CALGARY, ALBERTA -- (Marketwired) -- 06/13/13 -- Caspian Energy Inc. ("Caspian") (TSX: CEK) is pleased to announce the signing of a number of agreements (the "Transaction Agreements") whereby its Kazakhstan subsidiary expects to be able to immediately implement the previously announced testing of certain wells based on the advice of outside consultant Mr. Roger Nutt (the "Nutt Plan") over two wells within the next 90 days. Pursuant to the Transaction Agreements, additional financing has been committed to Aral Petroleum Capital LLP ("APC"), a Kazakhstan partnership in which Caspian indirectly holds a 40% interest, to cover operating expenses, as well to Caspian to cover ongoing overhead and accounts payable. The financing will permit drilling which will allow APC to meet its 2013/14 License drilling commitments in the North Block.
The Transaction Agreements provide for the availability of a loan of US$20 million to APC for the purpose of funding APCs operations. It is intended that proceeds from this loan will, in part, be used to fund the work prescribed in the work program agreed with the Ministry of Oil and Gas in Kazakhstan. This work program 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.
APC has two existing wells for which testing has been approved and will commence imminently under with the Nutt Plan. Of particular note is well 316, which is to be tested first, and for which US$2 million of the above mentioned US$20 million loan has been allocated. All required approvals to test well 316 have been granted. Negotiations are underway with local contractors with a view to commencing testing in the very near future and a rig is currently available for this purpose.
The Transaction Agreements amend the loan agreement between Caspian's wholly-owned subsidiary, Caspian Energy Ltd. ("CEL"), and Asia Sixth Energy Resources Limited to allow CEL to draw US$100,000 each month from now until November and to draw an additional US$1,400,000 as early as December 28, 2013. These funds will enable Caspian to bring current all of its existing payable and to cover its budgeted operating expenses over the next 18 months.
In return for raising the financing contemplated in the Transaction Agreements, CEL's partners in APC, being Asia Sixth Energy Resources Limited ("ASER") and its subsidiary Groenzee B.V. ("Groenzee" and together with ASER, "CEL's Partners"), require CEL to transfer to them part of its ownership interest in APC resulting in CEL's interest in APC reducing from 40% to 33.5% provided CEL's Partners comply with their obligations under the Transaction Agreements.
"Clearly", Caspian Chairman and CEO William Ramsay commented, "this new arrangement places Caspian Energy Inc. 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. I would like to thank all our various stakeholders for their ongoing support as we enter this critical but exciting phase".
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