Due to an increase in the price of Brent crude, Kazakhstan-focused explorer Roxi Petroleum announced it will receive an additional $3 million consideration from the previously announced sale of the Galaz contract area to China-based Xinjiang Zhundong Petroleum Technology Co.
The sale was announced back in February, and due to the slight rise in oil prices the consideration will be $100 million and Roxi's effective consideration has increased from $20 million to $23 million.
The company says that under the agreement, $2 million of the aggregate purchase consideration will be retained by Xinjiang Zhundong Petroleum Technology for a period of 12 months to cover warranty claims individually greater than $50,000. Of the $2 million retention, $0.68 million relates to Roxi.
The acquisition has been cleared by local regulatory agencies, Roxi said. The first part of the process saw Xinjiang Zhundong Petroleum Technology pay $58 million of the aggregate purchase price to operator Korea’s LGI and Kazakhstan’s Sary-Arka Mining.
The second phase involves payments to three other sellers, including Roxi, and requires separate Chinese exchange control approval. This is now expected to occur in the first two weeks of June, Roxi said. The completion date for the dale has been extended to 12 June.
The Galaz block is located in the Kyzylorda Oblast in central Kazakhstan. The contract area was extended in 2011 to 179sq km and now includes significant exploration upside on the east side of the Karatau fault system, as well as the NW Konys development.
Prior to the sale, Roxi held 34.22% interest in the license for the Galaz contract area, which runs on an exploration basis until 14 May 2016. The other shareholders in Galaz are Sary-Arka Mining LLP, LGI and Baverstock GmbH, a company controlled by Roxi CEO Kuat Oraziman.
Roxi Petroleum says it plans to use the funds from the sale of the Galaz contract area to fund all of the planned 2015 development at its BNG asset, located in western Kazakhstan, 40km southeast of Tengiz on the edge of the Mangistau Oblast. Roxi expects the Galaz sale to be sufficient to fund all of the 2015 development costs at the BNG deep and shallow regions, and cover the costs of three further deep wells (801, A6 & A7) to the Deep Well A5 drilled in 2014.
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