REG - Caspian Sunrise plc - AGM Statement

Caspian SunriseAnnouncement

30/06/2023 07:00

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RNS Number : 4580E  Caspian Sunrise plc  30 June 2023

 

Caspian Sunrise PLC

 

("Caspian Sunrise", or the "Company")

 

AGM Statement

 

Update on the timing of the publication of the 2022 financial statements; the
impact of  sanctions; and dividends

 

 

Ahead of its  AGM today the Company provides the following update.

 

Publication of the audited 2022 Financial Statements

The Board expects to approve its financial statements for the year ended 31
December 2022 in the first week of July.

 

AIM Rule 19 re-quires that audited ac-counts are pre-pared within six months
of the year end. Therefore, in the event they are not signed and published by
Monday 3 July 2023 the Company expects trading in its shares would be
temporarily suspended from 7.30am on 3 July 2023 until publication.

 

While we cannot refer to any financial numbers to be included in these
financial statements we are able to confirm that 792,284 barrels of oil were
produced in 2022, some 48% more than in 2021 and a company record.

 

Ukraine war

The two principal consequences of the Ukraine war have been to make
international sales uneconomic at the current time and to make operating far
more difficult.

 

Urals oil discount

Despite the UK and the EU specifically exempting oil produced in Kazakhstan
and transported through the Russian pipeline network being free from
sanctions, the large discounts for oil using the Russian pipeline network and
emerging as Urals Oil continues with no sign of lessening.

 

We have explored various alternatives to transport our oil but have yet to
find a solution that would allow us to sell at or close to international
prices. We are therefore selling all our oil on the domestic market at
domestic prices.

 

Selling to the domestic market and to domestic mini refineries does have
advantages, such as speed of payment and the absence of significant deductions
for tax, oil treatment and transportation. Nevertheless, we estimate the loss
of revenue to be running at an annualised rate of approximately $18 million
based on current production volumes.

 

For much of the period under review and subsequently our inability to sell on
the international markets also led to missed profits. However, the recent fall
in international oil prices means we are currently achieving broadly the same
net outcome by selling to local mini refineries where the deductions to the
headline price are much lower, as we would by selling on the international
markets.

 

Operations

Before the Ukraine war the majority of international supplies and consumables
were sourced via Russia.  Now they typically come from China, a vast country
whose border with Kazakhstan is some 3,000 kilometers from the BNG Contract
Area and where the originating destination is usually far further.

 

The extra distance involved and the complexities of this new supply route with
long delays at the border has typically resulted in much greater lead times
for key supplies and consumables resulting in some significant operational
delays. It has also required a much greater investment in working capital as
these supplies and consumables have to be paid for many months earlier than
previously.

 

Drilling at certain key wells was paused waiting for key parts and supplies
with crews shifting from project to project. The overall impact is that, while
progress has been made across a number of wells, it has not been possible to
complete the work at any to increase production to the levels expected.

 

Dividends

The financial backdrop to the board's consideration of dividends in the
immediate future includes:

 

·    We continue to forego approximately $18 million revenue each year
based on current production levels as the result of the continuing discount
for oil sent through the Russian pipeline network

·    Sourcing all key drilling consumables via China has significantly
delayed operations and increased costs

·    As a result of the operational interruptions, we are yet to increase
daily production beyond the current 2,000 bopd

·    We have yet to receive the $22.5 million proceeds from the
conditional sale of 50% of the holding company for the Caspian Explorer.

 

Accordingly, and with reluctance, the board has decided to suspend further
dividend payments until either the end of the year or following a significant
increase in production from Wells 141, 142 or 802 or the receipt of the $22.5
million proceeds from the sale of 50% of the Caspian Explorer.

 

The 2022 financial statements when published will include a detailed overview
of our assets, progress in the year and subsequently and our views on the
future which remain very positive.

 

Contacts:

 

Caspian Sunrise PLC

 

Clive Carver,
Chairman
+7 727 375 0202

 

WH Ireland, Nominated Adviser & Broker

 

James
Joyce
+44 (0) 207 220 1666

James Bavister

Andrew de Andrade

 

Qualified person

 

Mr. Assylbek Umbetov, a member Association of Petroleum Engineers, has
reviewed and approved the technical disclosures in this announcement.

 

This announcement has been posted to:

www.caspiansunrise.com/investors (http://www.caspiansunrise.com/investors)

 

The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. The information
is disclosed in accordance with the Company's obligations under Article 17 of
the UK MAR. Upon the publication of this announcement, this inside information
is now considered to be in the public domain.

 

 

 

 

 

 

 

 

 

 

 

 

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