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Xinjiang Zhundong-led group eyes USD 100m Galaz acquisition onshore Kazakhstan

08th January 2015

Xinjiang Zhundong Petroleum Technology company has announced that it is leading a consortium seeking to acquire 100 per cent of the equity and associated debt of the Galaz Contract Area onshore Kazakhstan 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 USD 100m

Xinjiang Zhundong Petroleum Technology company has announced that it is leading a consortium seeking to acquire 100 per cent of the equity and associated debt of the Galaz Contract Area onshore Kazakhstan 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 USD 100m
he contract area was extended on 10 January 2011 to 179 square kilometres and now includes significant exploration upside on the east side of the Karatau fault system, as well as the NW Konys development

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.

The principal shareholders in Galaz are LGI (40 per cent), the Korean multinational, Roxi Petroleum (34.22 per cent) and Baverstock (23.78 per cent).

Of the USD 100m disclosed approximately USD 50.4m relates to the equity of Galaz & Co LLP, and approximately USD 49.6m relates to the assumption of shareholder loans owed by Galaz & Co LLP.

The Galaz block is located in the Kyzylorda Oblast in central Kazakhstan. The contract area was extended on 10 January 2011 to 179 square kilometres and now includes significant exploration upside on the east side of the Karatau fault system, as well as the NW Konys development.

Pilot production commenced on 19 January 2012 following approval of the NW Konys Pilot Production Plan from the ministry of oil and gas, with emissions and flaring permits received from the relevant authorities.

Since 2008 17 wells have been drilled at Galaz, a significant number of which are or indicate they will be commercial.

Wells NK-3, NK-5, NK-7, NK-8, and NK-9 are on extended test producing in aggregate 1,000 bopd on average.

Additionally, wells NK-4, NK6, NK-12 and NK-31 are being prepared to commence test production.

"For some time we have made it clear that while we are very pleased with our investment at Galaz we view the opportunities at our flagship BNG asset to be greater,” said Clive Carver, chairman of Roxi Petroleum.

Roxi intends to use its share of any funds created by the sale to boost its development of its operated BNG Contract Area, also in Kazakhstan.

“The proposed sale our interest in Galaz on the terms disclosed would fund the bulk of what we have planned this year at BNG."

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