of which is currently dependant on Galaz receiving the final permits associated with the pilot production.
Well NK20 was drilled to a total depth of 1600m. Shows were encountered over three intervals while drilling. The well has been logged run and production casing has been set. Initial log evaluation and core indicates that the target Arskum formation is not hydrocarbon bearing . As the NW Konys field cores also showed no significant visual hydrocarbon shows, final evaluation will be confirmed by core analysis, which is currently in progress.
The combined thickness of the remaining intervals with oil shows, totals 7.0m and therefore Galaz does not believe they warrant testing at this stage. The results of this well have confirmed the presence of good quality Arskum reservoir to the south east of the Contract Area, and migration and entrapment of hydrocarbons on the Eastern side of the Karatau Fault, which we plan to explore in the recently announced extension area. The KazRosMunai drilling rig, contracted to drill well NK20, has been released after 44 days from spud date.
David Wilkes CEO commented, "Although the results of NK20 are less favorable than NK 22, both wells indicate encouraging potential for the newly extended area for Galaz.
"We will now continue to focus on the development of NW Konys to achieve early production from the existing wells drilled in 2009, following receipt of the final permits, as well as evaluate the new production well locations as part of the next phase."
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