Roxi Petroleum Plc AGM Statement (5640C)

TIDMRXP

RNS Number : 5640C

Roxi Petroleum Plc

29 June 2016

Roxi Petroleum PLC

("Roxi" or the "Company")

AGM Statement

At its Annual General Meeting to be held this morning Roxi, the Central Asian oil and gas company with a focus on Kazakhstan, will provide shareholders with the following operational update.

BNG

Deep Well A5

Background

Deep Well A5 was spudded in July 2013 and drilled to a total depth of 4,442 meters with casing set to a depth of 4,077 meters to allow open-hole testing. Core sampling revealed the existence of a gross oil-bearing interval of at least 105 meters from 4,332 meters to at least 4,437 meters.

Unrecovered drilling fluids have blocked the well during preparation for testing but for a brief period of up to two hours at a time the well flowed oil at the rate of 2,000 bopd before becoming blocked by the accumulation of unrecovered heavy drilling fluids becoming set in the oil production tubing.

Current position

As outlined in the financial statements the pressure encountered outside the production tubing has been consistently of the order of 300 bar and we flowed the well periodically when the pressure in the oil production tubing has exceeded 320 bar. When the pressure in the tubing falls to 250 bar we have stopped flowing to protect the well.

Over time, as the obstructions in the well have been removed, the time required for the pressure inside the tubing to revert to 320 bar has reduced from several days to now just a few hours.

Roxi management believes it should not now be long before the well is able to flow continually with the pressure in the oil production tubing staying above the 250 bar level.

However, as a suitable rig has become available, work has commenced to attempt to side-track the well from a depth of 4,013 to 4,450 meters to gain access to structures at these depths.

Accordingly work to allow the well to flow without interruption has been suspended and will resume on completion of the side-track.

Deep Well 801

Background

Deep Well 801 was spudded on 15 December 2014 and reached a Total Depth of 5,050 meters on August 2015. The well is located approximately 8 kilometers from Deep Well A5 and was planned to target the same structure as Deep Well A5 in the Middle and Lower Carboniferous.

Core samples and logging reveal a potentially oil bearing interval starting from 4,536 meters and extending 100 meters. The pressure and temperatures encountered indicate this well is unlikely to be connected to the reservoir targeted by Deep Well A5. Therefore should Deep Well 801 prove commercially viable it would be a separate discovery to the potential discovery previously announced in connection with Deep Well A5.

As with Deep Well A5 the issue is high pressure and temperature. The well has flowed periodically and our expectation is that following a programme of chemical washes the well will begin to flow on a more consistent basis.

The well also has a stuck pipe occupying the bottom 70 meters of the well. In the event this is not removed before the well is capable of flowing on an extended basis the flow tests will commence with the stuck pipe in place and the pipe recovered at a later date.

Current position

As outlined in the financial statements the blockages in this well are being treated by repeated chemical washes, which have improved the position. The next chemical wash is expected in the next few days.

Deep Well A6

Background

Deep Well A6 was spudded in early November 2015 and is to be drilled to a planned total depth of 5,000 meters targeting the Carboniferous. As previously announced 9-inch casing has been set to a depth of 3,726 meters.

Issues were encountered in drilling through the salt layer, which delayed progress but have been successfully resolved.

Deep Well A6 is located some 1,200 meters from Deep Well A5.

Current position

Drilling has reached a depth of 4,000 meters and paused to allow additional 7 inch casing to be set to this depth, after which we plan to resume drilling to a depth of 4,450 meters, when we will set further casing to that depth. Then we intend to drill to the planned total depth of 5,000 meters to target the Carboniferous structures we consider to be the most promising.

Shallow Wells

Background

BNG's shallow wells are located in the Yelemes portion of the BNG block. They extend over an area of 800 square kilometers and are focused on proving the extent of a number of promising horizons.

In particular our belief has been for some time that the shallow horizon produced from by wells 54,805, 806, & 807 extend significantly further than the relatively small area in which they were drilled. Well 143 is 3,000 meters distant from these other wells and first indications from this well are that the shallow horizon does indeed extend over a significant area.

Current position

Aggregate production from the BNG shallow wells is currently 628 bopd (367 net to Roxi). This figure will vary as wells are taken on and off testing.

Munaily

Background

The Munaily field is located in the Atyrau Oblast approximately 70 kilometers 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 kilometer rehabilitation block in 2008 and funded two wells and one well re-entry.

Current position

We have concluded an agreement with a Chinese company to re-enter up to 20 wells drilled during Soviet times with our Chinese partner bearing the all workover costs. Any incremental production will be split on a 50:50 basis.

A workover rig is in the process of being assembled and we expect work on the first well re-entry to be commence in July.

Currently 145 bopd (85 net to Roxi) are being produced from Munaily. Sales of oil from Munaily are at export prices.

The income from the sale of all production from the shallow wells at BNG and from Munaily is being used to assist funding the deep development work at BNG.

Beibars

Background

In 2007, Roxi acquired a 50 per cent interest in Beibars Munai LLP, which operates the 167 square kilometer Beibars Contract Area on the Caspian shoreline south of the city of Aktau. While acquiring 3D seismic in 2008, the licence was put under Force Majeure when the acreage was allocated as a military exercise area (Polygon), by the Ministry of Defence. Since then no operations have been carried out, and Roxi operates a care and maintenance administrative budget on the project.

Current position

We understand a court hearing to consider the ending of the force majeure has been convened for September 2016 and we expect to have this licence restored to us in due course.

Comments:

Clive Carver, Chairman commented

"Our focus continues to be in developing our existing deep wells to allow flow testing to commence."

Enquiries:

Roxi Petroleum PLC

Clive Carver, Chairman [phone]

WH Ireland Ltd

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

END

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June 29, 2016 02:00 ET (06:00 GMT)