The Directors of Roxi Petroleum announced that the Company has entered into agreements to farm-out interests in two of its assets. The Ravninnoe farm-out agreement with Canamens will provide additional working capital for the Group and the Ravninnoe drilling programme. The Directors are looking forward to working with Canamens to appraise and develop the Ravninnoe field.
The Company has also entered into a farm-out agreement with KazRosMunai LLP to farm-in to the Galaz Contract Area. KazRos, a Kazakh drilling company based in Kyzylorda, will be using their rigs to drill 9 wells on the NW Konus field to earn an equity interest.
The Company also announced that Kuat Oraziman has been appointed executive director on the board effective from November 1, 2008. Oraziman has been serving as a non-executive director to the Company since May 2007.
Rob Schoonbrood, Roxi CEO said, "These deals represent a significant step towards the development of Roxi's asset portfolio, and I am particularly looking forward to working with our new partners to bring both Galaz and Ravninnoe into production. I am also delighted to welcome Kuat Oraziman to an executive role on the board. His business skills have already contributed greatly to the company's activities, and his greater participation will only strengthen the company's future."
Ravninnoe Farm-Out Agreement
The Company has signed a farm-out agreement with Canamens Energy BV ("Canamens") to develop the Company's Ravninnoe Contract Area. Canamens has the right to purchase up to 32.5% of the issued capital of Ravnninoe Oil LLP ("Ravninnoe Oil"), the sole registered contractor under the SSUC for the Ravninnoe Contract Area, as to up to 20% from the Roxi group and as to up to 12.5% from the residual partners in Ravninnoe Oil.
Should Canamens elect to make such purchase as described below, the purchase of 20% from the Roxi Group is subject to the approval of Roxi shareholders at a General Meeting. Canamens have released an initial cash consideration of US $5M to acquire an initial 10% stake in Ravninnoe Oil from the residual partners.
Canamens will then have an option to fund a well project up to a total amount of US $8.5M in return for a further 22.5% stake to be transferred to Canamens by Roxi and the residual partners in Ravninnoe Oil. Thereafter, Canamens may elect to fund a further US$8.5m of work program costs as part of their work program commitment towards the well project. Should the well reach certain aggregate flow targets and oil price targets, a final payment of US $5M would be paid by Canamens to the Roxi Group. The maximum aggregate sale proceeds and contribution to drilling funds in respect of the whole 32.5% interest would be up to US $27M of which $16.6m would be in relation to the sale of Roxi's 20% interest.
The well is planned to spud as soon as logistically possible after Canamens notifies Roxi that it elects to fund the well, but before January 31, 2009. The necessary equipment, drilling rig and contracts will be secured once this notice is received. Well Ravninnoe #20 will test the middle Carboniferous oil bearing reservoirs at a depth of approximately 3250m measured depth ("MD").
The initial $5 million is payable to Kuat Oraziman, a director of the Company, in connection with the portion of Ravninnoe Oil he owns in his own name. The $5 million has been made available to Roxi as a loan less an amount of US $1.25m as repayment of the earlier US $1.25m loan made to Roxi by Oraziman and announced on August 28, 2008. Under the terms of the loan agreement the loan is repayable with 30 days notice, but not earlier than June 31, 2009. The loan is interest free until June 31, 2009, after this date the interest rate will be LIBOR + 2%. The loan is a related party transaction under the AIM Rules. The Directors, with the exception of Kuat Oraziman, consider, having consulted with the Company's nominated adviser, that the terms of this loan are fair and reasonable insofar as the Company's shareholders are concerned.
Canamens is a private equity funded upstream oil and gas company. Its aim is to acquire assets with existing or near-term production opportunities, with field development and exploration potential where it can add real value through its industry experience and through its relationship with leading industry service providers. Sector Asset Management and Goldman Sachs are its two principal investors.
Galaz Farm-Out Agreement
The Company has completed the farm-out agreement with KazRos to appraise and develop the Company's Galaz Contract Area. KazRos will spend US $17M to drill 9 wells (4 wells to a depth of 1400m and 5 wells to a depth of 2800m) to earn a 32.5% interest in Galaz LLP ("Galaz"), the sole registered contractor under the SSUC for the Galaz Contract Area. The Roxi Group will transfer 19.175% of Galaz. KazRos will also purchase a further 1.5% of Galaz for a consideration of $500,000 cash of which $295,000 is receivable by Roxi. Roxi will retain an indirect 30.09% interest in Galaz.
Galaz Operations Update
After extensive remedial work to shut off three non-productive water zones in Well #26, the well has been put on to pump, and is currently in a clean up phase prior to staring a 90 day test production. Initial production is approximately 50bopd at 65% watercut from the Lower Cretaceous, Arskum sands at a depth of 1310-1313m MD. This well was drilled in 1992 and was originally perforated over four separate horizons.
Well NK3 was spudded on 4 November 2008 on the NW Konus field. The well is targeted to test upper Jurassic sands at a prognosed depth of 1320-1330m MD, with a secondary target in the Lower Cretaceous Arskum Sands at a prognosed depth of 1280-1320m MD. The well is currently drilling ahead at 900m.
A second rig has been mobilised by KazRos to the Contract Area, and well NK4 was spudded on November 17 to test the Upper Jurassic and Arskum sands on the same structure.
BNG Operations Update (Roxi interest 58.41%)
A 3D seismic crew was mobilized in October to the Yelemes-Ayrshagyl area of the BNG Contract Area. After successful trials, acquisition of a 360km2 survey started on the November 4, 2008.
A work-over rig has been mobilized to well Yelemes #54, to re-enter and test the Jurassic sands at a depth of approximately 2200m MD. Well #54 tested at rates upto 250 Barrels of oil per day in 1988. The well re-entry is in advance of the planned pilot production in 2009 of the Yelemes field.
Most Popular Articles
From the Career Center
Jobs that may interest you