Caspian Sunrise
PLC
("Caspian Sunrise" or the
"Company" and together with its subsidiaries, the
"Group")
Proposed disposal of the
Shallow MJF & South Yelemes structures
On 14 May 2024 the board of the
Company (the "Board")
announced the conditional disposal of the MJF and South Yelemes
Structures currently held by the Group, for a headline cash
consideration of approximately US$83 million. At that time the
proposed purchaser Absolute Resources LLP ("Absolute Resources"), was granted a 90
day exclusivity period to conclude its due diligence. On 18 July
2024 the Board announced that the proposed purchase price had by
negotiation increased to approximately US$88 million and that the
exclusivity period had been extended until 31 August
2024.
The board is now pleased to announce
it has entered into a conditional and binding term sheet (the
"Heads of Terms") with
Absolute Resources regarding the proposed disposal of the shallow
MJF and South Yelemes Structures on the BNG contract area, which is
located in the west of Kazakhstan, 40 kilometres southeast of
Tengiz on the edge of the Mangistau Oblast, covering an area of
1,561 square kilometres, and the oil and gas assets and operations
carried out therein (the "BNG
Contract Area") (the "Disposal"). The Disposal will be
effected by way of the sale to Absolute Resources of the entire
issued share capital of a Group entity to be established in the
Astana International Finance Centre (the "NewCo").
The MJF structure is the principal
shallow structure on the BNG Contract Area and has accounted for
the vast majority of the Group's oil production since it first
produced oil in 2016. The South Yelemes structure was awarded its
own export licence in 2021 but to date has only produced from wells
drilled in the Soviet era, as improved by recent horizontal
drilling.
The Group would continue to own the
remainder of the BNG Contract Area including the licences for the
two key deep structures Airshagyl and Yelemes Deep.
The Board believes that the Group
has a competitive advantage in the identification and acquisition
of new projects in Kazakhstan, which it does not necessarily have
to the same degree in the day to day operation of maturing assets.
Accordingly, in the opinion of the Board, the funds released from
the Disposal can be better used elsewhere to enhance longer term
shareholder value.
In the year ended 31 December 2023
revenue attributable from the production of oil at the MJF and
South Yelemes Structures was approximately US$21.6 million, down
from approximately US$39.2 million in 2022, with gross profit in
2023 of approximately US$16.6 million, down from approximately
US$32.7 million in 2022. In 2023 the profit before tax from the BNG
shallow structures was approximately US$12.5 million, down from
approximately US$15.0 million in 2022.
The carrying value of the MJF and
South Yelemes Structures at 31 December 2023 as set out in the 2023
audited financial statements was approximately US$60.6
million.
Under the AIM Rules, the proposed
disposal is of a sufficient size relative to the Group to require
shareholder approval. A shareholder circular (the "Circular"), including further details
relating to the Disposal and including a notice convening a general
meeting of the Company's shareholders ("Shareholders") will be posted to
Shareholders in due course and at that time will also be uploaded
to the Company's website at https://caspiansunrise.com/investors/circulars-documents.
The Company will make a separate announcement relating to the
publication of the Circular in due course.
Material terms of the Heads of Terms
The aggregate consideration payable
by Absolute Resources shall be the Kazakhstan Tenge equivalent of
USD$88 million (the "Price"), which shall be payable by
Absolute Resources as follows:
·
the outstanding amount of historical costs under
certain subsoil use contracts (the "Subsoil Use Contracts") shall be deemed
paid by Absolute Resources by the transfer to NewCo of the
outstanding amount of such historical costs as at the date of
completion of the Disposal ("Completion"). As of 26 August 2024,
these costs were approximately US$16.3 million and to the extent
that the actual transfer of costs is less than this amount then the
first tranche below shall be increased by the
difference;
·
US$2 million that was paid by Absolute Resources
to the Group earlier this year under the terms of a related
exclusivity agreement, in two separate tranches of US$1 million
each;
·
US$12 million within 5 business days following the
signing of the Heads of Terms;
·
approximately US$54.1 million that will be payable
upon Completion; and
·
US$4 million (the "Second Tranche Payment") shall be paid
in equal monthly instalments in the 120-day period
post-Completion.
The Group will contribute subsurface
use rights under the Subsoil Use Contracts and assets related to
the production of hydrocarbons under those contracts to NewCo prior
to Completion. No other obligations or debts other than those
specified in the Heads of Terms shall be transferred to
NewCo.
Absolute Resources has made certain
assumptions regarding the Disposal which, if any are incorrect,
entitle Absolute Resources to withdraw from the transaction or
otherwise renegotiate the Heads of Terms and/or the Sale and
Purchase Agreement ("SPA").
Completion will be conditional on,
inter alia, the following conditions (the "Conditions"):
·
the Group having complied with certain
pre-Completion obligations relating to the ongoing operation of the
Company as set out in the Heads of Terms;
·
Absolute Resources having obtained relevant
antimonopoly and governmental consents in Kazakhstan;
·
the Company obtaining the consent of the requisite
majority of Shareholders;
·
Absolute Resources having completed satisfactory
technical, financial and tax investigations, and an inventory of
assets related to the operations under the Subsoil Use
Contracts;
·
Absolute Resources having received debt-financing
to pay the Price under the SPA;
·
there being no material adverse change in the
business, operations, assets, financial or trading position,
profits or prospects of the Group related to the Subsoil Use
Contracts prior to Completion;
·
the successful negotiation and signing of suitable
contractual documents between the parties, including the SPA;
and
·
Absolute Resources having paid the portions of the
Price due prior to Completion.
The Conditions must be satisfied by
31 October 2024. If any of the Conditions have not been satisfied
by this date, the parties have agreed to negotiate and agree in
good faith a new long-stop date.
The Group shall retain full
operational control over NewCo until the Price (other than the
Second Tranche Payment) has been paid by Absolute
Resources.
The parties intend to enter into the
SPA on or before 30 September 2024. If this date is not met, the
defaulting Party may become liable to pay the sum of US$2 million
in liquidated damages to the other Party, and in the case of the
Group's default, amounts equal to up to approximately US$14 million
then received by the Group may become repayable by the Group to
Absolute Resources, subject to certain deductions.
Contacts:
Caspian Sunrise PLC
Clive Carver, Chairman and
CFO
|
+7 727 375 0202
|
Zeus Capital Limited
James Joyce
|
+44 (0) 203 829 5000
|
James
Bavister
Andrew de
Andrade
Qualified person
Mr. Assylbek Umbetov, a
member of the Association of Petroleum Engineers, has reviewed
and approved the technical disclosures in this
announcement.
The person responsible for arranging
the release of this announcement on behalf of the Company is Clive
Carver, Chairman and CFO of the Company.
This announcement has been posted
to:
www.caspiansunrise.com/investors
The information contained within
this announcement is deemed to constitute inside information as
stipulated under the retained EU law version of the Market Abuse
Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018. The
information is disclosed in accordance with the Company's
obligations under Article 17 of the UK MAR. Upon the publication of
this announcement, this inside information is now considered to be
in the public domain.