Preliminary results indicate that some service work has to be done to maintain a steady productivity rate on Dolinnoe-1. Emir-1 showed extremely high pressure and good productivity in a test that approximated 30 minutes in length. In accordance with local regulations, test production has been interrupted until local government inspectors approve a detailed work program with appropriate safety measures. More oil trucks will be acquired to provide a steady and smooth oil delivery to the oil storage facilities owned by BMB's 30% partner in Emir Oil.
Given these new field developments, representatives of McDaniel & Associates will be visiting Kazakhstan in early November to view the testing of Dolinnoe-1 and Emir-1 and to inspect the rest of the ADE block before finalizing their review of the reserves of the ADE Fields. It is anticipated that McDaniel & Associates will complete their review by mid-November.
BMB plans to tie into an existing, unused gas pipeline located near the ADE license in order to commercialize its natural gas production. It will give BMB access to the regional gas pipeline network and to the regional gas market. This market, including the City of Aktau, and local industries are experiencing a shortage of natural gas and BMB believes that there will be good demand for gas from BMB's ADE Fields.
On August 18, 2003, InterUnion announced that it entered into a non-binding Letter of Intent (the "LOI") with BMB Holding, Inc. ("BMB"), for the proposed acquisition by InterUnion of all of the outstanding shares of BMB, which indirectly holds a 70% interest in the Aksaz, Dolinnoe and Emir oil fields in Kazakhstan (the "Acquisition"). The terms of the Acquisition provide that InterUnion will issue to the shareholders of BMB 148,571,429 (revised from 142,857,143 announced on August 18, 2003) Common Shares. InterUnion and BMB expect that the Closing of the Acquisition and the previously announced financing will occur next month. The proposed Acquisition is subject to certain conditions, including due diligence, the execution of a definitive agreement and other necessary approvals.
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