Operational, financial & regulatory updates

Caspian Sunrise PLC

("Caspian Sunrise" or the "Company")

Operational & regulatory update, financial update, management & board changes, shareholding update

Introduction

The board is pleased to update shareholders on:

·    operational progress at its flagship BNG asset

·    Kazakh regulatory matters 

·    financial position

·    board & management changes

·    new arrangements relating to the Oraziman family shareholding.

BNG Deep Wells

Progress has been made with our deep wells but to date none are yet producing at commercial quantities.

Deep Well A5

We have struggled for some time with another stuck pipe this time at the point at which the side track commences.

After several weeks attempting to remove the pipes with no success we have seen in the last few days signs that our efforts are beginning to work. However, if the current attempt to free the well is not successful, we plan to pause operations at Deep Well A5 to make use of the rig and specialist pipes at other Deep Wells.

Once freed the stuck 180 meter section of liner and the tubing inside will be pulled from the well so we can continue further work-over activities with the goal of resuming and establishing flow on a commercial basis.

Deep Well A8

We have completed acid and hot oil treatments at the well targeting the interval between 4,343 meters  to 4,499 meters.

A consistent flow of oil has yet to be established but we believe that oil is present and that it is the low permeability of the reservoir near the wellbore that is impeding the  flow.

Rather than use coil tubing equipment, the results from which have to date been disappointing, we are erecting a G40 drilling rig over the well to continue the cleaning process including reducing any near wellbore formation damage caused by previous drilling.  This requires the use of pipes currently in use at Deep Well A5.

Once successfully completed we intend to establish flow and conduct testing. In due course we intend to drill a further approximately 800 meters to a depth of 5,300 meters to test deeper reservoir targets as originally planned.

Deep Well A6

The result of the acid treatments at Deep Well A6 have to date been inconclusive. It appears from pressure data that reservoir connectivity and permeability has been improved. Illustrating the point, prior to acid treatments it took approximately one week for the pressure in the well to rise 100 bar after shut in. Following the acid treatments it now takes only two days for the same pressure to build.

As with Deep Well A8 a rig will be required to continue the cleaning process. The intention is to use the rig currently at Deep Well A5 . Should the interval currently being worked not flow at commercial levels the intention is to use the rig to test a lower level.

BNG Shallow wells

BNG Production volumes

The MJF field is currently producing at rates between 1,300 and 1,550 bopd, with average daily production of 1,445 bopd. No production is permitted at the South Yelemes structure until the licence upgrade is received.

New Well 151

After some early challenges, production from New Well 151 began in November 2020, with oil flowing naturally at rates of 70-80 bopd. Testing continues with management targeting production of approximately 150 bopd.

New Well 141

At Well 141 we are working to install a pump in the well and management are targeting production of approximately 200 bopd.

Regulatory update

There has been no material progress with the award of the export licence at the South Yelemes field at the BNG Contract Area; the formal award of the new licence at the 3A Best Contract Area; or our appeal against the MJF assessed costs.

Financial update

Shareholders are reminded that following the grant of the export licence at the MJF structure the Kazakh regulatory authorities assessed $32 million historic costs, for the whole of the BNG Contract Area entirely against the MJF structure, which accounts for only 1% of the BNG surface area. This sum is repayable quarterly over 10 years. 

We are appealing against the basis of the assessment but the obligation to make these payments continues and would only reduce following the successful outcome of our appeals. The next quarterly payment falls due in February 2021.

With domestic oil prices at $6 per barrel and without a proven deep well success almost all of  the surplus income from the proceeds from the sale of oil sold on the export markets are required to continue to fund these quarterly payments. Accordingly, until such time as the domestic price rises materially, or there is a commercial success at a deep well or the BNG historic costs assessment is significantly reduced, the Group will not generate sufficient cash to fund drilling of any new wells, shallow or deep. Our focus therefore continues to be on conserving cash to maintain operations at current levels until matters improve.

Board / management changes

In recognition that the current financial position is likely to continue for some time the board has implemented a number of further actions to conserve cash.

Clive Carver, currently Executive Chairman and Chief Financial Officer, will revert to being non-executive chairman.

Seokwoo Shin, who has been with the Group for two years and was previously head of Korea National Oil Corporation's (KNOC) operations in Kazakhstan, will join the board as an Chief Operating Officer, following completion of the standard regulatory director checks.

Tim Field who joined the board as a non-executive director in January 2019, will leave the board but remain a consultant to the Group

Talgat Kuzbakov, previously Group Financial Controller, who has been with the Company for 10 years, will become Group Chief Financial Officer, although will not become a board member.

Oraziman family shareholding

Aibek Oraziman, a director of the Company, will in due course receive 57,369,124 shares previously owned by the late Rafik Oraziman.  Accordingly, Aibek Oraziman's shareholding will increase to 507,733,613 shares representing 24.3 per cent of the issued share capital.

The overall beneficial interest of the immediate Oraziman family remains unchanged at 903,429,605 shares representing 43.3 per cent.

Separately, Aibek Oraziman and Aidana Urazimanova, who holds 354,210,642 shares representing 17.0 per cent have agreed to transfer their Caspian Sunrise shareholdings to Akku Investments LLP (Akku), a Kazakh entity, with each owning 50%. Aibek Oraziman and Aidana Urazimanova and Akku are therefore beneficially interested in 861,944,255 shares representing  41.3 per cent.

Contacts:

Caspian Sunrise PLC

Clive Carver

Chairman                                                                                +7 727 375 0202

WH Ireland, Nominated Adviser & Broker

James Joyce                                                                            +44 (0) 207 220 1666

James Sinclair-Ford

Qualified person

Mr. Asslybek Umbetov, a member Association of Petroleum Engineers, 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.