Roxi has agreed to farm-out an interest in the BNG Contract Area to Canamens. The agreement is conditional, inter-alia, on regulatory approval by the Kazakh authorities and the approval by Roxi's shareholders. Following the Canamens farm-in to Ravninnoe Contract Area in 2008, this agreement aligns the Company and the Canamens group in a long term strategic partnership to develop two of the Company's core assets, with the goal of reserves growth and early production.
Roxi also announced further appraisal success on the NW Konus field, within the Galaz Contract Area in the Kyzylorda Oblast, Central Kazakhstan. The last two wells in the 2008 drilling program, NK5 and NK6, have encountered encouraging net oil pay intervals in Arskum and Upper Jurassic sandstone, from wireline logging evaluation.
Rob Schoonbrood, Roxi CEO commented, "We are delighted to work with Canamens to develop the highly prospective BNG assets. Both companies have demonstrated their ability to work together to get these deals done, and I believe that the partnership will result in a great success for the development of BNG.
Since Roxi's IPO in May 2007, in which a total of approx $80 Million was raised, the Company has lined up more than $90 Million of additional finance to cover its commitments for the development of the extended portfolio. Of this amount only $5M is in the form of loans
Sale and Purchase Agreement with Canamens
The Company has entered into a sale and purchase agreement to farm-out to Canamens up to a 35% interest in BNG Ltd LLP ("BNG"), as to up to 20.44% of the total interest from Roxi and up to 14.56% of the total interest from partners (the "SPA").
The agreement, other than the initial advance, is subject to the satisfaction of certain conditions precedent (including, amongst other things, Company shareholder approval as required under the AIM Rules, and receipt of necessary Kazakh regulatory approvals). The Company will convene a general meeting to seek shareholder consent to approve the disposal of part of its interest in BNG.
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.
Appraisal Success and Reserves Upgrade on Galaz Contract Area (Roxi interest 30.09%)
The Company has successfully completed the five well appraisal drilling programme (NK1,3,4,5,6) on the NW Konus field in the Galaz Contract Area, in the Kyzylorda Oblast, Central Kazakhstan. Well NK5 was spudded on 7 December 2008 and reached a total depth of 1,410m. The well has encountered a 20m of net oil pay in the primary Jurassic reservoir zone, and in the overlying Lower Cretaceous Arskum sandstone. The well is currently being prepared for completion and a 90 day test period. Well NK6 was spudded on December 11, 2008 and reached a total depth of 1,265m. It has encountered 29m of net oil pay in the same interval and is awaiting further evaluation.
Longer Term Funding Arrangements
Roxi continues to conduct discussions with a number of parties to provide strategic funding over the longer term to exploit the opportunities the Company has created. The Board believes that the prospect of successfully concluding one of these discussions is significantly increased by the Company's operational success and ability to secure working capital for the contract work programs through farm-out and disposal.
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