Roxi Petroleum plc disclosed Wednesday that further to its statement Feb. 10, the Central Asian oil and gas company with a focus on Kazakhstan, announced that the sale of the Company's equity and debt interests in the Galaz Contract Area to a consortium led by Xinjiang Zhundong Petroleum Technology Co., a Chinese publicly traded conglomerate, (the Galaz Disposal), is proceeding as planned and is now expected to complete by May 31.
Following the recent rise in the price of Brent crude the total proceeds of Galaz Disposal will now be $100 million and the net proceeds attributable to Roxi will now be approximately $23 million.
Two million dollars of the aggregate purchase consideration will be retained by the purchaser for a period of 12 months to cover warranty claims individually greater than $50,000. Roxi's share of this retention will be $0.68 million.
Impact on Roxi
Once received, Roxi plans to use the proceeds of the Galaz Disposal to fund all of the planned development in 2015 at the Company's flagship asset BNG.
Additionally, as previously announced, under the terms of the 2008 acquisition of 59 percent of Eragon Petroleum PLC (Eragon) from Baverstock, Roxi had an obligation to carry Baverstock for the first $100 million of costs on the Eragon assets (BNG, Galaz & Munaily). This obligation has now been fulfilled and the responsibility for further development funding for the Eragon assets (principally BNG) will be in the ratio 59:41 between Roxi and Baverstock. .
The net amount attributable to Baverstock from the Galaz Disposal is approximately $11 million. Together with the $23. million attributable to Roxi this will provide approximately $34 million to develop BNG.
The expected profit after tax on the disposal of Galaz to be included in the 2015 Roxi financial statements is approximately $17 million.
Further announcements regarding the progress of the sale will be made in due course.
Clive Carver, chairman said
"We are pleased to have moved without undue delay from the announcement of the sale of our interests in Galaz in February to expected completion in May. We believe this demonstrates the advantages of being based locally with a good understanding of the regulations.
The funds, once released from the sale of Galaz, will cover our BNG work program for 2015, which we hope will lead to the an appreciation in the value of the Group without dilution for Roxi shareholders."
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