The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014.
Caspian Sunrise PLC
("Caspian Sunrise" or the "Company")
Purchase of equipment and the issue of shares
Introduction
The Board of Caspian Sunrise is pleased to announce the purchase of drilling equipment, including four rigs, for an aggregate consideration of $7 million, to be satisfied by the issue of 58,333,333 new ordinary shares ("Consideration Shares") representing 3.2 per cent. of the Company's existing share capital at an issue price of 10p per share.
Much of the equipment has already been used on a rental basis and is well known to the Company.
Background
The relative lack of drilling activity in Kazakhstan has resulted on occasion in unnecessary delays in sourcing basic equipment to develop our oil fields. The cumulative impact of which has been to set back the pace of development and to increase costs.
Now we have commenced a 10 well infill drilling on the MJF structure it makes commercial sense to have direct access the rigs and other routine equipment required. This is expected to reduce operational delays, speeding up the development of our oil fields and reducing drilling costs. In particular, we now expect to complete the 10 well drilling programme sooner than the previous 20-month estimate.
For specialist equipment, such as rigs capable of drilling below 4,500 meters, we will continue to use equipment owned by others.
The equipment
The equipment to be acquired comprises principally four drilling rigs, two cranes, pumps, generators, a blow-out preventor and 12 vehicles, including trucks, crew buses and pickup trucks.
The largest of the rigs to be acquired is a 350 tonne rig, with the capacity to drill to a depth of up to 5,000, meters. The two further drilling rigs are 225 tonne rigs, each being able to drill to depths of up to 4,000 meters. The fourth is a workover rig of 80 tonnes, with a capacity to drill up to 1,500 meters and perform general workover tasks to a depth of 2,500 meters is to be acquired.
One of the cranes is able to lift 50 tonnes and the other 25 tonnes and are used principally in the assembly and dis-assembly of the rigs.
Completion of the acquisition is subject to and conditional upon, amongst other things, inspection of the equipment.
Caspian Sunrise Services
A new division, Caspian Sunrise Services, has been formed to take the lead in the development of the Group's assets. The division will have a core skilled workforce, initially of 15, to which additional workers will be added as circumstances dictate. The new division will lease the purchased equipment on an arms-length basis from the Eragon Petroleum UAE, the group company which will own the equipment.
Shareholder lock-ins
The seller of the equipment, Mr Kalmyrzayev, has agreed not to sell or otherwise dispose of the Consideration Shares for a period of six months from the date of Admission (as defined below).
The issue price of 10p per share represents a 3.4% discount to the closing share price of 10.35p on 30 August 2019, being the last practical date prior to the signing of the purchase agreement.
Shares in issue
Application will made to London Stock Exchange for the Consideration Shares to be admitted to trading on AIM ("Admission"), and dealings in the new ordinary shares are expected to commence on or around 16 September 2019. The Consideration Shares will, when issued, rank pari passu in all respects, and carry the same rights as the existing Ordinary Shares. Following Admission the total number of ordinary shares in issue will be 1,882,660,885.
Comment
Clive Carver, Executive Chairman commented
"This marks another natural step in the Company's progression as a full- fledged oil producer. It will allow us to develop our oil fields quicker and more cheaply than has been the case to date."
Caspian Sunrise PLC |
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Clive Carver Executive Chairman |
+7 727 375 0202 |
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WH Ireland, Nominated Adviser & Broker |
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James Joyce Jessica Cave James Sinclair-Ford |
+44 (0) 207 220 1666 |
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.
