Roxi Petroleum Plc Operational Update (4108W)

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RNS Number : 4108W

Roxi Petroleum Plc

07 November 2014

7 November 2014

Roxi Petroleum plc

("Roxi" or "the Company")

Operational Update

Roxi, the Central Asian oil and gas company with a focus on Kazakhstan, is pleased to further update the market with news of progress at its BNG, Galaz and Munaily assets.

BNG

Background

The BNG Contract Area 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 of which 1,376 square kilometres has 3D seismic coverage acquired in 2009 and 2010.

Roxi has a 58.41 per cent interest in the BNG Contract Area.

Deep Well A5

As previously announced Deep Well A5 has an oil-bearing interval of at least 105 meters between 4,332 and 4,437 meters.

Roxi is pleased to update the market with news of the continuing preparations for the 30-day well test.

The very high pressure in the well during the drilling phase resulted in heavy drilling fluids being used to control the pressure, which need to be removed in a swabbing exercise before flow testing can commence.

Coil tubing equipment has been mobilised and installed to clean out the drilling fluids in the well as part of the swabbing process. The majority of the drilling fluids have now been cleaned from the well using the coil tubing. However, towards the end of the process the coil tubing equipment experienced a compressor failure, which needs to be replaced before the swabbing process can be completed.

Accordingly, the 30-day well test is now likely to commence towards the end of November 2014.

The well will be tested on an open-hole basis. The pressure at the top of the well is some 7,000 psi., which will be helpful for the flow test. The delay in replacing the faulty heavy duty compressor powering the coil tubing equipment makes no difference to the outcome of the flow test, the results of which will be used to provide an external reserves estimate.

Further announcements on progress at Deep Well A5 will be made in due course.

Shallow Well 143

As previously announced Well 143, which was drilled to a Total Depth of 2,750 meters in 2013, tested for water with oil sheen in the Valanginian section.

The focus has now shifted to the Jurassic section, between 2,704 and 2,710 meters and now additionally beween 2,692 and 2,694 meters.

Further announcements on testing at Well 143 will be made in due course.

Galaz

Background

The Galaz block is located in the Kyzylorda Oblast in central Kazakhstan. The Contract Area was extended on 10 January 2011 to 179 square kilometres and now includes significant exploration upside on the east side of the Karatau fault system, as well as the NW Konys development.

The operator is LGI, the Korean multi-national, which invested US$34.4 million by way of loans into the project and paid a further US$15.6 million in return for 40 per cent of the asset. A total of 30 square kilometres 3D seismic has been acquired and processed.

Roxi has a 34.44 per cent interest in the Galaz Contract Area.

Well NK-22

Well NK-22 was drilled to a depth of 2,840 meters in 2010. The interval between 1,439 and 1,451 meters was recently perforated and following nitrogen injection the well produced water with oil. The well is being monitored to assess its potential.

Munaily

The Munaily field is located in the Atyrau Oblast approximately 70 kilometres southeast of the town of Kulsary. The field was discovered in the 1940s and produced from 12 reservoirs in the Cretaceous through to the Triassic.

Roxi acquired 58.41 per cent interest of the 0.67 square kilometres rehabilitation block in 2008 and funded two wells and one well re-entry.

Licence

The license at Munaily is a full production license, with an expiry term of 11 years where production can be sold at export prices. However, the relatively low production volumes means that the advance oil sales at Munaily to date have been conducted nearer domestic prices with the proceeds used to fund the drilling of two additional wells required under the agreed work programme.

Roxi's interest

Roxi maintains an effective 58.41 percent interest in the Munaily Contract Area

Production volumes

To date Munaily has one producing well, H1 where production is at the rate of 150 bopd. A second well, Well 39, has been perforated and is currently undergoing swabbing before the well is placed on production.

A further announcement will be made once the rate of production is known.

Drawdown under the $40 million equity facility

To meet the costs at BNG to the end of the year, including the costs of testing Deep Well A5, Roxi has called down a further $1.7 million from the $40 million equity facility announced in January 2013 with Mr Satylganov, a Director of the Company. This brings the total called and received to date to $26.2 million.

Roxi will accordingly issue a further14,244,542 shares to Mr.Satylganov, so that the total number of shares issued to Mr.Satylganov are 219,533,544, representing 25.6 per cent of the enlarged total shares in issue. The price of the shares issued to Mr.Satylganov is 7.41p, based on the agreed exchange rate of GBP1=$1.61 in the subscription agreement dated 14 January 2013.

Roxi will apply for the 14,244,542 subscription shares to be admitted to trading on AIM and it is anticipated that trading in such shares will commence on 12 November 2014. The total number of shares in issue following the issue of these shares will be 858,433,994. Roxi has no shares in Treasury, therefore this figure may be used by Shareholders, from Admission, as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

Enquiries

RoxiPetroleum PLC

   Clive Carver, Chairman                                                         [phone] 

WH Ireland plc

   James Joyce / James Bavister                                              [phone] 

Qualified Person

Mr. Nurlybek Ospanov, Roxi's senior geologist who is a member of the Society of Petroleum Engineers ("SPE"), has reviewed and approved the technical disclosures in this announcement.

This information is provided by RNS

The company news service from the London Stock Exchange

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