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Friday, 14 June 2013
Caspian Energy to test two wells after agreeing US$20mln loan
Caspian Energy (TSE:CEK) expects soon to test two existing wells and resume exploratory drilling in Kazakhstan after agreeing a new financial arrangement with its Chinese partner Asia Sixth.
Caspian indirectly holds a 40% Aral Petroleum Capital (APC), the Kazakhstan company that owns the North Block licence.
Under the new arrangement, APC will receive a loan of US$20mln, while Caspian itslelf will be able to draw US$100,000 per month until November to cover its expenses and also to borrow US$1.4mln at the end of 2013.
In return, Caspian will transfer part of its interest in APC to Asia Sixth, cutting its stake to 33.5%.
APC will commence testing on its two existing wells under the Nutt Plan within 90 days, Caspian said. Well 316 will be tested first and for which US$2mln of the new US$20 mln loan has been allocated, said the company.
All required approvals to test well 316 have been granted and negotiations are underway with local contractors over a rig to commenceg testing.
Proceeds from the US$20mln loan will also fund the work programme agreed with the Ministry of Oil and Gas in Kazakhstan.
This programme envisages the drilling of a deep exploration well in the Baktygaryn and Aransay area. As well, one shallow well is planned to be drilled in Itassay.
William Ramsay, Caspian’s chairman and chief executive, said the new arrangements had put the company in “a significantly stronger position.”
“With an improved balance sheet and new financing available for both capital expenditures and budgeted operating expenses for the next year, we will be able to return to our core business: exploring for oil.
“The North Block offers proven upsides, and we will now recommence those efforts by implementing the Nutt Plan over the next 90 days, and pursuing an exciting new well drilling program in 2013/14.”
Caspian added it also intends to appeal the decision of the Toronto Stock Exchange (TSX) to de-list its shares and plans to make an application for listing on NEX, subject to the outcome of its appeal to the TSX.
NEX is a separate board of TSX Venture Exchange that provides a trading forum for listed companies that have fallen below TSX Venture's ongoing listing standards.