Baku, Azerbaijan, Jan. 8
By Elena Kosolapova - Trend:
Chinese Xinjiang Zhundong Petroleum Technology Co seeks to acquire 100 percent of the entity Galaz & Co LLP which holds the license for the Galaz Contract Area in Kazakhstan, Roxi Petroleum company said on Jan. 8.
Galaz & Co LLP is owned by Roxi Petroleum (34.22 percent interest), Korean Multinational (40 percent) and Baverstock (23.78 percent).
The Chinese company is ready to pay up to $100 million including the assumption of debt and for which it has been granted an exclusivity period to 31 January 2015.
The proposal is subject to due diligence and on the signing of binding documentation and would be conditional on approval of both Kazakh and Chinese regulatory authorities.
Roxi confirmed that although there is no certainty that a sale will be concluded on the disclosed terms, it has entered into a non-binding heads of terms and is working with Xinjiang Zhundong and the other shareholders in Galaz to complete the sale of Galaz on these terms.
Of the $100 million disclosed approximately $50.4 million relates to the equity of Galaz & Co LLP and approximately $49.6 million relates to the assumption of shareholder loans owed by Galaz & Co LLP, of which approximately $11.3 million is owed to Roxi.
In aggregate the share of the $100 million disclosed attributable to Roxi is expected to be some $28 million.
Moreover, under the terms of the 2008 acquisition of 59 percent of Eragon Petroleum PLC from Baverstock, Roxi has an obligation to carry Baverstock for the first $100 million of costs on the Eragon assets (BNG, Galaz & Munaily). This obligation has almost been fulfilled. Therefore the proceeds attributable to Baverstock, which would be an additional $12 million, would also be available for the development of the BNG Contract Area.
The Galaz block is located in the Kyzylorda Oblast in central Kazakhstan. The Contract was extended on 10 January 2011 to 179 square kilometres and now includes significant exploration upside on the east side of the Karatau fault system, as well as the NW Konys development.
Pilot production commenced on 19 January 2012 following approval of the NW Konys Pilot Production Plan from the Oil and Gas Ministry, with emissions and flaring permits received from the relevant authorities.
Since 2008 17 wells have been drilled at Galaz, a significant number of which are or indicate they will be commercial. Wells NK-3, NK-5, NK-7, NK-8, and NK-9 are on extended test producing in aggregate 1,000 bopd on average. Additionally, Wells NK-4, NK6, NK-12 and NK-31 are being prepared to commence test production.
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