Arawak Acquires 40% Stake in Saigak Field
Arawak Energy Limited announced that it has completed the acquisition of Saigak Investments BV, a company that has a 40% participating interest in the Saigak field in Western Kazakhstan, from Vitol BV. This transaction was originally announced following the signature of an initial agreement, which was subject to certain conditions, including obtaining necessary statutory and governmental approvals. The process of obtaining the required consents was finally completed, allowing the Company to complete the transaction. In consideration for the transaction, Arawak issued 8,352,587 common shares to Vitol BV on June 9, 2008. The Vitol Group of companies is Arawak's largest shareholder and as a result of this transaction has increased its stake to 41.52%.
The Saigak field is located approximately 120 km from the Company's existing Akzhar field in the Aktubynsk region of Western Kazakhstan and is operated by Maersk Oil Kazakhstan GmbH, which owns the remaining 60% interest. The Saigak field is currently producing around 2,000 bopd gross from four wells, one of which is currently being worked over. The Company's independent reserve evaluators, McDaniel & Associates Consultants Ltd., remainied proved plus probable reserves attributable to Arawak's 40% interest are estimated at 2.2 million bbls. The Company has also obtained the cashflow from the effective date to closing, totaling US$12.4 million.
Saigak, a sweet 33-37 degrees API crude, is currently produced from four wells and from multiple zones at around 2,000 metres depth. All crude is currently exported.
Saigak is produced under a production sharing contract, which was originally signed in 1992 and is valid until 2022. The terms of the PSC are unique, including a 12.5% royalty and 100% export rights. All other taxes and duties are included in the government profit share, currently calculated at 24%.
Alastair McBain, President & Chief Executive Officer of Arawak stated, "Today's completion of the Saigak acquisition increases our productive capacity in Kazakhstan alone to over 10,000 bopd, with current actual production of around 8,500 bopd. We are now keen to focus on working with Maersk to look for operational synergies with our existing assets in Kazakhstan and to seek opportunities to reverse the decline of this relatively mature but highly cash-generative asset."
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