Dae Han Issues Update about Galaz and NW Konys

Dae Han New Pharm has made its own announcement about the closing of the deal with LG International (LGI) to acquire a stake in Roxi Petroleum's (AIM:RXP) Galaz block.

A link to the original announcement in Korean can be found here.

Using Google Translate to get an English version of the release yields this result:


"Daehannyupam equity investment genetic Block 40%, LG Completes Acquisition of business

Daehannyupam invested in Kazakhstan oil optical operation of the project sign jeu Roxy Gala Careers live apart under development for 40% stake in Block jeu LG had completed an agreement to sell the firm announced on May 29.

With the completion of this agreement, apart jeu development of the project management will be given access to the LG International Corp. 5 is scheduled to begin production sometime in the pilot. Production of 1,600 barrels a day as the initial starting size of 3,800 barrels per day, said it plans to increase the production.

Current Kazakh government for the Northwest Connie seu Block C1 730 million barrels of production based on the pilot kept asking for is approved. To get approval from the government to smooth the current reserves will be calculated on the conservative, NK22 successful drilling of the reserves are projected to grow more.


This is the LG daehannyupam equity investment firm's large-scale genetic photosphere obtained for the commercial and reliability has been rated as a good opportunity."


Whilst understanding the nuances of the release is difficult, it does seem to suggest that current reserves C1 on NW Konys are "conservative" and that NK22 is projected to increase reserves.

Let's hope the results of NK22 are released soon.

LGI Announces Purchase of Galaz from Roxi

In a seemingly back to back announcement to Roxi Petroleum's (AIM:RXP) earlier disclosure about the sale of an interest in Galaz, LG International (LGI) has issued a press release about its purchase of a stake in Galaz.

The seemingly new disclosure is that LGI is going to become operator of the NW Konys field.  It seems the start of pilot production has slipped again to H2 2010, but the anticipated gross production rate has increased to 1,600bopd, with the expectation being set that gross production will rise to some 3,800bopd.

Roxi Petroleum Announces Sale of Galaz

On 29 April Roxi Petroleum (AIM:RXP) announced the sale of a stake in its Galaz project to LG International Corp (LGI).  This deal has been in gestation for some time, but the Sale and Purchase Agreement has finally been executed.

The deal is quite complex, and requires a great deal of concentration to understand completely.  Here are a few highlights insofar as I can tell.  It is recommended that any reader also consults the actual RNS issued by the company to check that I've not made any significant errors in this report of it.

• Overall, Roxi's interest in Galaz will fall from 50.15% to 34.22%
• In return, Galaz re-pays a loan from Roxi to Galaz of some $8.4m
• Galaz also loans Roxi of some $8.7m to be re-paid out of future production
• Roxi uses these proceeds to re-pay its convertible loan from Altius Energy (previously known as Arawak Energy), thus avoiding the dilutive effect of conversion.  Some of the proceeds are also used to purchase a 13% stake in Galaz from the local partners.
• LGI provide a loan of up to $26m to Galaz some of which will be used to repay the the bridging loan from Kuat Oraziman of $3m announced on 31 March and some to re-pay $5.5m to KazRosMunai.  The rest of the money will be used to finance the working capital needs of Galaz and fund further development of the project.

Overall it seems that Galaz is now well-funded, with a credible international partner and Roxi has funds to finance work on other assets as well as participate in the upside on Galaz.  Maybe some of these funds will be used on Ravninnoe or to purchase a further stake there.

Unfortunately, we did not learn any more about the results of the NK22 well, which seems like a new discovery on the block.  Hopefully, we will hear news on that soon, together with the start of production on NW Konys.

Roxi Petroleum Newsflow Update

In the post on 11 March, I set out a number of items of expected newsflow.  Here is an update:

1) Ravninnoe Well #20 test result (expected March 2010 per Oil Barrel Conference).  Update: Result announced in 7 April RNS.  240bopd from an 18 metre interval.  Awaiting results of extended flow test and acid stimulation.

2) Galaz NK22 test result (ought to be imminent as discovery was announced on 18Feb 2010).  Update: Result still awaited.

3) South Yelemes re-perforation of Well G-54 result (they were preparing to perforate on 3 Feb 2010). Update: Result announced in 7 April RNS.  200bopd from shallower interval.

4) Spudding of first new well on South Yelemes (a rig had been mobilised on 3 February 2010). Update: Well 805 spudded on 14 April, to be followed by Well 806.

5) Canamens exercising their option (or not) over a further %-age of BNG (due by 31 March 2010). Update: Done, announced in 31 March RNS.

6) Repayment (or not) of Arawak Energy (now known as Altius Energy) loan(s) - decision due by 31 March 2010.  Update: Re-paid from a new interest-free loan from Kuat Oraziman. This new loan likely to be re-paid using funds received from LG in the Galaz deal.

7) Further exercise (or not) of Arawak (now known as Altius Energy) warrants (the exercise price rises to 15p after 31 March 2010). Update: Altius Energy exercised a total of 3.6m warrants, leaving a substantial number outstanding at an exercise price of 15p or above.

8) Commencement of Galaz production (approval should be granted before end April 2010). Update: LG deal going well, but now expected to close during May 2010.

9) Commencement of Galaz development programme (deal with LG announced on 10 Feb 2010; awaiting regulatory approval). Update: presumably after the partial sale to LG deal completes

10) Lifting of Beibars military polygon (or not), and maybe a farm-in? (timing of lifting of the military polygon is unknown at present). Update: No further updat as yet.

11) Forward drilling plan for Ravninnoe (probably dependent upon Well #20 test result). Update: No further update yet.

12) Volumetrics and forward drilling plan for BNG (At Oil Barrel, the expectation was set of some news on this by mid-2010 in the form of a Competent Persons Report or CPR). Update: still awaited.

Additionally, we have been informed that some 80bopd of production on Munaily will commence around mid-year 2010, with the potential to ramp up to 300-400bopd.


Don't forget to do your own research.

Roxi Petroleum Start Drilling on BNG Block

In a low key announcement, on 16 April Roxi Petroleum announced the spudding of the first new well on the BNG Contract Area since they assumed operatorship of the block.

Well 805 commenced drilling on 14 April targeting the already discovered South Yelemes field.  The well will be drilled to 2,500m, so it seems it will explore both formations previously discovered in Well 54.  Roxi re-entered well 54, previously drilled in the 1980's and produced 200bopd from the Upper Jurassic sands at 2,212m.  There is  also another potential productive formation at around 2,223m but that suffered from  waterinflux from behind the casing.  Hopefully, Well 805 will have more success in this zone.

It is to be expected that Well 806 will be drilled once 805 has been completed.

Roxi Petroleum Operations Update

Today Roxi Petroleum (AIM:RXP) announced a comprehensive operations update covering four of their oil exploration and production assets in Kazakhstan.

BNG

Roxi have successfully re-perforated the old well 54 on the South Yelemes field.  The deeper interval produced oil and water at a rate of 90 barrels of oil per day (bopd).  This interval had to be isolated with a cement plug after water ingress from a deeper water leg.  The shallower interval is now on test production at ~200bopd.  As this well was originally drilled in 1988, it seems a remarkable achievement to get this well to flow at all.

Two further wells 805 and 806 on the South Yelemes field will now be drilled to test the formations producing in Well 54, and two secondary targets (presumably deeper) in the Middle Jurassic.  It seems appropriate to expect bpth these wells to be producers as the primary target is the formation already producing in Well 54.  Roxi estimates the gross P50 reserves for South Yelemes to be 12.5 million barrels of oil (mmbo) - 23.41% of this net ro Roxi.  The slight disappointment is that the Matrix broker note from December 2009 seemd to indicate gross recoverable resources of c. 25mmbo.

We can expect a further 3-6 wells to be drilled on BNG this year, and a further 895km2 of 3-D seismic to be shot over the southern portion of the block.

Ravninnoe

The initial production rate from Well #20 looks a bit low at 240bopd and calls into question the commerciality of the discovery, but this may improve as the well cleans up after the acid stimulation. 

Interestingly, there is a hint that Roxi and/or Canamens may end up purchasing a further stake in the Ravninnoe block from the Kazakh partners if they cannot fund the future work programme.

Galaz

There are five wells ready for production at a gross rate of some 1,200bopd, and state approval to begin pilot production is to be expected next month, with a reserves audit from McDaniel & Associates to come.  Well results from NK22 should be released in the next few weeks as the test programme looks poised to start.

Munaily

We can expect initial production of some 80bopd soon, ramping up to 300-400bopd hopefully before year end assuming the necessary approvals from the state authorities are forthcoming in a timely manner.


All in all, it is clear steady progress is being made across 4 of the assets, with the company being funded for the significant 2010 drilling campaign and cash flow now commencing from four separate fields.  But a nagging doubt about the commerciality of Ravninnoe.

Roxi Petroleum Changes PR Company

According to their website, Roxi Petroleum plc (AIM:RXP) currently use College Hill Associates Limited as their PR consultants.

However, it has been tweeted that Roxi may have changed their PR consultants to Buchanan Commuications.  See below:

http://twitter.com/Gorkana/statuses/11425680691

"Roxi Petroleum switches financial PR account to Buchanan Communications"

http://bit.ly/dxvXkH

If true, then it may mark a sea change in Roxi's communication with the market.