LONDON (Alliance News) - Roxi Petroleum PLC shares rose on Monday after it said it has cancelled a share subscription deal with BOCO due to the imminent sale of the Galaz contract area in Kazakhstan despite extending the deadline due to the need for Chinese regulatory approval.
The company said it has also finally cleared the blockage at the Deep Well A5 that was plaguing operations and said it could make a separate discovery at the nearby Deep Well 801 after discovering it does not link up with the A5 well.
Roxi shares were up 18% to 16.36 pence per share on Monday morning.
The company said it had struck a subscription deal to raise USD20 million from BOCO (HK) Ltd in April, under which BOCO was set to subscribe for 75.6 million shares at 18 pence per share.
On Monday, Roxi said "in light of the imminent completion of the sale of Galaz and difficulties in receiving timely payment", it has terminated the proposed deal.
The company made a conditional sale of the Galaz contract area in February to a consortium being led by Chinese firm Xinjiang Zhundong Petroleum Technology Co. The total amount to be paid is dependent on the Brent oil price, and on May 20, Roxi said it would get USD2.3 million more from the sale than previously anticipated due to a rise in oil prices. The total price for the sale stands at around USD23.0 million.
Roxi said the buyer has "received all the required regulatory clearances" and completed the first part of the sale, but said the second phase of the deal involves payments to three other sellers, including Roxi, which holds a 34.2% stake in the area, which requires separate Chinese exchange control approval.
That approval is expected in the first two weeks of June, and therefore Roxi has extended the sale deadline until June 12.
In addition, the company said it has cleared the blockage in the Deep Well A5, which had been preventing operations continuing since February.
"The blockage at Deep Well A5 has now been cleared. Pressure in the well has returned to levels encountered when it was originally drilled and the 30-day well test is set to commence following the delivery on site of additional pipes," said Roxi.
At the nearby Deep Weel 801, the company said core samples and logging have shown that it is unlikely to link up to the Deep Well A5, meaning it would be classed a separate discovery if the 801 well proves commercially viable.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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