Roxi Announce Proposed Sale of the Galaz Contract Area

Roxi Announce Proposed Sale of the Galaz Contract Area

Roxi, the Central Asian oil and gas company with a focus on Kazakhstan, is pleased to update the market with news of the Galaz Contract Area in which it holds an interest of 34.22 per cent.

Roxi notes the announcement made by Xinjiang Zhundong Petroleum Technology Co., (“Xinjiang Zhundong”) a Company listed on the Shenzhen Stock Exchange in China, in connection with the potential acquisition of 100% of the Galaz Contract Area (“Galaz”) for an aggregate consideration of up to $100 million including the assumption of debt and for which it has been granted an exclusivity period to 31 January 2015.

Roxi is pleased to confirm that although there is no certainty that a sale will be concluded on the terms disclosed, it has entered into a non-binding heads of terms and is working with Xinjiang Zhundong and the other shareholders in Galaz to complete the sale of Galaz on the terms disclosed below and expects to make a further announcement once all the relevant legally binding agreements have been entered into.
Principal disclosed terms

Xinjiang Zhundong announced that it is leading a consortium seeking to acquire 100% of the equity and associated debt of Galaz by the acquisition of the Kazakh entity Galaz & Co LLP that holds the licence for the Galaz Contract Area for an aggregate consideration of no more than $100 million.

The proposal is subject to due diligence and on the signing of binding documentation and would be conditional on approval of both Kazakh and Chinese regulatory authorities.

Impact on Roxi

Of the $100 million disclosed approximately $50.4m relates to the equity of Galaz & Co LLP, in which Roxi has a 34.22% interest and approximately $49.6m relates to the assumption of shareholder loans owed by Galaz & Co LLP, of which approximately $11.3 million is owed to Roxi.

In aggregate the share of the $100 million disclosed attributable to Roxi is expected to be some $28 million.

Under the terms of the 2008 acquisition of 59% of Eragon Petroleum PLC (“Eragon”) from Baverstock GmbH (“Baverstock”), Roxi has an obligation to carry Baverstock for the first $100 million of costs on the Eragon assets (BNG, Galaz & Munaily). This obligation has almost been fulfilled. Therefore the proceeds attributable to Baverstock, which would be an additional $12 million, would also be available for the development of the BNG Contract Area.

Including the contribution from Baverstock the proposed proceeds from the sale of Galaz on the terms announced by Xinjiang Zhundong would fund at least four deep wells at BNG.

Source: Roxi

Oil and Gas Press