TIDMCASP
RNS Number : 0758O
Caspian Sunrise plc
05 February 2021
Caspian Sunrise PLC
("Caspian Sunrise" or the "Company")
Commercial, financial, operational & regulatory update
Introduction
The board is pleased to provide an update covering commercial /
financial / operational and regulatory matters.
Commercial & financial update
In our previous announcement we identified three principal
factors holding back the company's short term progress:
-- Kazakh domestic oil price
-- Assessed BNG historic costs
-- Lack of deep well success
Domestic prices
Despite the Brent oil price rising to approximately $59 per
barrel, more than 3 times the lowest price recorded in the past 12
months, the price at which we are required to sell our domestic
production remains at a 12 month low of approximately $6 per
barrel.
Recently domestic sales have ranged between 40-45% of total oil
produced. Until the domestic price recovers selling to the domestic
market will remain loss making. We therefore continue to rely
entirely on export sales for day to day cashflow and
profitability.
In partial mitigation we are therefore pleased to report an
increase both the overall production we are allowed to sell in
February 2021 and an increase in the proportion of that may be sold
by reference to export rather than domestic prices.
Assessed BNG historic costs
We continue to appeal against the BNG historic costs of $32
million to be paid quarterly over 10 years, which have been levied
entirely against the MJF structure, despite that structure
represent only 1% of the total BNG Contract Area.
We look forward to the case being considered by the Kazakh
authorities later this month. In the meantime we prepare to pay the
next quarterly payment.
Deep Well progress
As before, while some progress has been made with our deep
wells, none are yet producing at commercial quantities.
Deep Well A8
Using pipes previously in use at Deep Well A5 further work was
undertaken to clear the well to allow production from the interval
between 4,343 meters and 4,499 meters. While this resulted in
limited gas and oil shows they were not at commercial levels.
Our intention is to fracture and complete the well at the
current 4,500 meter depth, which we expect will take two months. In
the event this does not result in commercial quantities of oil we
plan to drill a further 800 meters to the original Devonian target
at a depth of 5,300 meters.
Deep Well A5
Work at Deep Well A5 to remove the stuck pipes paused while
drill pipes were in use at Deep Well A8 but has recently resumed.
In the event the stuck pipes cannot be removed from Deep Well A5 we
would look to drill a further side track from a depth of 4,500
meters.
Deep Wells A6 & 801
There has been no further progress at Deep Wells A6 and 801
since our previous announcement.
BNG Shallow wells
BNG Production volumes
Annual Production
Total production for 2020 was 545,667 barrels (2019: 506,620
barrels) an increase of 7.7% on 2019, at an average 1,491 bopd
(2019: 1,388 bopd),. All of this production was from the BNG
Contract Area with 523,640 barrels, representing approximately 96%
of the total, from the MJF structure.
Current production
The MJF structure is currently producing at rates between 1,200
and 1,520 bopd, with average daily production for January 2021 of
1,384 bopd. No production is permitted at the South Yelemes
structure until the licence upgrade is received.
New Well 151
Production from New Well 151 began in November 2020, with oil
flowing naturally at rates of 70-80 bopd. Recently production rates
have fallen to an average rate of 17 bopd. A pump is to be
installed to boost production to take advantage of the increased
production in February 2021 that is eligible for export
markets.
New Well 141
Following increasing quantities of water being produced from the
original interval a new interval has been perforated and the well
has been restored to production at an average rate of approximately
30 bopd. We intend to install a pump at this well to boost
production volumes.
Summary
Commercial, operational and regulatory progress has been limited
of late.
Of the three factors identified as holding us back two, being
the domestic price and the historic costs levied against the MJF
structure, are outside our control. The third, achieving commercial
production from our existing deep wells remains very much in our
control.
Sales of oil to export markets continues to fund the Group's day
to day activities.
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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