Caspian Subsidiary Aral Petroleum Recommences Production
VANCOUVER, BRITISH COLUMBIA--(Marketwired - June 20, 2016) - Caspian Energy Inc. (NEX:CKZ.H) ("Caspian") is pleased to announce that its wholly-owned operating subsidiary, Aral Petroleum Capital LLP ("Aral") has resumed oil production at the East Zhagabulak field in Kazakhstan. With three wells operating, Aral is producing oil at an average rate of 932 barrels per day.
Production was previously halted by Aral due to low prices of crude oil in the local and global markets. With recent increases in the price of crude oil, production has once again become cash flow positive for Aral. Further, the Kazakhstani government has also recently decreased custom duties on oil exports, giving local producers the ability to access global markets at more attractive prices.
During the month of May 2016, Aral sold its oil in the local Kazakhstani market at a price of US$12 per barrel. It has received government approval to commence exports in the month of June 2016 and entered into an agreement with a Swiss petroleum trading company to export its production to the Russian port of Ust'-luga. The maximum production allowed under Aral's government-approved work program is 143,250 barrels, and as of May 31, 2016, Aral had produced 32,828 barrels, leaving it with the ability to produce a further 110,422 barrels through the remainder of the year.
"The recommencement of production represents a significant development for Aral," said Michael Nobbs, Chairman of Caspian's board of directors. "If the sale prices for crude oil available to Aral are maintained or continue to increase, Aral will begin generating excess cash flow that can be deployed towards the business and/or its creditors. However, Aral continues to face claims and demands from its trade creditors, as discussed in previous announcements made by Caspian. If a creditor were to take action to seize or block access to Aral's bank accounts, Aral's ability to continue producing would be seriously jeopardized."
Caspian is an oil and gas exploration and development company, operating in Kazakhstan where it has a number of targets in the highly prospective Aktobe Oblast of Western Kazakhstan. The Company holds an exclusive licence, which entitles it to explore and develop certain oil and gas properties known as the "North Block," an area of 1,467 square km, and a production contract ("Production Contract") for the area known as "East Zhagabulak," through its interest in Aral. The Production Contract was entered into on July 28, 2010 with the Ministry of Energy and Mineral Resources of the Republic of Kazakhstan ("ROK") relating to the East Zhagabulak field (the "License Area") in the Aktobe oblast of the Republic of Kazakhstan. The Production Contract provides Aral with the exclusive right, over a 25 year term, to extract hydrocarbons from the License Area. Aral is obliged to carry out operations on the License Area in accordance with the requirements of the Production Contract, which, among other things, stipulates minimum levels of involvement for Kazakhstani personnel, the process for approval of work programs and the need to comply with environmental and other requirements. Pursuant to the Production Contract, Aral is obliged to sell at least 20% of its production to the ROK on an annual basis, and the ROK has the pre-emptive right to purchase hydrocarbons at below-market prices. In addition, Aral is required to spend certain amounts on local development and maintain a reserve remedial fund. The ROK has certain pre-emptive and other rights under the Production Contract, including the right to requisition the hydrocarbons in the License Area in certain circumstances.
This news release contains "forward-looking information" within the meaning of applicable Canadian securities legislation which we refer to herein, collectively, as "forward-looking information". Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate", or "believes" or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved" and include statements relating to planned production and export activities of Aral, its future cash flows and potential litigation. Caspian's actual performance, developments and/or results may differ materially from any or all of the forward-looking statements. Further information which may cause results to differ materially from those projected in the forward-looking statements is contained in Caspian's filings with Canadian securities regulatory authorities. All material assumptions used in making forward-looking information are based on management's knowledge of current business conditions and expectations of future business conditions and trends. Although Caspian believes the assumptions used to make such statements are reasonable at this time and has attempted to identify in its continuous disclosure documents important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. Caspian does not undertake to update any forward-looking information, except in accordance with applicable securities laws.
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FOR FURTHER INFORMATION PLEASE CONTACT:
Caspian Energy Inc.
Chairman of the Board of Directors