Roxi Petroleum (RXP) spuds first well on Ravninnoe Asset

Roxi Petroleum (AIM:RXP) announced that it has spudded its first well on the Ravninnoe asset. This well, named Well #20, is effectively an offset from Well #8, drilled during Soviet times.

It has previously been announced that Well #8 tested oil at 6-800 barrels of oil per day (bopd) from the mid-Carboniferous horizon. The existing reserves associated with this field are quite modest, at 3.7 millons of barrels of oil (mmbo) proved + probable + possible.

However, the other holders of part of the Ravninnoe asset did at one time have their share of the asset up for sale through Envoi where it was disclosed that the mid-Carboniferous had expected Pmean gross reserves of 26mmbo (p7) and that there was also a deeper, lower-Carboniferous target with Pmean gross reserves of 27mmbo (p7). Roxi holds a 30% interest in the Ravninnoe block.

The July 2009 AGM Presentation (slide 15) shows the target depth of Well 20 is 3,800m with a production liner being set from 3,200m to 3,800m. This indicates Well #20 is being drilled to penetrate the lower-Caroniferous as well as the mid-Carboniferous. The GM held on 17 November indicated that Well #20 was not in an optimum location to test the lower-Carboniferous target, so they are unlikely to drill as far as 3,800m. However, it was stated that if they still had oil shows at 3,500m, they would keep going. Full report on GM here.

Today's announcement is ambiguous on the targets of the well, but if they do drill both horizons with this well, and achieve a positive result with both, then the impact on Roxi's reserves and production would be very significant indeed.

Roxi Petroleum (RXP) finally seals the BNG Farm-out Deal with Canamens

Back in July Roxi Petroleum (AIM:RXP) announced the terms of a farmout deal with Canamens, whereby in exchange for 35% of BNG, Canamens would fund up to $50m of the 2009 and 2010 work programmes for the BNG asset. Under the terms of that arrangement, Roxi would end up with 37.96% of BNG. This deal was ratified by shareholders at a GM held on 12 August.

In September, with the interims, they made a further announcement that the terms of the deal were being re-negotiated, and a further separate but associated agreement with Baverstock, so they could be released from further work programme commitments.

Yesterday, Roxi announced the details of the new transaction. This deal means that Roxi's additional work commitments are reduced to $8m, in return for reducing its eventual stake in BNG to 23.41%. Whilst it is disappointing that the final stake is BNG is being reduced so dramatically, it is undoubtedly good news that funding issues have now been resolved and the path is clear to commence drilling; hopefully in the near future.

Roxi Petroleum (RXP) Hires Big Hitting CFO

Today Roxi Petroleum announced that they had hired David Wilkes as Group Finance Director. David is the former Country Managing Partner of Ernst and Young in Kazakhstan.

http://www.roxipetroleum.com/PDFs/Rns220909.pdf

Central Asian Republic Oil/Gas Fields and Pipelines

Interestingly, Yelemes and Ravninnoe (as Ravnin) and Munaily (as Munayli) appear on this EIA map of Oil and Gas fields and pipelines in Central Asia, including Khazakhstan:

http://www.eia.doe.gov/emeu/cabs/Kazakhstan/images/Central%20Asian%20gas%20and%20oil%20pipelines%202004.pdf

ADA Oil

ADA Group is not currently an asset of Roxi Petroelum. But in October 2007, it did announce an option to buy a 50% stake in ADA and ADA Oil (together the ADA Group), which has significant, prospective acreage in Kazakhstan, and now very significant production. See this link:

http://www.roxipetroleum.com/PDFs/Rns041007.pdf

Further details of the ADA acreage is given here:

http://www.roxipetroleum.com/PDFs/RoxiEragonAcquisition0208.pdf Slides 20-22, and here
http://www.roxipetroleum.com/PDFs/Rns310108_4.pdf Pages 209-247

Part of the consideration was going to be Roxi shares at a value of 80p, later reduced to 65p. The credit crunch played its part in decimating the Roxi share price, so the deal did not go ahead. However, the deposit was never re-paid, and at the 2009 AGM, it was said that Roxi was interested in a deal for a part of ADA, but perhaps a different shape to the original one.

Here are other links about ADA. The first indicates that one discovery on Aktobe, where it suggests ADA has a stake, may have over 1bn barrels of reserves:

http://www.eia.doe.gov/emeu/cabs/kazaproj.html

The second indicates a discovery made on the block in 2006:

http://www.lgicorp.com/eng/ir/ir_news/news_view.jsp?txtGubun=Q&txtSeqNum=64

There has long been Korean interest in the assets of Roxi. For instance, Vision FMS from Korea was going to buy some of the Roxi shares issued as consideration for the Eragon acquisition and for the failed ADA deal.

Now, LG has expressed an interest in buying the Galaz asset.

Perhaps as significant is a recently announced deal whereby the Korean National Oil Company (KNOC) and LG have recently raised their stake in ADA Oil to 75% after a partial sale of assets from Vertom and other Kazakh holders:

http://209.85.229.132/search?q=cache:k5wrK1XZ4bIJ:www.securities.com/googlenews.html%3Fpc%3DKZ%26doc_id%3D230890976+ADA+and+LG+and+KNOC&cd=1&hl=en&ct=clnk&gl=uk

"Korean National Oil Corp. (KNOC) and LG International Corp. Purchased an additional 30% stake in the Ada oil block in Kazakhstan . The move increased their combine shareholding to 75%. Previously, KNOC and LG International held a 22.5% stake in the block each. In the recent transaction, the companies boosted their stakes by 17.5% and 12.5% respectively. The stakes were offered by Vertom and other shareholders due to problems in planned investment. Ada oil block is located in north western Kazakhstan . It is expected to producer 250,000 barrels of oil from the block by the end of this year. Next year, production is expected to rise to 750,000 bpd. Exploration of the block started in 2006. Its reserves are estimated at 170m barrels."

Interestingly, the seller was Vertom, which is one of the investment vehicles of Kuat Oraziman, one of the executive directors and major shareholders of Roxi Petroleum (RXP).

Is it possible that Roxi may sell the Galaz asset to LG perhaps as some part of the consideration for a stake in ADA?

Anticipated Future Newsflow

(Courtesy of Shamus)

A few have asked me to provide an expected news flow and activity time line for RXP. I will provide one to the best of my knowledge until December:

Expected news anytime between August and November:

• LG buyout for Galaz
• Galaz commercial license approval (allows to sell oil at commercial rates => revenue)

August 2009:

• BNG Waiver approved by Kazakhstan Government

September:

• First instalment for BNG from Canamenns
• Ravninnoe rig mobilisation
• Galaz update
• Possible BNG rig contract announcement
• New Broker note from Matrix (or maybe October)

October:

• Ravinnoe Spud 1st well
• Possible BNG seismics results
• Galaz, Ravinnoe volumetric updates

November:

• BNG seismics results
• BNG volumetrics
• Ravninnoe spud
• Potential Ravninnoe mobilisation to 2nd well?

End Nov/Dec:

• BNG rig mobilisation
• Ravninnoe 1st well update
• December BNG Spud
• Further Ravninnoe updates

January:

Second installment from Canamens due


Keep in mind:

(1) They have a new broker who is trying to get them onto SETS (This is so it can behave much like MXP)

(2) I have tried to trade it before only to find out that when its time to buy again I can only buy in 100 GBP parcels.

(3) I am noticing there is low liquidity in this stock (most of it is in the hands of Kazakhs that want a mininimum 65p per share for it)

I don't know where its going it is the type of share that 1 million shares will push it 5% and next day 50,000 shares will push it another 10%. But it should return to the 20's in the near future with some tipping 40-60p at end of year (on back of BNG seismic results), although I would like that to happen I would be happy with 20-30's given overall market conditions, I do expect to see some profit taking on the way up of course.

Roxi Petroleum (AIM:RXP): Galaz Asset

Post updated and moved here.