TIDMCASP
RNS Number : 7920H
Caspian Sunrise plc
06 August 2021
Caspian Sunrise PLC
("Caspian Sunrise" or the "Company")
Strategic, Financial, Operational and shareholding update
Introduction
The Board of Caspian Sunrise is pleased to provide the following
strategic, financial and operational update together with details
of new shares to be issued and a reorganisation of the shareholding
of the Oraziman family.
Shareholders are also directed to the responses to shareholder
questions, which will be posted later today to
www.caspiansunrise.com/investors/responsestoshareholdersquestions.
Background
While the past few years have been difficult it seems clear that
the Group has turned the corner both operationally and financially.
Accordingly, we are now in a position to return to a more managed
approach to the development of the Group's assets.
Financial position
Our financial position is materially better in than in recent
times. This better financial position provides the opportunity to
increase the pace at which we seek to develop our assets, and in
particular BNG.
Oil prices
The continued strong oil price provides the backdrop to our
financial position. At $70 plus per barrel the price achieved on
international market is now approximately four times greater than
at the low point of 2020. Additionally, the rapid recent increase
in domestic prices to approximately $19 per barrel is approximately
three times the price received for most of 2020.
Increased production
The additional revenue from the production at our first
horizontal well 154 provides a significant boost to operating
cashflows. We expect this to further improve as production levels
at Well 154 increase and from October as the South Yelemes wells
resume production.
Increased proportion of production to be sold
internationally
We are now close to repaying all the historic local oil trader
funding provided with respect for domestic sales. Once done we
expect a greater share of our total production to be eligible for
international rather than domestic sales.
We own our equipment
In recent years we have opportunistically acquired drilling
equipment at what we consider to be low prices. This significantly
reduces both the drilling costs and the delays in relying on third
party equipment.
As important as the reduced cost is the flexibility that owning
our own equipment provides. We therefore expect to become far more
efficient in undertaking drilling activities.
No external debt
Despite the extremely tight financial position over the past few
years the Group has, with the exception of the amounts due to the
Oraziman family, no external debt.
To further improve the ability to develop assets the Oraziman
family have, subject to independent shareholder and regulatory
approval, agreed to convert their entire debt of approximately $6.2
million to Caspian Sunrise shares to be issued at a price of 3.2p
per share. A General Meeting will be convened in due course to seek
the confirmation of independent shareholders to the terms of such a
conversion.
Dividends
It has been a long-held objective of the group to be a regular
payer of dividends. Accordingly, at the General Meeting referred to
above, shareholders will also be asked to approve a capital
reduction required to allow the payment of dividends.
BNG
Operational update
Production from the BNG Contract Area is currently running at
the rate of 1,950 bopd, with 100% coming from 8 wells on the MJF
structure. Included in this production is a contribution from New
Well 154 of approximately 700 bopd.
Work so far this year on the existing four Deep Wells has not
resulted in any material oil flows.
Operational plans
Next MJF well
Following the success of our first horizontal well, Well 154, we
now plan to drill a horizontal side track from a depth
approximately 2,200 meters from existing Well 153. The side-track
is planned to be approximately 200 meters in length.
We shall use one of our RT50 rigs with the drilling expected to
be complete by the end of August 2021.
Deep Well A8
Also in August 2021, we plan to re-commence drilling A8 from the
current 4,500 meter depth to the original planned depth of 5,300
meters, targeting a possible structure the Devonian. This drilling
work is expected to take approximately two months and will be
undertaken using our G40 rig.
However, we are first clearing a large quantity of dust from the
well before drilling recommences to check for oil flows at the
current 4,500 meter depth.
New Deep Well 802
In September 2021, we plan to spud a new Deep Well 802,
targeting structures in the Devonian. This will be the fifth deep
well at BNG and the second on the Yelemes structure
The well has a planned Total Depth of 5,300 meters and will be
drilled using our RT50 rig. As we have already acquired the casing
for the well and will be using or own rig the additional costs are
expected to be limited to $5 million.
Drilling is expected to take six months to complete.
A5
Deep Well A5 was the first deep well drilled on the BNG Contract
area and is the one we still believe may have the greatest
production levels, once flowing.
We plan to drill a new side-track at this well from a depth of
3,850 meters to 4,500 meters commencing in October 2021 provided we
have access to new drill pipes.
The side-track will be drilled using our G40 rig and once
started is expected to take three months to complete.
Deep Wells A6 & 801
The chemicals used earlier in the year at deep Wells A6 and 801
did not produce the results we hoped for. We are working with
international experts to identify chemicals better suited to work
in extremely high temperatures. It will only be when we have
confidence in the results of this investigative work that we will
look to re-frack both Deep Wells A6 and 801.
3A Best
At 3A Best the responsibility to fund the next stage of
development will rest with our new partners once the updated
licence is issued.
Caspian Explorer
The initial charter for the Caspian Explorer since its
acquisition in October 2020, is due to end in August 2021. While
there has been interest in both multiple future operational
charters and also in acquiring the Caspian Explorer outright to
date none of this interest has translated into a contract.
The income from the first charter more than covers the operating
costs since acquisition and the Board continue to regard the
Caspian Explorer as a valuable asset with the expectation it will
generate meaningful cash for the rest of the Group in the years to
come.
New rig
We have agreed to acquire a further workover rig for a
consideration of $750,000 with the consideration to be settled in
Caspian Sunrise shares to be issued at a price of 2.844p per share.
The new rig will be used initially for workovers on the MJF
structure where some of the earlier wells are showing signs of
decline.
Using an exchange rate of GBP1 - $1.39, would results in
18,972,164 new shares to be issued to the rig owner.
We have also agreed to issue 562,500 shares, credited as fully
paid, to staff below board level as reward for their work on the
successful horizontal well.
Application will made to London Stock Exchange for these shares
to be admitted to trading on AIM ("Admission"), and dealings in the
new ordinary shares are expected to commence on or around 12 August
2021. The new shares will, when issued, rank pari passu in all
respects, and carry the same rights as the existing Ordinary
Shares. Following Admission the total number of ordinary shares in
issue will be 2,110,771,664.
Oraziman family shareholdings
Akku Investments
In December 2020, the Company announced the intention of Aibek
Oraziman and Aidana Urazimanova, the adult children of Kuat
Oraziman, to pool their shares in Akku Investments, a new Kazakh
registered entity.
After further investigation they have decided to retain their
separate beneficial ownerships but have appointed Akku Investments
to act as the discretionary manager of these holdings, including
deciding how the shares are to be voted at General Meetings.
Kuat Oraziman
The Company has also been informed that Kuat Oraziman, the CEO
of the Company, has gifted for zero consideration the 41,485,330
shares equally to Aibek Oraziman and Aidana Urazimanova and
accordingly Kuat Oraziman no longer holds any shares in the
Company.
At today's date the Oraziman family continue to hold 903,429,585
shares representing 42.80% of the shares in issue following the
issue of the new rig consideration shares and the staff reward
shares referred to above.
The beneficial holdings of each member of the Oraziman family
are now:
Aibek Oraziman (non-executive director) # 528,476,278 shares 25.04%
Aidana Urazimanova 374,953,307 shares 17.76%
# Included in the above are 57,369,124 shares held by the late
Mr Rafik Oraziman, which are going through probate.
Following the proposed debt conversion referred to above and
which is conditional on independent shareholder and regulatory
approval the Oraziman family would own 1,042,253,483 shares
representing 46.33 per cent of the total shares in issue.
Comment
Clive Carver, non-executive chairman said
"The improvement in the Group's financial position allows a
return to a more expansive approach to the development of the
Group's assets.
The success of our first horizontal well demonstrates what we
believe may be possible on the two shallow structure at BNG, namely
the MJF and South Yelemes, both of which should have full
international licences by October 2021, with the ability to sell
the majority of oil produced by refence to international rather
than domestic prices.
The intention to clear the way for the commencement of dividend
payments is expected to lead to an increase in the interest in the
Group's shares from investors seeking a regular dividend
return.
We therefore look forward to moving out of a difficult period
into one where we can look forward to further operational
success."
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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