Roxi Petroleum Completes Acquisition of Kazakhstan Assets

Roxi Petroleum, created to acquire controlling interests in and develop oil and gas assets in Central Asia, initially focusing on Kazakhstan, has entered into a sale and purchase agreement to acquire controlling interests over three oil and gas assets in Western Kazakhstan. The transaction includes additional options to further increase Roxi Petroleum’s interest in the assets.

The assets being acquired cover approximately 1200 km2 in Western Kazakhstan in the PreCaspian and Turgai Basins. The assets give Roxi Petroleum access to large high quality exploration acreage and further opportunities for early development of reserves already on the State balance.

The first asset is an exploration contract, which covers an area of over 1100 km2, not far from the Tengiz oilfield in the Pre-Caspian basin of West Kazakhstan. The contract for the block was signed earlier this year. The block is considered by the Company to be highly prospective in both the Jurassic sandstone at depths of 2500-3000m and in the pre-salt Carboniferous sandstones and carbonates at depths of 4000-5000m. Exploration in this area since the 1980’s has resulted in the development of several Jurassic discoveries in the surrounding acreage.

The second asset is an Exploration and Production Contract in the Turgai Basin near the town of Kyzylorda in central Kazakhstan. The field contains “probable” reserves, in Cretaceous and Jurassic sandstones, on a wrench fault structural trap. There are four wells on the block with three delineating the oil-water contact and one well drilled higher on the structure tested at rates of up to 70m3/d (500bopd). Exploration upside exists deeper in untested Triassic sandstone targets.

The third asset is the rehabilitation of an oilfield in the southern Pre-Caspian basin. The field produced at low rates with high water cut from Cretaceous and Jurassic sands at depths of 500-1200m. The field was re-licensed in 2004. A full evaluation of remaining reserves needs to be undertaken. Exploration potential exists deeper in the Permo-Triassic reservoirs.

The Company will acquire a 59% controlling interest in Eragon Petroleum plc, a UK holding company, which through its subsidiaries, has controlling interests in the three assets.

More than 99% of the purchase consideration is to be satisfied by the issue of approximately 145 million new Roxi Petroleum shares at a fixed price of US$1.30 (65p at an exchange rate of 2US$ per 1£) per share. The consideration shares will represent approximately 46 per cent. of the Company’s enlarged share capital.

The acquisition will constitute a reverse takeover under the AIM rules and also fall within the ambit of Rule 9 of the City Code. Accordingly, completion of the acquisition, and the resumption of trading in Roxi Petroleum shares are conditional upon, inter alia, the publication of an Admission Document on the enlarged company, obtaining a Rule 9 waiver from the Takeover Panel, and approval by the Roxi Petroleum shareholders at a forthcoming extraordinary general meeting.

The acquisition follows the Company’s strategy of acquiring further assets in Central Asia.

On completion of the acquisition, Roxi Petroleum’s management will have operational and financial control of the three oil and gas fields.

The Company will provide detailed information regarding the acquisition in the re-admission document which will be published as soon as practical; however, given the work involved this is expected to take several months.

The company remains committed to releasing its interim results for the period ending June 2006 on 7th September.

Commenting on the potential acquisitions Rob Schoonbrood, Chief Executive Officer of Roxi Petroleum said:

“These acquisitions mark a step change in the operational profile of Roxi providing additional scope for early production whilst also further bolstering the upside potential of the Company.

The acquisitions are part of our stated strategy of adding value by following a dual track programme: operational development combined with strategic acquisitions. We shall continue to drive the Company forward, working with our local partners to achieve our goal of making Roxi Petroleum a significant force in the region and creating further value for our shareholders”.

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