10th Feb 2015 13:57
LONDON (Alliance News) - Roxi Petroleum PLC Tuesday said it has sold its equity and debt interests in the Galaz contract area in Kazakhstan for net proceeds to Roxi of USD20.7 million.
The company sold its interest to a consortium led by Chinese firm Xinjiang Zhundong Petroleum Technology Co. The sale is conditional and Roxi is expecting to receive approval for the deal from Kazakh authorities by the end of April, it said in a statement.
The Galaz block is located in the Kyzylorda Oblast in central Kazakhstan. Roxi currently has an effective 34.22% interest in the licence for the Galaz contract area.
The consortium will purchase 100% of the interests in the Galaz area, including all associated debts, for an aggregate of USD100 million, of which USD10 million is dependent on the Brent oil price reaching USD60 per barrel before April 28.
Roxi's interest in the Galaz Contract Area is held via its 59% holding in Eragon Petroleum Ltd, which owns 100% of Galaz Energy BV, which in turn owns 58% of Galaz and Co LLP, the entity which holds the licence for the Galaz Contract Area.
Under the conditional sale and purchase agreement, the consortium will acquire a 100% stake in Galaz and Co LLP.
Of the USD90 million payable by the consortium, some USD49.6million will be used to acquire existing loans and accrued interest of Galaz and Co LLP, of which some USD6.9 million is owed direct to Roxi and a further USD4.4 million is owed to its subsidiary Galaz Energy BV.
The net amount receivable to Galaz Energy BV will total USD23.4 million including the USD4.4 million debt referred to above, of which some USD13.8 million is attributable to Roxi.
This together with the USD6.9 million debt due direct from Galaz and Co LLP to Roxi takes the net amount attributable to Roxi from the initial consideration to USD20.7 million.
In the event the price for Brent crude is USD60 per barrel or greater on April 28 and the additional consideration becomes payable, the net amount attributable to Roxi would increase to USD23.6 million.
The funds from the deal will be used to develop Roxi's flagship BNG asset, also in Kazakhstan, and will allow Roxi to complete its 2015 BNG programme of four deep wells followed by an independent assessment of the BNG reserves.
Roxi shares were up 1.5% to 11.80 pence per share on Tuesday afternoon, having briefly spiked to 12.73p on the news.
By Joshua Warner; [email protected]; @JoshAlliance
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