Caspian Sunrise Regulatory News (CASP)

Roxi Petroleum plc

("Roxi" or "the Company")

Interim Results for the period ended 30 June 2015

Roxi Petroleum plc, the Central Asian oil and gas company with a focus on Kazakhstan, announces its unaudited results for the six-month period ended 30 June 2015.

Highlights

Operational

During the period under review

· Deep Well A5: Clean up work largely completed by May 2015

· Deep Well 801: Drilled to 5,050 meters without incident

Subsequently

· Deep Well A5:Side track drilling completed to a depth of 4,400 meters and preparatory work underway to commence 90 day well test

· Deep Well 801: testing commenced with gas detected and shows of oil

· New discovery at Shallow Well 143, which is producing at the rate of 100 bopd

· Aggreate production from the BNG shallow wells 453 bopd (265 bopd net to Roxi)

· Aggregate production from Munaily 145 bopd (85 bopd net to Roxi)

Financial

During the period under review

· Operating profit for the period of $19 million (2014: $23.7m)*

· Profit on the sale of Galaz $18.7 million

· Proceeds from the sale of Galaz attributable to Roxi to develop BNG $23 million

· Proceeds from the sale of Galaz available to Roxi and Baverstock to develop BNG $34 million

Subsequently

· All proceeds due from the sale of Galaz received (excluding $1.2million retention)

· Uncapped BNG Royalty cancelled

· Rig quotes for proposed new 5,000 meter deep wells halved from $15 million to $7.5 million

· Devaluation of the Tenge vs US$ significantly reduces operating costs going forward

· * included a $25 million revaluation at BNG

Strategy

Roxi's strategy is to prove up the greatest quantity of reserves at its BNG flagship asset with the least dilution to shareholders.

BNG

Background

The BNG Contract Area is located in the west of Kazakhstan 40 kilometers southeast of Tengiz on the edge of the Mangistau Oblast, covering an area of 1,561 square kilometers of which 1,376 square kilometers has 3D seismic coverage acquired in 2009 and 2010.

Roxi has a 58.41% interest in the BNG Contract Area via its 59% holding of Eragon Petroleum Limited.

Licence

In June 2015, the BNG licence was successfully renewed for a further three-year period to 7 June 2018.

The main focus of activity during the period of the renewed licence will be to prove up the greatest amount of reserves consistent with avoiding unnecessary dilution to Roxi shareholders (the "Estimation Phase").

During the Estimation Phase oil produced will be sold at domestic Kazakh prices, currently $10 per barrel net to Roxi. Thereafter, subject to the findings of the Estimation Phase, Roxi intends to seek a full production licence at BNG, which will allow oil produced to be sold at international prices.

Our development approach

The BNG Contract Area has both shallow and deep prospects, both of which Roxi is keen to develop.

Deep Wells

Deep Well A5

The well was spudded in July 2013 and drilled to a total depth of 4,442 meters with casing set to a depth of 4,077 meters to allow open hole testing. Core sampling revealed the existence of a gross oil-bearing interval of at least 105 meters from 4,332 meters to at least 4,437 meters.

The well was difficult to drill with a salt layer of approximately 130 meters and high temperatures and pressures at the lower depths. The extremely high-pressure in the well (7,000 psi at surface) required the use of drilling fluids with a high density (2.16 g/cm3). Removing this high density drilling fluid to allow testing was problematic.

Some of the excess drilling fluids were ejected due to the high well pressures, but by November 2014 it became clear that intervention would be required to complete the operation. We decided the best way to clean-up the well for testing would be by using coil tubing equipment. However, in December 2014, due to the high pressure in the well, the coil tubing equipment used became stuck at a depth of 2,996 meters. The coil tubing was cut at a depth of 30 meters below the wellhead.

In December 2014, in addition to the blockage in the well referred to above we announced that a pipe was also stuck at the bottom of the well.

In February 2015, we announced that the major part of coil tubing had been removed from the well. The 50 meters of coil tubing remaining in the well, which still contained drilling fluids, were trapped at a depth of 2,996 meters together with a metallic object believed dropped during the clean-up works.

The blockage at Deep Well A5 was finally cleared in May 2015.

As announced on 15 July 2015 we decided to side-track the well from a depth of 4,000 meters and then to set casing to the full length of the side- tracked well.

Roxi is pleased to report that the side-track drilling has now been completed to a depth of 4,400 and the preparatory work to commence a 90-day well test is well underway.

Deep Well 801

Deep Well 801 was spudded on 15 December 2014 with a planned Total Depth of 4,950 meters. The revised Total Depth is 5,050 meters, which was reached without incident and a liner has been run to the full depth of the well.

The well is located approximately 8 kilometers from Deep Well A5 and was planned to target the same structure as Deep Well A5 in the Middle and Lower Carboniferous. Sinopec, the Chinese multinational, has drilled the well for a fixed cost of $11 million.

Core samples and logging reveal a potentially oil bearing interval starting from 4,536 meters and extending 100 meters. However, the pressure and temperatures encountered indicate this well is unlikely to be connected to the reservoir targeted by Deep Well A5. Therefore should Deep Well 801 prove commercially viable it would be a separate discovery to the potential discovery previously announced in connection with Deep Well A5.

Five potential intervals for production have been identified below the salt layer. The well has been perforated at the levels of the two deepest intervals, 4,896 meters and 4,822 meters.

The heavy-duty rig used to drill 801 has been dis-assembled pending its use on Deep Well 802 (see below). A lighter rig has been assembled over Deep Well 801 and will be used to test the perforated intervals and subsequently the other intervals of interest.

Initial testing of the well commenced on 21 September following stabilization of pressure in the well. Encouragingly, gas has been detected together with oil shows and following the temporary closure of the well pressure has again started to build. We expect to reopen the well in the next few days and are hopeful that oil will flow naturally to the surface.

Shallow wells

BNG's shallow wells are located in the Yelemes portion of the BNG Contract Area. They extend over an area of 800 sq. km. and are focused on proving the extent of a number of promising horizons. In particular our belief has been for some time that the shallow production horizon in wells 54,805, 806, & 807 extends significantly further than the relatively small area in which these wells were drilled.

Well 143 is 3,000 meters distant from these other wells. Despite disappointing initial test results we have continued to test this key well at various intervals and are pleased to report it has produced oil at the rate of approximately 100 bopd from two intervals, 2,692 meters and 1,961 meters.

This not only represents a new discovery in its own right for the MJ-F structure but also adds weight to the belief that the producing horizons seen in the other shallow wells extend far further than previously thought.

Testing continues and further announcements will be made in due course.

Well 54

Well 54 was drilled in Soviet times to a depth of 3,000 meters and re-tested in 2010.

The well is currently producing at the rate of 90 bopd.

Well 805

Well 805, which was drilled in 2010 to a total depth of 2,505 meters, tested two hydrocarbon-bearing zones between 1,965 meters and 2,230 meters, at rates of 150 bopd and 226 bopd with a sucker-rod pump. In April 2013, further testing took place at Well 805 at rates of 120 bopd. In June 2014 we announced the interval between 1,960 and 1972 meters had been perforated and tested with a flow rate of 90 bopd using a 2mm choke.

The well is currently producing at the rate of 95 bopd.

Well 806

Well 806 was also drilled in 2010 to a total depth of 2,557 meters. In November 2013 this well was tested at intervals at 1,985, 1,998 and 2,022 meters. In June 2014 we announced the interval between 2,022 and 2,032 meters had been perforated and had tested with a flow rate of 90 bopd using a 2mm choke.

The well is currently producing at the rate of 83 bopd.

Well 807

Well 807 was drilled between September 2013 and November 2013 to a depth of 2,500 meters and is targeting Cretaceous Limestone and Jurassic Sandstone. Under testing the well is producing at the rate of 40 bopd using a 2mm choke from the Valanginian horizon in the interval between 1,966 meters and 1,979 meters.

The well is currently producing at the rate of 85 bopd.

Well 143

Well 143, the first of the 2013shallow wells, was spudded on 1 April 2013, on the MJ-F structure located towards the North of South Yelemes field at BNG. The total depth of the well was planned to be 2,500 meters. This well initially targeted Jurassic Callovian sands at a depth of 2,170 meters with a secondary objective in the Cretaceous Valanginian limestone at a depth of 1,935 meters.

As the middle Jurassic section is also expected to be within 4-way dip closure in the MJ-F structure as well as the top Jurassic section, Roxi decided to drill to 2,750 meters, 250 meters deeper than the original planned depth. The well reached the total depth of 2,750 meters in June 2013, and wire line logs were run.

Interpretation of these results has been encouraging with three main intervals of interest identified, at 2,193, 2,216 and 2,692 meters. Additionally, a fourth interval of interest at 2,088 meters has been identified from core samples and will now be tested.

As noted above in September 2015 we announced that oil has been produced from two intervals 2,692 meters and 1,961 meters.

Further testing of these two intervals to determine reliable flow rates will be conducted before assessing the remaining intervals of interest. If successful the location of the well may extend the shallow horizon at South Yelemes.

Aggregate current production

Aggregate production from shallow wells 54, 805, 806, 807 & 143 is some 453 bopd (206 bopd net to Roxi).

Operator status

BNG Ltd LLP, of which Roxi owns 58.41%, has been the operator at BNG since 2011.

Work programme

Preparatory work for two further deep wells at BNG (Deep Wells A6 and 802) is underway.

Deep Well 802

As referred to above the heavy-rig used on Deep Well 801 has been disassembled for use on a new Deep Well 802, located some 8 kilometers from Deep Well 801. Deep Well 802 is to be drilled to a depth of 5,000 meters targeting the Lower Carboniferous.

Deep Well A6

Deep Well A6 is located 2 kilometers from Deep Well A5 and it is planned to be drilled to a Total Depth of 5,000 meters targeting principally the Middle Carboniferous.

Preparatory work has already commenced at the drill site and following the completion of the side-track drilling at Deep Well A5 that rig will be reassembled ready to spud Deep Well A6 in Q4 2015.

Sale of Galaz

On 20 May 2015, we completed on the sale of our interests in the Galaz Contract Area to a consortium led by Xinjiang Zhundong Petroleum Technology Co., a Company listed on the Shenzhen Stock Exchange in China, for an aggregate consideration of $100 million.

The amount attributable to Roxi was some $23 million, less the agreed retention of $0.7 million for a period of 12 months to cover warranty claims individually greater than $50,000, which has now been received in full. Roxi plans to use the funds from the sale of the Galaz Contract Area to fund all of the planned development in 2015 at the Company's flagship asset BNG.

Additionally, as previously announced, under the terms of the 2008 acquisition of 59% of Eragon Petroleum PLC ("Eragon") from Baverstock, Roxi had an obligation to carry Baverstock for the first $100 million of costs on the Eragon assets (BNG, Galaz & Munaily). This obligation has now been fulfilled and the responsibility for further development funding for the Eragon (principally BNG) assets will be in the ratio 59:41 between Roxi and Baverstock.

Baverstock has agreed to use the$11 million proceeds attributable to Baverstock from the sale of Galaz to fund its work programme commitments at the BNG Contract Area.

Cancellation of BNG Royalty

In July 2015, following the end of the period under review, we announced the cancellation of the royalty payments on all future production from the BNG Contract Area in return for the issue of 46,661,654 fully paid ordinary shares then representing 5% of the enlarged issued ordinary share capital.

Background

Roxi acquired its interest in the BNG Contract Area in 2008 as part of Roxi's acquisition of 59% of Eragon Petroleum Limited ("Eragon').

In January 2009, Roxi entered into a farm-out agreement with Canamens Central Asia BV ("CCA") whereby CCA acquired a 35% stake in BNG from Roxi in return for a $7 million payment to Roxi plus a further $45 million to be paid towards existing BNG work programme commitments. 

In March 2011 Roxi announced that CCA had informed Roxi that it would be unable to pay the full amount due under the work programme commitments. On 11 May 2011 an agreement between Roxi and CCA was announced whereby for an initial payment by Roxi of $2.5 million plus a royalty in perpetuity of 1.5% of production revenues (calculated by reference to the wellhead price) (the "BNG Royalty") the 35% stake in BNG previously acquired by CCA was restored to Roxi.

Since that date the BNG Royalty agreement was assigned intra-group by CCA to Canamens Limited ("CL") and Sector Spesit IV, a sub-fund of Sector Umbrella Trust ("SS4"), which holds the benefit of the BNG Royalty as to 50% for itself, and 50% for SS4.

Details of the Cancellation Agreement

Under the Cancellation Agreement, CL and SS4 agreed to cancel and terminate in full their interests in the BNG Royalty in consideration of Roxi issuing to CL & SS4 46,661,654 new ordinary shares fully paid then representing 5% of the enlarged Roxi issued ordinary share capital. 

Completion of the Cancellation Agreement followed the completion of the Annual General Meeting of Roxi on 24 July 2015.

Parallel arrangements with Baverstock

Since January 2015, under the terms of the 2008 Eragon Acquisition Agreement, Roxi and Baverstock have been liable to fund all costs incurred in respect of BNG in the ratio 59:41, including the 1.5% royalty payment on BNG production revenue.

Accordingly, in consideration of Roxi issuing 46,661,654 ordinary shares to cancel the 1.5% royalty under the Cancellation Agreement, Roxi has entered into a parallel BNG Royalty Agreement with Baverstock, with effect from completion of the Cancellation Agreement.

Under the terms of this agreement Baverstock will pay to Roxi in perpetuity a royalty payment at the rate of 0.615% of the production revenues at BNG, being 41% of the 1.5% original BNG Royalty to reflect the interest in BNG attributable to Baverstock.

Impact on Roxi

Roxi's board believe the cancellation of the BNG Royalty is an excellent outcome for the Company as it removes a future uncapped liability, which may have affected the Company's ability to secure traditional debt funding and replaced it with a supportive institutional shareholders.

Other assets

Munaily

The Munaily field is located in the Atyrau Oblast approximately 70 kilometres southeast of the town of Kulsary. The field was discovered in the 1940s and produced from 12 reservoirs in the Cretaceous through to the Triassic. Roxi acquired 58.41 per cent interest of the 0.67 square kilometres rehabilitation block in 2008 and funded two wells and one well re-entry.

The field is capable of producing at the rate of 145 bopd (85 bopd net to Roxi).

It remains Roxi's intention to sell this asset when circumstances permit.

Beibars

Roxi acquired a 50 per cent interest in Beibars Munai LLP in 2007, which operates the 167 square kilometer Beibars Contract Area on the Caspian shoreline south of the city of Aktau. While acquiring 3D seismic in 2008, the license was put under Force Majeure when the acreage was allocated as a military exercise area (Polygon), by the Ministry of Defence. Since then no operations have been carried out, and Roxi operates a care and maintenance administrative budget on the project.

Once the access issue with the army is resolved the Company expects to seek farm-in partners to explore the Beibars Contract Area.

Operating in a low oil price environment

The current low price for oil has had a dramatic impact on the levels of exploration activity in the region and more generally across the smaller listed companies around the world.

Under Kazakh regulations oil produced during exploration or estimation phases of a licence must be sold at the Kazakh domestic price. For a while this remained static as the world price fell but during the period under review fell to the equivalent of $10 per barrel net to Roxi.

A consequence of this in Kazakhstan and more widely in the region is the absence of exploration activity. Our expectation is that by the next renewal of the BNG licence in 2018 there are likely to be only a small number of development projects of the size of BNG for the multinational and state owned oil companies to consider when looking to fill gaps in their production profiles. At that time and possibly before Roxi is likely to be an attractive solution to a shortage on new production for the larger companies.

A more immediate consequence is that the costs of hiring rigs and drilling crews have fallen significantly. Two years ago we were regularly quoted a minimum $15 million for a 5,000 meter well. We now expect to sign turnkey agreements to drill the new A6 and 802 deep wells for about half this amount per well.

The funding from the sale of Galaz, and the participation of Baverstock, should allow us to meet our work programme costs for the remainder of the 2015 drilling programme.

Kazakhstan

Compliance with regulations and status for new projects

Roxi is one of a limited number of publicly listed smaller companies operating in Kazakhstan. There are however a larger number of privately owned companies and operations of multinational and state controlled oil companies in the region.

Roxi, although listed on the AIM market of the London Stock Market, distinguishes itself from a number of international companies operating in Kazakhstan by the involvement of Kazakh's in all levels of its operations.

Of our66 staff 65 are Kazakh nationals. Additionally a majority of the Company's shares are held by Kazakh nationals. This high Kazakh involvement in the ownership and management of the Company assists us to operate effectively within what may otherwise appear a complex system of regulation and control.

Roxi is therefore well placed to bid for any new assets, which become available as the result of the failure of previous licence holders to meet their work commitment obligations.

Impact of the devaluation of the Kazakh Tenge

Following the period under review the Tenge devalued by 44% against the US$, the functional currency of Roxi and the currency in which all revenues and some costs are transacted. This follows a 20% devaluation in 2014.

Under prevailing international accounting rules the Company is obliged to write down the accounting value of its assets. In the financial statements for the year ended 31 December 2014 some $20 million was written off the value of the asset.

As the most recent devaluation occurred after the period end the accounting value of the Companies assets at 30 June 2015 has not been affected. However the financial statements for the year ended 31 December 2015 are likely to show a further $40 million write down assuming no further devaluations.

This is an adjustment the Roxi board believes has no commercial logic as a falling Tenge materially benefits Roxi. The majority of administrative costs incurred in Kazakhstan are incurred in Tenge. Additionally a proportion of the drilling programme costs are Tenge denominated. The impact of the recent devaluation is that these costs are now 44% lower than previously when compared to the Company's functional currency the US$.

Reserves

Current position

None of the work carried out at BNG since its acquisition in 2008 has been reflected in its stated reserves.

In January 2011, BNG engaged Gaffney Cline & Associates ("GCA") to undertake a technical audit of the BNG license area.

The work of GCA resulted in confirming total unrisked resources of 900 million barrels from 37 prospects and leads mapped from the 3D seismic work undertaken in 2009 and 2010. The report of GCA also confirmed risked resources of 202 million barrels as well as Most-Likely Contingent Resources of 13 million barrels on South Yelemes.

Independent reserve reports

Information has been supplied to the Kazakh authorities following drilling at the shallow wells, including Well 143, which Roxi's management expect to result in a significant increase in the certified state balances.

Additionally, following completion of testing at Deep Wells A5 and 801, work on an interim independent reserve report will commence with the intention of publishing the results in H1 2016.

This work will be updated following the completion of testing at planned Deep wells A6 and 801.

Results

The operating profit for the period of $19 million is largely derived from the $18.7 million profit on the sale of Galaz..

It was pleasing to note that the administrative costs for the period were broadly similar to the corresponding period in 2014, despite there being higher operational activity.This is a tribute to the management of the company in Kazakhstan and the impact of the Tenge devaluation.

Funding

The successful sale of Galaz together with income derived from BNG's shallow wells will provide the funding required to complete the existing drilling programme. Additional income is expected from the production hoped for from Deep Wells A5 and 801.

Relationship with Baverstock

Background

Baverstock GmbH, ("Baverstock") our partner across the Eragon assets (BNG, Galaz and Munaily), is a Swiss registered entity controlled by Kuat Oraziman, CEO of Roxi. Baverstock, which also has a small number of other Kazakh and Korean investors, was the first developer of the Eragon assets. Baverstock is also a 11% shareholder in Roxi.

In March 2008 Roxi paid $98 million via the issue of new Roxi shares at a price of 65p per share to Baverstock in return for 59% of Eragon and the obligation for Roxi to fund the first $100 million of Eragon asset work programme commitments.

As referred to elsewhere in this interim statement, in January 2015, Roxi satisfied the $100 million work programme contribution and from that date all further Eragon work programme commitments are to be funded in the ratio 59:41 Roxi : Baverstock.

The Board is of the view that it makes strategic sense for Roxi to seek to own 100 per cent of Eragon, which in turn owns 99 per cent of BNG, and is negotiating a potential purchase from Baverstock of its 41per cent interest in Eragon. Any purchase would be subject to regulatory approvals.

The principal benefit for Roxi shareholders would be that Roxi would be fully in control of the development of BNG and its future funding.

Further announcements will be made in due course.

Outlook

We look forward to announcing before the end of the year drilling results at both deep wells and at Well 143. Success at any one of these should materially improve the outlook for your Company.

Clive Carver

29 September 2015

Comments:

Clive Carver, Chairman, said

"2015 to date has been an active year with the sale of our interests in the Galaz Contract Area, the cancellation of the royalty payable on future production from BNG and the preparation for a merger with Baverstock.

Operationally we are pleased with the progress with both our deep wells and our shallow wells.

In Deep Wells A5 and 801 and Shallow Well 143 we have three exciting prospects, any one of which if proved would be a significant value enhancer."

Enquiries:

Roxi Petroleum PLC +7 727 375 0202

Clive Carver, Chairman

WH Ireland Limited +44 (0) 207 220 1666

James Joyce / James Bavister

Qualified Person

Mr. Nurlybek Ospanov, Roxi's senior geologist who is a member of the Society of Petroleum Engineers ("SPE"), has reviewed and approved the technical disclosures in this announcement.

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2015

For the six months ended 30 June 2014

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

This financial information was approved and authorised for issue by the Board of Directors on 29 September 2015and was signed on its behalf by:

CONSOLIDATED STATEMENTOF CASH FLOWS

NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION

1. STATUTORY ACCOUNTS

The interim financial results for the period ended 30 June 2014 are unaudited. The financial information contained within this report does not constitute statutory accounts as defined by Section 434(3) of the Companies Act 2006.

2. BASIS OF PREPARATION

Roxi Petroleum plc is registered and domiciled in England and Wales.

This interim financial information of the Company and its subsidiaries ("the Group") for the six months ended 30 June 2015has been prepared on a basis consistent with the accounting policies set out in the Group's consolidated annual financial statements for the year ended 31 December 2014. It has not been audited, does not include all of the information required for full annual financial statements, and should be read in conjunction with the Group's consolidated annual financial statements for the year ended 31 December 2014. The 2014annual report and accounts, which received an unqualified opinion from the auditors, did not draw attention to any matters by way of emphasis, and did not contain a statement under section 498 (2) or 498 (3) of the Companies Act 2006, have been filed with the Registrar of Companies. As permitted, the Group has chosen not to adopt IAS 34 'Interim Financial Reporting'.

The financial information is presented in US Dollars and has been prepared under the historical cost convention.

The same accounting policies, presentation and method of computation are followed in this consolidated financial information as were applied in the Group's latest annual financial statements.

In addition, the IASB has issued a number of IFRS and IFRIC amendments or interpretations since the last annual report was published. It is not expected that any of these will have a material impact on the Group.

Going Concern

The financial information has been prepared on a going concern basis based upon projected future cash flows and planned work programmes.

The expected receipts from the proceeds of the sale of Galaz are in the opinion of the Directors sufficient to cover operating costs associated with the day to day operation of the Company.

Additional funding would in the opinion of the Directors be available if required from the sale of oil produced during testing, further draw downs under the $40 million equity facility and if required by rescheduling various loans.

The Directors are confident, on the above basis, that the Group will have sufficient resources for its operational needs over the relevant period, being until September 2016. Accordingly, the Directors continue to adopt the going concern basis.

3. EARNINGS/(LOSS)PER SHARE

Basic earnings/(loss) per share is calculated by dividing the income/(loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year including shares to be issued.

In order to calculate diluted earnings/(loss) per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares according to IAS33. Dilutive potential ordinary shares include share options granted to employees and directors where the exercise price (adjusted according to IAS33) is less than the average market price of the Company's ordinary shares during the period.

The calculation of income/(loss) per share is based on:

* Including shares to be issued from the day the funds were received for such shares.

4. UNPROVEN OIL AND GAS ASSETS

During six months period ended June 30 2015 Company's oil and gas assets increased by US$1.1 million due to additions (2014: US$1.2 million).

5. INVESTMENT IN EQUITY ACCOUNTED JOINT VENTURE

The Company changed its accounting policy on joint ventures from 1 January 2014 following the introduction of IFRS 11 Joint arrangements which applies to the current year. The joint venture agreements and structures for Galaz and Company LLP provide the Company with interests in the net assets of Joint venture, rather than interests in its underlying assets and obligations. Accordingly, under IFRS 11, the group's share of joint venture have been accounted for using the equity method rather than proportionately consolidated, from the beginning of the earliest period presented.

On 10 February 2015 Galaz Energy BV entered into a SPA with Netherlands Sinian Investment BV ("SI BV") for the sale of its residual 58% interest in Galaz and Company LLP, Note 6. The transaction was finalized on 20 May, 2015.

Set out below is the summarised financial information for Galaz and Company LLP which was accounted for using the equity method up to 20 May, 2015 (amounts stated at 58% that represent Group's interest in Galaz and Company LLP).

Reconciliation of the summarized financial information presented to the carryingamount of the group's interest in the Galaz and Company LLP joint venture:

6. GALAZ DISPOSAL

On 10 February, 2015 Galaz Energy BV entered into a SPA with Netherlands Sinian Investment BV (part of consortium led by Xinjiang Zhundong Petroleum Technology Co., a Company listed on the Shenzhen Stock Exchange in China) for the sale of its 58% of the equity in Galaz and Company LLP for US$29.2 million.

This transaction completed on 20 May, 2015. Consequently as a result of the transaction Roxi lost its share in Galaz and Company LLP.

Up to the date of disposal, Galaz and Company LLP was treated as an investment in equity accounted joint venture.

The gain on disposal of Galaz and Company LLP was determined as follows:

1- the US$2.4 million release of cumulative translation reserves arose from the disposal of the Company's 34.22% net interest in Galaz and Company LLP to SI BV. This represents the previously capitalised translation losses attributed to the interest sold, now written off during 2015.

2- of the net US$28,266,000 purchase consideration US$3,829,280 was withheld by SI BV in order to pay withholding tax on the capital gain that arose in Galaz Energy BV. Purchase consideration in the amount of US$1,620,000 was received during 2014 and six months 2015. The residual part of purchase consideration net of capital gain tax, except for the retention amount, has been received in September 2015. As of June 30, 2015 the total outstanding amount under SPA is presented in other receivables line of Consolidated Statement of Financial Position.

7. CALLED UP SHARE CAPITAL

1On 8 January 2013 the Company secured an additional US$40 million equity investment from Kazakh investor Mr Kairat Satylganov. As at the reporting date US$29.2 million of the total consideration were received in respect of 244,670,973 ordinary shares.

8. BORROWINGS

(a) Short-term loans provided by Kazakhstan based borrowers and are repayable on demand. The Company agreed with the borrowers the loans are repayable in future once the Group companies reach free cash flows from oil sales.

(b) On 29 September 2011 the Company entered into the loan facility with Vertom International NV ("Vertom") whereby Vertom agreed to lend up to US$5 million to the Company with an associated interest of 12% per annum. The Company has offered Vertom security over its investments in its operating assets in respect to this loan facility. On 30 April 2012 the Group extended the term of the loan facility arrangement with Vertom for further two years to 30 April 2014 and at the same time increased the facility amount to US$7 million. On 28 June 2013 the term of the loan facility was extended until 30 April 2016.On 26June 2015 the term of the loan facility was extended until 30April 2018. The loan extension represents a substantial modification of the terms of the existing financial liability and has been accounted for as an extinguishment of the original financial liability and recognition of a new financial liability.

(c) The principal amount of US$1,428,000 represents an interest free loan from Mr Kuat Oraziman that is repayable on 27 June 2017. The carrying amount and fair value of the loan at 30June 2014 were not materially different.

9. SUBSEQUENT EVENTS

9.1 Future royalty liability

On July 24, 2015 the Company entered into an agreement with Canamens Limited and Sector Spesit IV to cancel future royalty payments due to them from production from Company's BNG asset in return for the issue of 46,661,654 fully paid Company's ordinary shares. That resulted to decrease in the derivative financial liability by US$2.2 million.

9.2 Options exercised

In July 2015 the Company's former employee exercised 500,000 share options at an exercise price of 4p.

9.3 Proceeds under Galaz SPA

On September 24, 2015 the Company received all proceed under Galaz SPA, except for the retention amount.

Company Information