JKX.L Regulatory News (JKX)

27 Nov 2007 07:00

JKX Oil & Gas PLC27 November 2007 6 CAVENDISH SQUARE, LONDON W1G 0PD, ENGLAND, UK Tel: +44 (0)20 7323 4464 Fax: +44 (0)20 7323 5258 Web site: http://www.jkx.co.uk 27 November 2007 JKX Oil & Gas plc announces Completion of acquisition of Koshekhablskoye gas field, onshore Russia JKX Oil & Gas plc ("JKX") is pleased to announce completion of the acquisitionof 100 per cent of the southern Russian Koshekhablskoye gas field (the "Field").The conditional acquisition was announced on 24 July, 2007 and was subject to anumber of conditions precedent including consent from JKX's shareholders. Theseconditions have now all been satisfied. The acquisition was executed through wholly owned subsidiaries of JKX acquiring100 per cent of the Field's licensee, Yuzhgazenergie LLC ("YGE"). US$40 millionof the total cash consideration of US$50 million has been paid to the seller,Mostotal Investments Limited, subject to an adjustment for working capital andindebtedness. The balance of US$10 million is payable in two tranches (of US$8million and US$2 million respectively), and is scheduled for payment before theend of 2009, provided that a number of further conditions are satisfied. JKX isfunding the transaction from existing cash resources. Miller and Lents Ltd, independent oil and gas consultants engaged by JKX, hasestimated that remaining proved gas reserves in the Field are 114 billion cubicfeet ("Bcf") and proved plus probable gas reserves are 216 Bcf. JKX has nowadded these 2P reserves of approximately 36 million boe to its booked reserves,representing an increase of approximately 85% in JKX's proved plus probable oiland gas reserves. The conditions precedent referred to above represent key milestones ininitiating field rehabilitation and development. In addition to JKX shareholderapproval granted at the EGM of 3 September 2007, the other conditions precedentwere fulfilled by obtaining the following approvals from the relevant Russianauthorities: o Development Plan for rehabilitation, further appraisal and development of the Field; o Anti-monopoly approval for the transaction; o Mining Allotment Act to set the boundaries of the Field and to permit work to commence on the Field; and o Registration of Land Leases covering the Field. Further, in August, the Russian authorities conducted an inspection of thelicence and YGE's compliance with its terms and on 3 August 2007 issued an "Actof Inspection" concluding that the licence is in good standing. The initial activities of the Field rehabilitation and development are underway,including the design and sourcing of replacement processing facilities,logistics associated with mobilisation of the drilling rig to initiate workoverson existing wells, procurement of camp facilities and commissioning of a 3-Dseismic survey over the licence area. Suitable office facilities have beensourced in Maikop and Moscow. The project is scheduled to produce first gas inthe second quarter of 2008. JKX Oil & Gas plc is an exploration and production company listed on the LondonStock Exchange. The Company has licence interests in Ukraine, Russia, Georgia,Bulgaria, Turkey, Italy and the United States. ENDS For further information please contact: Dr Paul Davies / Bruce Burrows JKX Oil & Gas plc 020 7323 4464Anthony Cardew / Sofia Rehman Cardew Group 020 7930 0777 This information is provided by RNS The company news service from the London Stock Exchange