TIDMCASP
RNS Number : 0052H
Caspian Sunrise plc
01 December 2020
Caspian Sunrise PLC
("Caspian Sunrise" or the "Company")
Operational & regulatory update, financial update,
management & board changes, shareholding update
Introduction
The board is pleased to update shareholders on:
-- operational progress at its flagship BNG asset
-- Kazakh regulatory matters
-- financial position
-- board & management changes
-- new arrangements relating to the Oraziman family shareholding.
BNG Deep Wells
Progress has been made with our deep wells but to date none are
yet producing at commercial quantities.
Deep Well A5
We have struggled for some time with another stuck pipe this
time at the point at which the side track commences.
After several weeks attempting to remove the pipes with no
success we have seen in the last few days signs that our efforts
are beginning to work. However, if the current attempt to free the
well is not successful, we plan to pause operations at Deep Well A5
to make use of the rig and specialist pipes at other Deep
Wells.
Once freed the stuck 180 meter section of liner and the tubing
inside will be pulled from the well so we can continue further
work-over activities with the goal of resuming and establishing
flow on a commercial basis.
Deep Well A8
We have completed acid and hot oil treatments at the well
targeting the interval between 4,343 meters to 4,499 meters.
A consistent flow of oil has yet to be established but we
believe that oil is present and that it is the low permeability of
the reservoir near the wellbore that is impeding the flow.
Rather than use coil tubing equipment, the results from which
have to date been disappointing, we are erecting a G40 drilling rig
over the well to continue the cleaning process including reducing
any near wellbore formation damage caused by previous drilling.
This requires the use of pipes currently in use at Deep Well
A5.
Once successfully completed we intend to establish flow and
conduct testing. In due course we intend to drill a further
approximately 800 meters to a depth of 5,300 meters to test deeper
reservoir targets as originally planned.
Deep Well A6
The result of the acid treatments at Deep Well A6 have to date
been inconclusive. It appears from pressure data that reservoir
connectivity and permeability has been improved. Illustrating the
point, prior to acid treatments it took approximately one week for
the pressure in the well to rise 100 bar after shut in. Following
the acid treatments it now takes only two days for the same
pressure to build.
As with Deep Well A8 a rig will be required to continue the
cleaning process. The intention is to use the rig currently at Deep
Well A5 . Should the interval currently being worked not flow at
commercial levels the intention is to use the rig to test a lower
level.
BNG Shallow wells
BNG Production volumes
The MJF field is currently producing at rates between 1,300 and
1,550 bopd, with average daily production of 1,445 bopd. No
production is permitted at the South Yelemes structure until the
licence upgrade is received.
New Well 151
After some early challenges, production from New Well 151 began
in November 2020, with oil flowing naturally at rates of 70-80
bopd. Testing continues with management targeting production of
approximately 150 bopd.
New Well 141
At Well 141 we are working to install a pump in the well and
management are targeting production of approximately 200 bopd.
Regulatory update
There has been no material progress with the award of the export
licence at the South Yelemes field at the BNG Contract Area; the
formal award of the new licence at the 3A Best Contract Area; or
our appeal against the MJF assessed costs.
Financial update
Shareholders are reminded that following the grant of the export
licence at the MJF structure the Kazakh regulatory authorities
assessed $32 million historic costs, for the whole of the BNG
Contract Area entirely against the MJF structure, which accounts
for only 1% of the BNG surface area. This sum is repayable
quarterly over 10 years.
We are appealing against the basis of the assessment but the
obligation to make these payments continues and would only reduce
following the successful outcome of our appeals. The next quarterly
payment falls due in February 2021.
With domestic oil prices at $6 per barrel and without a proven
deep well success almost all of the surplus income from the
proceeds from the sale of oil sold on the export markets are
required to continue to fund these quarterly payments. Accordingly,
until such time as the domestic price rises materially, or there is
a commercial success at a deep well or the BNG historic costs
assessment is significantly reduced, the Group will not generate
sufficient cash to fund drilling of any new wells, shallow or deep.
Our focus therefore continues to be on conserving cash to maintain
operations at current levels until matters improve.
Board / management changes
In recognition that the current financial position is likely to
continue for some time the board has implemented a number of
further actions to conserve cash.
Clive Carver, currently Executive Chairman and Chief Financial
Officer, will revert to being non-executive chairman.
Seokwoo Shin, who has been with the Group for two years and was
previously head of Korea National Oil Corporation's (KNOC)
operations in Kazakhstan, will join the board as an Chief Operating
Officer, following completion of the standard regulatory director
checks.
Tim Field who joined the board as a non-executive director in
January 2019, will leave the board but remain a consultant to the
Group
Talgat Kuzbakov, previously Group Financial Controller, who has
been with the Company for 10 years, will become Group Chief
Financial Officer, although will not become a board member.
Oraziman family shareholding
Aibek Oraziman, a director of the Company, will in due course
receive 57,369,124 shares previously owned by the late Rafik
Oraziman. Accordingly, Aibek Oraziman's shareholding will increase
to 507,733,613 shares representing 24.3 per cent of the issued
share capital.
The overall beneficial interest of the immediate Oraziman family
remains unchanged at 903,429,605 shares representing 43.3 per
cent.
Separately, Aibek Oraziman and Aidana Urazimanova, who holds
354,210,642 shares representing 17.0 per cent have agreed to
transfer their Caspian Sunrise shareholdings to Akku Investments
LLP (Akku), a Kazakh entity, with each owning 50%. Aibek Oraziman
and Aidana Urazimanova and Akku are therefore beneficially
interested in 861,944,255 shares representing 41.3 per cent.
Contacts:
Caspian Sunrise PLC
Clive Carver
Chairman +7 727 375 0202
WH Ireland, Nominated Adviser & Broker
James Joyce +44 (0) 207 220 1666
James Sinclair-Ford
Qualified person
Mr. Asslybek Umbetov, a member Association of Petroleum
Engineers, has reviewed and approved the technical disclosures in
this announcement.
This announcement has been posted to:
www.caspiansunrise.com/investors
The information contained within this announcement is deemed by
the Company to constitute inside information under the Market Abuse
Regulation (EU) No. 596/2014.
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END
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