REG - Caspian Sunrise plc - Review of Q1 2022

Caspian SunriseAnnouncement

07/04/2022 15:30

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RNS Number : 6953H  Caspian Sunrise plc  07 April 2022

 

Caspian Sunrise  PLC

("Caspian Sunrise" or the "Company")

 

Review of Q1 2022

Introduction

The Board of Caspian Sunrise is pleased to present a review of the first
quarter of 2022.

 

Civil unrest

The year began with the first significant instance of civil unrest for several
years.  In early January we were forced to suspend all operational activity
for a brief period. While this had only a small impact on the quantity of oil
produced it had a bigger impact at Well 142, which was at a crucial point and
will now need a further side-track before being brought back into production.

 

Russian sanctions

Our oil reaches the international market through the Russian oil pipeline
network. While we have not experienced any issues in transporting our oil
there has been an impact on the price at which the oil is sold, as all oil
emerging from the Russian pipeline network is termed Urals Oil and is now
subject to a $25 - $35 per barrel discount to Brent.

 

In the event the Russian pipeline network becomes unavailable to us or if the
discount for Urals Oil widens further we would look for alternative
distribution routes.

 

Debt conversion

On 9 March 2022, independent shareholders approved the conversion of
approximately $6.2 million of debt provided by the Oraziman family into new
shares.  This together with much improved operational cashflows has paved the
way for the Company's long held ambition of paying dividends.

 

Dividends

On 5 April 2022, we posted a circular to shareholders to convene a meeting to
consider resolutions required to be passed to allow dividends to start. If the
resolutions are carried at the general meeting scheduled for 22 April 2022,
and subsequently confirmed by the High Court, we would look to declare the
Company's first dividend in July 2022, as part of an ongoing quarterly
dividend programme.

 

Operations

 

BNG shallow structures

 

Production at the MJF structure continues to grow with production at the end
of March 2022 being approximately 2,142 bopd.

 

During the first quarter we worked on Well 142 and prepared for the drilling
of a horizontal well on the South Yelemes structure targeting oil in the
Sandstone, at a depth of approximately 2,430 meters.

 

BNG Deep structures

During Q1 2022, no significant work was undertaken at Deep Wells A5, A6, or
801.

 

At Deep Well A8, two intervals were perforated and while oil flowed following
both perforations it was not at commercial levels. We have therefore stopped
work at A8 and are moving the rig to drill the horizontal well planned for the
shallow South Yelemes structure.

 

Deep Well A7 was spudded in December 2022 with a planned total depth of 5,300
meters targeting oil in the Carboniferous and Devonian. By late March drilling
had reached a depth of 2,150 meters without incident. Drilling was then
paused, and the rig moved to drill new wells on the shallow MJF structure,
which we believe will have a faster impact on production levels and cashflows.
We plan to resume drilling at A7 at a later date.

 

In H2 2022 the final deep well required under the BNG work programme, Well
802, will be spudded. This well will also have a planned total depth of 5,300
meters and be targeting oil in the Carboniferous and Devonian.

 

Priorities at BNG

With oil prices high we are prioritising shallow well production over further
deep well drilling. Our target is to increase production from the current
2,300 bopd level to nearer 3,500 bopd and beyond as soon as possible.

 

The MJF structure has proved itself to be a reliable oil producer and now we
can again produce from the shallow structure South Yelemes we have adopted
this lower risk approach to making the most of the current situation.

 

We will continue to work to bring the existing deep wells into production,
with our focus now moving to Deep Well A5 at which we plan a further
side-track later in the year. However,  once all the 6 deep wells required
under the BNG work programme have been drilled we do not expect to any drill
further deep wells on the BNG structure without first bringing one or more
those already drilled into commercial production.

 

3A Best

We continue to work with the Kazakh authorities to renew the licence at
3A-Best.

 

Caspian Explorer

The Caspian Explorer has been the subject of serious interest from parties
looking to charter it in 2023 and in buying it outright. At the date of this
report however, that interest has not translated into any binding agreements.

 

 

Caspian Sunrise PLC

 

Clive Carver

Executive
Chairman
+7 727 375 0202

 

WH Ireland, Nominated Adviser & Broker

 

James
Joyce
+44 (0) 207 220 1666

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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