ST. HELIER, Jersey, Feb. 11,
2013 /CNW/ - EastSiberian Plc ("EastSiberian " or the
"Corporation"), an international junior oil exploration company
incorporated in the Bailiwick of Jersey, is pleased to announce
that the NI51-101 Reserve Report (the "Reserve Report") on the
licences within the previously announced Farm-in Agreement with
East Siberian Resources Ltd. ("ESR") has been completed by DeGolyer
& MacNaughton and submitted to the TSX Venture Exchange (the
"TSXV"). Title opinions (the "Opinions") on these licences have
also been completed and submitted to the TSXV. It is anticipated
that trading in the Corporation's stock will resume on or about
February 12, 2013, as the TSXV has
accepted the reserve report as part of the required documentation.
Resumption of trading of the Company's stock does not guarantee the
transaction will be completed or accepted by the TSXV.
Farm-in Agreement
The Farm-in Agreement between EastSiberian and
ESR was announced on June 27, 2012.
The Farm-in Agreement provides that the Corporation may earn up to
a 51% equity stake in two wholly-owned Cyprus subsidiaries of ESR, Elranio Holdings
Ltd. ("Elranio") and Lesona Holdings Ltd. ("Lesona" and Elranio and
Lesona collectively, the "Holding Companies"). Elranio
indirectly holds, through CJSC Pacific Oil Resources ("Pacific
Oil"), a Russian entity, a 100% interest in an exploration and
production license located on the eastern onshore portion of the
Sakhalin Island. Lesona indirectly holds, through LLC
Mezhregionalnaya Toplivnaya Kompaniya ("MTK"), a Russian entity,
one oil production licence and one exploration and production
licence located in Eastern
Siberia. ESR is owned 100% by the Alltech Group
("Alltech" www.alltech.ru) of the Russian
Federation, a private direct investment company.
The Corporation is pursuing a fund raising for
approximately USD$50 million to fully
fund the work program contemplated by the Farm-in Agreement (the
"Work Program") and for general corporate purposes. The fund
raise is being pursued by a brokered private placement of common
shares of the Corporation (the "EastSiberian Shares") at a market
determined price (the "Private Placement"). The original Farm-in
Agreement terms requires that an initial fund raise of at least
USD$15 million was raised by
December 31, 2012. On January 28, 2013, the Corporation announced that
it and ESR had signed an Addendum to the Farm-in Agreement
extending the Initial Fund Raise deadline to March 31, 2013 under the same terms and
conditions as originally agreed..
The farm-in for 51% of the Elranio shares is
based upon the funding of the following potentially staged earn-in
work programs to be performed in relation to the Prizalivnaya
Licence held by Elranio:
- a 20% shareholding in Elranio will be earned following a
US$15MM investment by the Corporation in Elranio for drilling the
first development well. This development well will be drilled to
the target reservoir zone of interest and tested, to a minimum
depth of 4,000 metres;
- a 20% shareholding in Elranio will be earned following an
additional US$10MM investment by the Corporation in Elranio for
drilling of the second development or delineation well. This second
development or delineation well will be drilled to the same
reservoir zone of interest and tested, to a minimum depth of 4,000
metres; and
- an 11% shareholding in Elranio will be earned following an
additional US$5MM investment by the Corporation in Elranio for
shooting 200 km of 2D seismic or an equivalent agreed upon 3D
seismic program.
The farm-in for 51% of the Lesona shares is
based upon the following potentially staged earn-in funding for
work program performed in relation to the Verkhnepitskaya Licence
and Borschevskaya Licences held by Lesona:
- a 26% shareholding in Lesona will be earned following a US$10MM
investment by the Corporation in Lesona for drilling the first
delineation well (1P) on the Borschevskaya Licence. This well will
be drilled updip from the oil water contact in the reservoir zone
of interest and tested, to a minimum depth of 2,700 metres ;
- a 25% shareholding in Lesona will be earned following an
additional US$10MM investment by the Corporation in Lesona for
shooting 300 km of 2D seismic on the Borschevskaya Licence;
and shooting 700 km of 2D seismic on the Verkhnepitskaya
Licence.
The earn-in period as defined in the Farm-in
Agreement is three (3) years after the date that the Initial Fund
Raise closes. The Initial Fund Raise proceeds will be used to drill
the first development well on the Prizalivnaya Licence and for
general corporate purposes.
Reserve Report
The Reserve Report completed by DeGolyer &
MacNaughton is as of August 31, 2012
and contains the evaluation of the hydrocarbon potential including
two fields within two of the three licence areas defined in the
Farm-in Agreement. These licences are the Prizalivnaya Licence
located on Sakhalin Island and the Borschevskaya Licence located in
East Siberia. DeGolyer &
MacNaughton are independent of the issuer and vendor East Siberian
Resources Ltd. and the reserve estimates are in accordance with NI
51-101 and the COGE Handbook reserve definitions. Possible reserves
are those additional reserves that are less certain to be recovered
than probable reserves. There is a 50 % probability that the
quantities actually recovered will equal or exceed the sum of
proven plus probable reserves and a 10% probability that the
quantities actually recovered will equal or exceed the sum of
proved plus probable plus possible reserves.
Mezhdurechenskoye Field
The Mezhdurechenskoye field was discovered in
1990 and is located within the Prizalivnaya Licence Area on the
south shoreline of Nabil Bay, close to giant offshore Lunskoye
field, operated by Sakhalin II (Gazprom). It is 35km south of the
town of Nogliki. Alltech acquired the licence for exploration and
production within the Prizalivnaya License Area at auction in
April 2008, and the license is not
due to expire until 1 April 2033. Two
wells, M-1S and M-3, have penetrated the P3dh oil reservoir to date
and are structurally low in the closure.
Sakhalin Island is part of the north western
Pacific rim, adjacent to the south eastern most coast of mainland
Russia, directly north of
Japan's Hokkaido Island, and
between the Sea of Okhotsk and the Tatar Strait. The North Sakhalin
Basin geologic province includes much of the northern half of the
island plus north western and north eastern offshore areas. The
84,000km2 province area is 72% offshore and 28% onshore.
The producing hydrocarbon reservoirs are the
fractured reservoirs of the Lower Miocene and Upper Oligocene
Dayekhurinskaya and Lower Uyininskayaya Formations, analogous to
the Okruzhnoye reservoirs elsewhere in the basin.
The North Sakhalin Basin Province has 32 onshore
gas fields, 29 onshore oil fields, five offshore gas fields, and
two offshore oil fields. Another two gas fields and three oil
fields straddle the coastline. Offshore fields are larger both in
closure areas and in petroleum volumes than fields onshore. Onshore
seeps are common along the trends of the major north-south faults,
and production occurs to depths exceeding 4,000m. Producible
hydrocarbons or hydrocarbon shows are in more than 30 stratigraphic
zones of Tertiary sandstones and fractured siliceous shales, and in
pre-Tertiary serpentinites that are unconformably juxtaposed with
Tertiary source rocks.
The Reserve Report concludes that the
Mezhdurechenskoye field contains a mean estimate proved undeveloped
reserves of 1.716 million barrels of oil, probable reserves of
47.746 million barrels of oil, and possible reserves of 68.324
million barrels of oil.
Borschevskoye Field
The Borschevskoye field lies within the Baykit
High province, located in the southwestern part of the East
Siberian craton, which also includes the Katanga structural saddle
to the east. The saddle connects the Baykit and Nepa-Botuoba highs.
The area of the province is approximately 220,000km2.
The Baykit High is bounded by the Yenisey Ridge foldbelt to the
west, the Cis-Sayan basin to the south, and the Tunguska basin to
the north.
Uplift, fracturing, and weathering of Riphaen
platform dolomites, followed by the unconformable deposition of
sealing Vendian and Cambrian sediments, has produced major
productive reservoirs in the nearby Yurubcheno-Tokhomskoye and
Kuyumbinskoye fields. The overlying Vendian sediments include
shales and sandstones of the Vanavarskaya formation, followed by
porous dolomites, anhydrites, sandstones, and shales of the
Oskobinskaya Formation (Borschevskoye reservoir). Pinchouts of
sandstones and dolomite reservoirs toward the top of the Kamov Arch
provide stratigraphic traps within the Vendian. Capping this
sequence, Cambrian salt and carbonates provide a seal for the
regional petroleum system.
For the Borschevskoye field, the Reserve Report
concludes that this field contains a mean estimate probable
reserves of 37.118 million barrels of oil, and possible reserves of
27.056 million barrels of oil.
Estimated Present Worth
The Reserve Report estimated the mean present
worth of future net revenues at US$314.9
million at a 10% discount rate, at 100% interest to ESR.
This estimate is based on Proved plus Probable reserves for both
fields using forecast pricing and after income tax.
The mean present worth was calculated assuming
that 100% of oil production was exported and the forecast netback
price at each field was net of the export tax imposed by the
Russian federation on oil exported out of the country and the
Mineral Extraction Tax.
The netback price for the Mezhdurechenskoye
field ranged from USD$419.09 per
metric ton (MT) (USD$57.33 per
barrel) to USD$359.36/MT
(USD$49.29 per barrel). This
price range reflects the close proximity of the field to tidewater
and developed export capacity on Sakhalin Island.
The netback price for the Borschevskoye field
ranged from USD$354.06/MT
(USD$48.57 per barrel) to
USD$296.28/MT (USD$40.64 per barrel). This price range reflects
the more remote area of East
Siberia and the higher transportation costs to ship the oil
to export markets.
The estimated undiscounted future gross revenues
from developing the mean estimated reserves (proved undeveloped
plus probable) of the fields is USD$3.774
billion. The estimated undiscounted total capital
expenditures to fully develop the mean estimated reserves (proved
undeveloped plus probable) of both fields is USD$787.9 million. The undiscounted future net
revenue from developing the mean estimated reserves (proved
undeveloped plus probable) of the fields is USD$1.049 billion. The estimated values disclosed
do not represent fair market value.
Title Opinions
The Corporation has also received legal title
opinions on all three licences within the Farm-in Agreement. These
Opinions determined that these licences are all lawfully owned by
ESR through its subsidiary corporations in Cyprus and Russia.
The Reserve Report will be available on SEDAR at
www.sedar.com.
Forward looking Statements or
Information
Certain statements included in this news
release constitute forward-looking statements or forward-looking
information under applicable securities legislation. Such
forward-looking statements or information are provided for the
purpose of providing information about management's current
expectations and plans relating to the future. Readers are
cautioned that reliance on such information may not be appropriate
for other purposes, such as making investment decisions.
Forward-looking statements or information typically contain
statements with words such as "anticipate", "believe", "expect",
"plan", "intend", "estimate", "propose", "project" or similar words
suggesting future outcomes or statements regarding an outlook.
Forward-looking statements or information concerning EastSiberian
in this news release may include, but are not limited to statements
or information with respect to: business strategy and objectives;
development, exploration, acquisition and disposition plans, and
the timing and results thereof. Forward-looking statements or
information are based on a number of factors and assumptions which
have been used to develop such statements and information but which
may prove to be incorrect. Although EastSiberian believes that the
expectations reflected in such forward-looking statements or
information are reasonable, undue reliance should not be placed on
such statements because EastSiberian can give no assurance that
such expectations will prove to be correct. In addition to other
factors and assumptions which may be identified in this news
release, assumptions have been made regarding, among other things:
the timely receipt of any required regulatory and shareholder
approvals; the ability of EastSiberian to obtain qualified staff,
equipment and services in a timely and cost efficient manner; and
the ability of EastSiberian to obtain financing on acceptable
terms. Readers are cautioned that the foregoing list is not
exhaustive of all factors and assumptions which have been
used.
Forward-looking statements or information are
based on current expectations, estimates and projections that
involve a number of risks and uncertainties which could cause
actual results to differ materially from those anticipated by
EastSiberian and described in the forward-looking statements or
information. These risks and uncertainties may cause actual results
to differ materially from the forward-looking statements or
information.
The forward-looking statements or information
contained in this news release are made as of the date hereof and
EastSiberian undertakes no obligation to update publicly or revise
any forward-looking statements or information, whether as a result
of new information, future events or otherwise unless required by
applicable securities laws. The forward-looking statements or
information contained in this news release are expressly qualified
by this cautionary statement.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
SOURCE EastSiberian Plc