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Roxi Petroleum reaches agreement to cancel sale of stake in Munaily field

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Kazakhstan focused Roxi Petroleum (LON:RXP) will retain its 58.41 per cent stake in the Munaily asset in the west of the country after it reached an agreement to cancel the sale of its holding.

In an operational update today, the company also gave details of activities on the NW Konys and South Yelemes fields.

A sale and purchase agreement was struck with BT Corporation in 2008 over the stake in the 0.69 sq km Munaily field and the initial price of US$0.5 million will now be repaid to the BT Corporation, said Roxi.

David Wilkes, Roxi's chief executive, said: "We are pleased to have been able to finally agree with BT Corporation acceptable terms for cancelling the previously negotiated sale and now look forward to moving this asset to production in 2011."

As well as US$0.5 million, Roxi will also pay back to BT Corporation US$1.2 million for work performed at Munaily by BT since 2008.

The firm added that it had has secured a new loan with Mr Kairat Satylganov, who has agreed to lend Munaily US$2 million.

Roxi said the loan will be converted to consideration should the lender decide to acquire a 30 per cent interest in Munaily. These funds will in part be used to compensate BT Corporation for work undertaken on the license area over the past two years.

The company estimates Munaily has GOST C1 reserves of 1.2 million barrels and said it planned to drill a further two production wells in each of 2012 and 2013 as part of the commitment under the existing production license.

Also in today's announcement, Roxi said it was still awaiting final licences for the South Yelemes pilot production to commence and a gas flaring licence for NW Konys.

It said it expected both these assets to begin pilot production by the end of this year.

At the North Yelemes structure a rig has been mobilised to drill Well 136 which it plans to spud during November.

At NW Konys, the firm also plans to mobilise a rig to drill two back-to back appraisal wells, which are planned to spud within the next four weeks.

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