In addition, subject to Caspian shareholder approval, Santos will take a 15% direct equity placement in Caspian at an issue price of 3 cents per share at a total cost of A$3 million. Santos will also be granted an option to acquire a further 40 million shares representing approximately 4.9% of Caspian's issued share capital.
The above transactions are subject to further due diligence to Santos' satisfaction, agreement of final documentation and any necessary Kyrgyz and other approvals. Under the terms of the letter agreement, Santos will sole fund and operate a phased work program over all of the licenses over a period of approximately 4 years during which it will earn the working interests.
"This is another significant step for Santos as it provides a measured entry into an area which we believe is highly prospective for oil and gas," Santos Managing Director, Mr. John Ellice-Flint, said today.
"Central Asia is generally an under-explored hydrocarbon province and this agreement gives Santos significant option value through becoming the dominant upstream operator in Kyrgyzstan," he said.
"Caspian has been successful in acquiring these interests over the last 3 years, and we look forward to working with them, both as a co-venturer, and also as one of their major shareholders."
This move is in line with Santos' strategy of diversifying its exploration program through a focus on understanding the geology and tying up material exploration positions in prospective hydrocarbon basins.
The 10 exploration licenses cover 16,500 square kilometers, largely in the Fergana Basin. The Basin, which extends across parts of Kyrgyzstan and into Uzbekistan and Tajikistan is, in part, analogous to the prolific hydrocarbon province of the Tarim and Junggar Basins in western China, which contain many large fields.
The exploration licenses in Kyrgyzstan contain a number of attractive exploration opportunities.
The total discovered reserves from 58 fields in the Fergana Basin are estimated to be in excess of 1.2 billion barrels of oil and 5.5 TCF of gas, with cumulative production to date of more than 600 million barrels.
Republic of Kyrgyzstan Fact Sheet:
The overall government take, which is by way of direct and indirect taxation, is around 35%. Taxes are applied via income tax at 20%, dividend withholding tax at 10%, excise tax at approximately US$14/tonne (approximately US$2/bbl), VAT (which is recoverable) at 20% and minor taxes on gross revenue of about 4%.
Other exploration and production companies active in Kyrgyzstan at present are: Southern Petroleum (a government production company), White Valley, Sinopec and Cambrian Oil and Gas. CNOOC has recently announced a major oil and gas investment program in the Fergana Basin in neighboring Uzbekistan.
Population: 5.2 million
The Fergana Basin covers an area of 63,000 square kilometers and has been producing hydrocarbons since the early 1900s. Cumulative discovered reserves from 58 fields are estimated to be in excess of 1.2 billion barrels of oil and 5.5 TCF of gas, with cumulative production to date of more than 600 million barrels.
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