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Caspian Sunrise plc - Operational and Financial Update

RNS Number : 7423L
Caspian Sunrise plc
04 May 2020
 

Caspian Sunrise PLC

("Caspian Sunrise" or the "Company")

 

Operational and financial update

 

Introduction

 

The Directors are pleased to update the market with news of progress at its flagship BNG asset together with details of measures taken to underpin the Company's finances.

 

New Well 153

 

On 27 April 2020, we announced that New Well 153, the second of the infill wells drilled at the MJF structure, was producing oil at the rate of approximately 200 bopd. We are now pleased to update the market with news that, as expected, Well 153 is currently producing at rates in excess of 500 bopd.

 

New Well 150, the first of the MJF infill wells, continues to produce at rates in excess of 500 bopd.

 

This increases aggregate daily production to in excess of 2,000 bopd with the capacity to produce up to 2,300 bopd once the licence upgrade is approved, which would allow full production to resume at the South Yelemes shallow structure.

 

Ongoing development activities

 

On 18 March 2020, in response to the uncertainties surrounding the impact of the Covid-19 virus, the Board announced its decision to suspend all operational drilling activities after the completion of the work then in hand.

 

Following a review of the Group's financial position in light of the actions noted below the board has decided to continue to pursue on a controlled basis the development of the shallow and deep structures at the BNG Contract Area.

 

Accordingly, the G50 rig used at New Well 153 will move to Deep Well A5, allowing the cracked tubing to be replaced and work to continue to bring that well into production.

 

A G40 rig has already moved to the third site selected for infill drilling at the MJF structure to drill New Well 151. The well has been spudded and to date reached a depth of 12 meters. A decision on the pace at which the well is to be drilled is yet to be taken.

 

Measures taken to underpin the Company's future

 

Before the Covid-19 outbreak the Company was proud to be a low cost operator with low drilling, lifting and transportation costs and a record in recent years of maintaining overall G&A cash expenditure below $3 million.

 

The Group, other than money advanced by the Oraziman family under a subordinated framework agreement and short term advances from local oil traders, has no external debt.

 

The decision in September 2019, to acquire equipment, including four rigs, lessens the cash costs of continued drilling.

 

The depreciation of the Kazakh Tenge against the US $ also reduces $ reported costs.

 

As noted above in March 2020, we took action to reduce expenditure by reducing staff numbers in the field and in the administrative offices and we also suspended work on a number of acquisition prospects, thereby saving the associated professional fees and allowing the executive management team to focus on the immediate issue of survival. At that time the board led by example by agreeing to defer a large portion of its salary / fees.

 

The board has now agreed to further short term salary / fee reductions, which in aggregate reduce the monthly cash outlay to approximately 25 per cent of the pre Covid-19 contracted levels. We have also put in place lesser deferral arrangements for office based staff although we continue to pay field staff their full entitlements. In addition the Company has secured significant additional financial support from local oil traders for the pre-sale of oil..

 

As a result of the actions noted above the board believes the Group is now well placed to come through the current Covid-19 related difficulties in good shape.

 

Board appointment

 

Evidencing the continued commitment of the Company's largest shareholding group the Oraziman family, which owns 42.9 per cent of the issued shares, the board intends to appoint Aibek Oraziman to the board as a non-executive director. Aibek Oraziman is the Company's largest individual shareholder holding 18.8 per cent. The timing of the appointment will depend on the completion of the required regulatory checks.

 

Comment:

 

Clive Carver, Executive Chairman said:

 

"The progress at New Well 153 is pleasing as is the resumption of our shallow and deep structure drilling campaigns, albeit at a controlled pace.

 

The financial measures put in place demonstrates the commitment and confidence of the board, our largest shareholding group and the local oil traders in the Company's medium and long term prospects.

 

We look forward to welcoming Aibek Oraziman to the board in the near future."

 

Caspian Sunrise PLC

 

Clive Carver

Executive Chairman                                                                +7 727 375 0202

 

WH Ireland, Nominated Adviser & Broker

 

James Joyce                                                                            +44 (0) 207 220 1666

James Sinclair-Ford

 

Qualified person

 

Mr. Nurlybek Ospanov, Caspian Sunrise PLC's Chief Geologist / Technical Director who is a member of the Society of Petroleum Engineers ("SPE"), 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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Quick facts: Caspian Sunrise Plc

Price: 2.95

Market: AIM
Market Cap: £56.87 m
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