Licence Renewal and Operational update

RNS Number : 4679J

Roxi Petroleum Plc

17 July 2013

 



Roxi Petroleum plc

("Roxi" or "the Company")

Licence Renewal and Operational update

Roxi, the Central Asian oil and gas company with a focus on Kazakhstan, is pleased to provide an operational update on its flagship BNG asset.

Licence renewal

Roxi is pleased to announce that the BNG licence has been successfully renewed for a further period of two years ending on June 6, 2015 during which significant exploration activity is planned that is not expected to require additional shareholder funding.

Deep Wells

As previously announced the focus of the 2013 drilling campaign at BNG are the deep wells planned for the Aryshagal region within the BNG Contract Area.  The first of these wells to be drilled to a depth of 4,700 meters has now been spudded and is expected to take a further 90 days to reach its total depth.

This well will target the Permian formation at 4,120 metres and the Carboniferous formation at 4,390 metres and if successful could fundamentally transform the longer term economic value of the BNG asset and the Roxi Group, which retains a 58.41 per cent interest in the BNG Contract Area.

BNG has engaged a drilling company on a turn-key basis and Roxi will therefore not be exposed to cost overruns which can result from difficulties associated with pre salt drilling in the region.

Up to four further deep wells are planned in 2013 and 2014, including three as part of the agreed work programme under the terms of the renewed licence, at an estimated aggregate cost of $35 million. The board believes it will not need to seek additional shareholder funding for this work.  The funding for this exploration is expected to be met using the funds secured under the $40m equity investment announced in January 2013 together with the proceeds of planned asset disposals within the Company's portfolio that it is currently pursuing. Further details of any asset disposals will be provided in due course.

Existing production at BNG

Production from Wells 54 and 805 is running at the rate of some 200 bopd (117 bopd net to Roxi), and  production from 806 is expected later in 2013 following the receipt of the permits required for the 90 day testing. Production revenues will be used to assist the  funding  of  the further development of BNG.

Strategy for BNG

Roxi intends to complete its exploration phase of the BNG asset within the recently renewed licence period.  Thereafter, subject to the results from the appraisal of the existing and planned wells, Roxi intends to cease exploration activities at BNG and to convert the licence to a pilot production licence prior to a full production licence in 2015 enabling oil to be produced and sold at international prices.

Comments:

Clive Carver, Chairman said

"The renewal of the BNG licence and the commencement of the deep drilling programme mark the coming together of several years preparatory work.

With our first deep well we are targeting a known producing area with a history of successful production and consequently we have high expectations of a significant  discovery.

Over the next two years, with up to four additional deep wells to drilled in the Ayrshagal region of the BNG Contract Area, in addition to further shallow wells and extended prolonged testing of existing wells in the already producing Yelemes region, we expect to prove that BNG has a significant commercial value, measured both by reserves and production volumes. We then intend to cease exploration activities, switch to a pilot production licence prior to a full production licence expected in the during 2015, which would enable us to sell oil at international prices andgenerate significant cashflow.

Additionally the results from the shallow well 143 announced recently, with oil shows at three separate intervals, also lead us to continue to believe in the commercial viability of the BNG Contract Area as a whole aside from the deep drilling prospects.

We have put in place funding mechanisms to cover the costs of the 2013 drilling campaign and expect to be able to fund the 2014 campaign from existing asset disposals and the drawdown of further funds under the equity agreement announced in January 2013 without further recourse to Roxi shareholders.

Enquiries

Roxi Petroleum PLC                                                                                   

Clive Carver, Chairman                                                                 [phone]

WH Ireland plc                  

James Joyce / James Bavister                                                     [phone]

Qualified Person

Mr. Hyunsik Jang, Chief Operating Officer of the Company, has reviewed and approved the technical disclosures in this announcement. He holds a BSc in Geology and has 25 years of international experience of exploration, appraisal and development of oilfields in a variety of environments.

 

END

 

 

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