Caspian Sunrise Regulatory News (CASP)

31 Jan 2008 15:40

Roxi Petroleum Plc31 January 2008 Roxi Petroleum PLC Proposed acquisition of 59% of Eragon Petroleum plc Approval of waiver of the obligation to make a mandatory offer under Rule 9 ofthe City Code on Takeovers and Mergers Application for Admission to AIMNotice of General Meeting Roxi Petroleum plc ("Roxi" or "the Company"), the Kazakhstan based oilexploration and development company, announces the publication of its admissiondocument and circular for the proposed acquisition of 59% of Eragon Petroleumplc ("Eragon") and the resumption of trading of its shares to the AIM Market ofthe London Stock Exchange. Roxi has conditionally acquired a 59% controlling interest in Eragon, theholding company for three exploration and production assets in WesternKazakhstan. Transaction highlights: O Roxi shares resume trading today O Acquisition of 59% of Eragon for US$190m O Option to acquire an associated asset for US$60m O Roxi issuing new ordinary shares at 65p per share as consideration O Following completion market capitalisation at 65p per share: £208.1m O Eragon assets include: o Three Contract Areas: BNG, Galaz and Munaily - in aggregate 1,453 km(2) o Located in the Pre Caspian and the Turgai basins - established petroleum provinces o Considerable exploration, development, and near term production potential: • BNG: 21 exploration leads • Galaz: Discovery with near term production potential • Munaily: Field rehabilitation O Following Admission and completion of the Eragon Acquisition, Roxi willhave controlling interests in three oil fields and two exploration blocks withclear potential for further development O Roxi also holds an option to acquire a 50 per cent. indirect interest inthe ADA Group for an aggregate consideration of US$425 million. The ADA Groupowns two exploration and production assets located in Western Kazakhstan. Theoption expires on 30 March 2008 with the right to extend O Roxi has signed a memorandum of understanding, ("MOU") with Vision FMSKorea Co. Ltd. ("FMS"), a Korean private company. Under the MOU, prior to thecompletion of the Eragon Acquisition, FMS intends to subscribe, subject to duediligence and regulatory approvals, an initial $25 million worth of Roxi sharesproposed to be satisfied by shares issuable in connection with the EragonAcquisition and the option to acquire an associated asset at a price of 70p pershare. In addition, subject to due diligence, FMS intends to subscribe for afurther $75 million of Roxi shares at a price of 90p, conditional on completionof the ADA acquisition. The Company will announce by 19 February 2008 whether ornot FMS have entered into a subscription agreement for the initial $25 millionRoxi shares O The Eragon Acquisition is a reverse takeover under the AIM Rules forwhich shareholder approval is sought at a general meeting on 29 February 2008. ADMISSION STATISTICS Number of Existing Ordinary Shares 168,207,490Number of Consideration Shares 145,000,000Price per share at which Consideration Shares issued 65pProject Management Shares issuable on Admission 6,923,077Number of Ordinary Shares on Admission 320,130,567Consideration Shares and Project Management Shares issuable on 47.46%Admission as a percentage of the Enlarged Share CapitalMarket capitalisation of the Company following Admission at the share £208.1mprice of the Consideration Shares Consulting Option Shares 24,000,000Consideration Shares, Project Management Shares issuable on Admission 51.12%and Consulting Option Shares as a percentage of the then issued sharecapital EXPECTED TIMETABLE OF PRINCIPAL EVENTS Despatch of the Admission Document and resumption of dealings in the 31 January 2008Existing Ordinary SharesLast time and date for receipt of proxy forms for the General Meeting 27 February 2008General Meeting 29 February 2008Completion of the Eragon Acquisition 3 March 2008Admission of the Enlarged Share Capital and dealings expected to 3 March 2008commence on AIMExpiry of exercise period of the ADA option 30 March 2008 Rob Schoonbrood, CEO of Roxi Petroleum plc commented, "Eragon and ADA are both significant opportunities for Roxi and itsshareholders. We believe the Eragon Acquisition will prove very valuable with significantgrowth potential from exploration and development and near term production. Thecombination of modern technology and the management team's skills and experiencewill enhance the value of the Company. Roxi is committed to working in Kazakhstan and in partnership with localbusiness interests and to develop relationships with international partners." 31 January 2007 Enquiries: Roxi Petroleum plc Rob Schoonbrood, CEO +7 727 244 0920 David Barker, COO +7 727 244 0920 College Hill (Financial PR) Paddy Blewer +44 (0) 20 7457 2020 Nick Elwes +44 (0) 20 7457 2020 WH Ireland (NOMAD and broker) James Joyce/David Porter +44 (0) 20 7220 1666 For details of the transaction, please see below. For the full admissiondocument, please visit the Company's website: www.roxipetroleum.com Introduction The Company was admitted to the AIM market on 22 May 2007 to pursue a strategyof building a diversified portfolio of oil and gas assets located in CentralAsia within three to five years. The acquisition of two principal assets hasbeen completed. The acquisition of the third principal asset, NorthKaramandybas, continues to be delayed pending the outcome of a legal challengeagainst the vendors' title and the approval of an extension to the SSUC. The Eragon Acquisition On 22 August 2007, your Board announced that the Company had conditionallyagreed to acquire a 59 per cent. controlling interest in Eragon, the holdingcompany for three exploration and production assets located in WesternKazakhstan, for a consideration of US$190 million, together with an option toacquire associated assets for US$60 million. The Eragon Acquisition gives the Company a five-fold increase in exploration anddevelopment acreage. The inclusion of another unappraised discovery means thatthe Company is in a strong position to achieve its goal of bringing a number offields into production in the near future. This broad acreage base also meansthat the Company is better positioned to increase its reserve base through theeffective management of risk in a diversified number of exploration plays. The Eragon Acquisition follows the Company's strategy of acquiring furtherassets located in Central Asia. On completion of the Eragon Acquisition, theCompany's management will have operational and financial control of theseadditional three oil and gas assets. The Eragon Assets The Eragon Assets comprise the BNG Contract Area, the Galaz Contract Area, andthe Munaily Contract Area, cover approximately 1,453 km(2). The BNG Contract Area The BNG Contract Area covers an area of over 1,422 km2 and is locatedapproximately 40 km from the Tengiz oilfield in the Pre-Caspian basin of WestKazakhstan. The BNG Contract Area is adjacent to numerous producing fields ordiscoveries under appraisal. The BNG Contract Area is considered by the Directors to be highly prospective inboth the Jurassic sandstone at depths of 2,500-3,000m and in the pre-saltCarboniferous sandstones and carbonates at depths of 4,000-5,000m. Explorationin this area since the 1980s has resulted in the development of several Jurassicdiscoveries in the surrounding acreage. Earlier evaluations included in theKazakhstan state tender information for the BNG Contract Area, predicted that upto 700mmbbls (95MMtons) of oil may be trapped on the block. The BNG ContractArea is an exploration block and no reserves have been assigned to it. However,to date the Company has identified 21 leads and prospects from the existing dataacquired through technical due diligence. BNG plans to carry out a four toeight year exploration programme from 2007, which will include collection andevaluation of existing data in 2008, followed by exploration 2D and 3D Seismicin 2008-2009, prior to exploration drilling in 2010-2015. Proposed extension to the BNG Contract Area The Company has acquired an option to extend the BNG Contract Area for $60million. The proposed extension of the BNG Contract Area has been identified asbeing a continuation of the existing exploration trends in the block and coversan area of approximately 139km2. The proposed extension contains two Jurassicand two Pre-salt prospects which the Directors consider excellent explorationpotential. The extension to the BNG Contract Area will help to consolidate theexploration strategy in the BNG Contract Area and in the opinion of theDirectors significantly increases the potential for early exploration success,the addition of reserves and early trial production. The Galaz Contract Area The Galaz Contract Area is located in the Turgai Basin, covers approximately30km2 and is located approximately 120 km north of Kyzylorda in the heart of thepetroleum producing fields of that region. The Galaz Contract Area contains theNW Konys field which was discovered in 1992 directly north west of the Konusfield. Four wells were drilled on the Galaz Contract Area in the early 1990s, withthree delineating the oil-water-contact and one well drilled higher on thestructure tested at rates of up to 70m3/d (440bopd). however, the field wasnever developed. Well 27 has been tested and has pumped paraffinic 40(o) API oilon test, from 8m of net Jurassic sands. Well 27 produced at rates up to 310 bopdfrom a depth of approximately 1310m (measured depth) for a period of one month. Indications of an oil accumulation in the Lower Cretaceous Neocomaniansandstones were encountered in well 29, which needs to be confirmed with furtherdrilling. Both reservoirs are producing in surrounding fields. Galaz hasrecently recommenced work-over operations on the field, on wells 27 and 26, totest the Jurassic reservoir. A Kazakh Institute report estimates that there are currently 12.5mmbbls of C2reserves on the NW Konys field. A recalculation of reserves has been carried outto SPE standards. Proven, probable and possible reserves of 7.9mmbbls aredetailed in the Competent Persons Report. The Company intends to shoot a 3D seismic survey over the field in 2008 toconfirm the structure and reservoir distribution and also to commence appraisal/development drilling. The Munaily Contract Area The Munaily Contract Area covers 0.69 km2 and lies approximately 60km southeastof the town of Kulsary in Atyrau oblast. The Munaily field was first discoveredin 1946. By 2002 the field had produced a cumulative of 10mmbbls of 24(o) to 41(o) API oil, from 11 shallow Cretaceous, Jurassic and Triassic aged sandsbetween 500m and 1650m. The Munaily SSUC was acquired specifically to evaluate and rehabilitate thefield. Unproduced Cretaceous and Jurassic sands are targeted for exploration andappraisal. The Company plans to complete the existing drilling and work-overprogramme and to re-evaluate the potential of the field. Acquisition of Ada Group On 4 October 2007, your Board announced the purchase, for a consideration ofUS$2 million, of an option to acquire a 50 per cent. indirect interest in theADA Group, which owns a further two exploration and production assets located inWestern Kazakhstan, for an aggregate consideration of US$425 million. Thisoption is exercisable on or before 30 March 2008. If Roxi exercises the option, pursuant to the ADA Option Agreement, the ADAGroup Acquisition would also constitute a reverse takeover of the Company underthe AIM Rules and would fall within the ambit of Rule 9 of the Takeover Code.Therefore, the ADA Completion would be conditional upon, inter alia, publicationof an admission document on the further enlarged Company, obtaining a Rule 9waiver from the Takeover Panel, and approval of the ADA Group Acquisition by theShareholders in a further general meeting. At present Shareholder approval is sought only for the Eragon Acquisition.Shareholder approval of the ADA Group Acquisition is not being sought. Shouldthe Company wish to exercise the option in respect of the ADA Group Acquisition,the Company will at that time publish a further admission document to provideany updated details on the ADA Group Acquisition and to call a general meetingto seek Shareholder approval at that time for the ADA Group Acquisition. Reverse Takeover The Eragon Acquisition will constitute a reverse takeover under the AIM Rulesand also falls within the ambit of Rule 9 of the Takeover Code. Accordingly,completion of the Eragon Acquisition is conditional upon, inter alia, thepublication of an admission document on the Enlarged Group, obtaining a Rule 9waiver from the Takeover Panel, and approval of the Eragon Acquisition byShareholders, which is being sought at the General Meeting, notice of which isset out at the end of this document. City Code on Takeovers and Mergers The terms of the Eragon Acquisition give rise to certain considerations underthe Takeover Code, and the proposed acquisition requires the approval of awaiver of the obligation to make a mandatory offer under Rule 9 of the CityCode. Further details are set out in the Chairman's letter in the Admission Document. Related Party Transactions, Section 320 of the 1985 Act and Section 190 of the2006 Act The Eragon Acquisition comprises certain related party transactions under theAIM Rules. In particular, the following agreements constitute related partytransaction because Mr Oraziman a, Director, is a related party (the "RelatedParty"): Eragon Acquisition Agreement - the Related Party has a beneficial interest in42.5 per cent. of the issued capital of Baverstock (the vendor of the 59 percent. interest in Eragon under the Eragon Acquisition Agreement as detailed inparagraph 12.7 (b) of Part VI of the Admission Document). Consulting Services Agreement - the Related Party is a director of and holds 50per cent of the issued share capital of Vertom (the provider of consultingservices under the Consulting Services Agreement as detailed in paragraph 12.7dof Part VI of the Admission Document). Facilitation Agreement - the Related Party is a director of and holds 50 percent. of the issued share capital of Vertom (the party to the FacilitationAgreement as detailed in paragraph 12.14 of Part VI of the Admission Document). Baverstock Deed - the Related Party has a beneficial interest in 42.5 per cent.of the issued capital of Baverstock (the party to the Baverstock Deed asdetailed in paragraph 12.16(c) of Part VI of the Admission Document) relating tothe placing by the Company of Consideration Shares on behalf of Baverstock). Vertom Deed -the Related Party is a director of and holds 50 per cent. of theissued capital of Vertom (the party to the Vertom Deed as detailed in paragraph12.16(d) of the Admission Document relating to the placing by the Company ofConsulting Option Shares on behalf of Vertom). The Independent Directors consider, having consulted with WH Ireland, that theterms of each of the Eragon Acquisition Agreement, the Consulting ServicesAgreement, the Facilitation Agreement, the proposed Baverstock Deed and theproposed Vertom Deed are fair and reasonable in so far as the Shareholders areconcerned. Furthermore, by reason of the relationships that the Related Party has, as setout above, section 320 of the 1985 Act and/or section 190 of the 2006 Act(depending on the date on which the relevant agreement was entered into) willalso apply to the following transactions, each of which transactions representsa substantial property transaction with the Company: 1. the Eragon Acquisition; and 2. the entry into the Consulting Services Agreement. Further details of the above agreements are set out in paragraph 12 of Part VIof the admission document. Directors and senior management incentives Subject to the completion of the Eragon Acquisition and ADA Group Acquisition,additional options will be issued to the members of the Company's board andsenior management team on a pro rata basis to the options they already hold withexercise prices equal to the prices at which new Ordinary Shares will be issuedin connection with these acquisitions. These additional options will be issuedunder the new 2008 Scheme. The vesting of a proportion of the additional options will be conditional uponreaching agreed daily production levels from these assets. General Meeting You will find set out at the end of the Admission document a notice conveningthe General Meeting of the Company to be held at 11 .00 a.m. on 29 February 2008at College Hill Associates Limited, The Registry, Royal Mint Court, London EC3N4QN to consider and, if thought fit, approving the following resolutions: 1. Resolution 1 is an ordinary resolution to approve the Eragon Acquisition for the purposes of the AIM Rules and to approve the 2008 Scheme; 2. Resolution 2 is an ordinary resolution to approve certain aspects of the Eragon Acquisition for the purposes of section 320 of the 1985 Act and/or section 190 of the 2006 Act; 3. Resolution 3 is an ordinary resolution to approve the Waiver; 4. Resolution 4 is an ordinary resolution to authorise the directors of the Company under section 80 of the 1985 Act to allot relevant securities up to an aggregate nominal amount of £36,379,378 and; 5. Resolution 5 is a special resolution to disapply statutory pre-emption rights in respect of equity securities up to an aggregate nominal amount of £36,379,378. In accordance with the requirements of the Panel, Resolution 3 to approve theWaiver will be taken on a poll of Independent Shareholders. Directors' Intentions No Independent Directors or persons connected with them are holders of OrdinaryShares. Action to be Taken A Form of Proxy is enclosed in the Admission Document for use at the GeneralMeeting. Whether or not you intend to attend the General Meeting, you arerequested to complete, sign and return the Form of Proxy to the Company'sregistrars Capita Registrars, The Registry, 34 Beckenham Road, Beckenham, KentBR3 4TU by no later than 11 .00 a.m. on 27 February 2008. The completion andreturn of a Form of Proxy will not preclude you from attending the GeneralMeeting and voting in person should you subsequently wish to do so. Recommendation The Independent Directors, who have been so advised by WH Ireland, consider theProposals to be fair and reasonable and in the best interests of the Company andthe Shareholders as a whole and fair and reasonable as far as IndependentShareholders are concerned. Mr. Oraziman does not express an opinion due to aconflict of interest arising from his interest, in Baverstock and Vertom asdescribed above. In providing advice to the Independent Directors, WH Irelandhas taken into account the Independent Directors' commercial assessments. Accordingly: 1. the Independent Directors unanimously recommend the Shareholders to vote in favour of Resolutions 1 and 2; and 2. the Directors unanimously recommend the Shareholders to vote in favour of Resolutions 3 to 5 (inclusive). The terms defined in this announcement have the same meaning as defined in theAdmission Document. The Admission Document is available at www.roxipetroleum.com This information is provided by RNS The company news service from the London Stock Exchange