Caspian Sunrise: Raises £1m From New Placement – Acidization For Deep Wells Planned For August

Caspian Sunrise, the Central Asian oil and gas company with a focus on Kazakhstan, is pleased to announce that it has raised £1 million through the placing (“Placing”) of 36,363,629 new ordinary shares (“Placing Shares”) in the capital of the Company to new and existing investors at an issue price of 2.75 pence per share (“Placing Price”), representing approximately 16.2% discount to closing mid-price on 4 August 2020.

Background and use of proceeds

As set out more fully in the Company’s 2019 Financial Statements, the combined impact of an already tight working capital position following the switch up to export status at the MJF structure in 2019, and the impact of the measures taken to combat the Covid-19 virus, had an inevitable impact on short term cashflows resulting in an abnormal build-up of trade creditors.

The funds raised by this small placing for cash, only the Company’s second since our IPO in 2007, allows the trade creditor position to be brought into balance and we do not expect to need to raise similar funding for at least the rest of the current financial year and probably not at all.

The new funding also helps avoid the need to cut back on exploration and development activities.

General update

Since the date of the publication of the 2019 Financial Statements the Brent Oil price has continued to strengthen and now in the mid $40‘s per barrel is now nearly three times greater than the lows experienced in April 2020.

While the domestic price for sales to the Atyrau refinery remains extremely low by historic standards we continue to pay down amounts owed to local oil traders from production deliveries allocated to the domestic market.

On the production front we are nearing total depth at New Well 151 and expect production from that well to commence in August 2020.  We also expect the four South Yelemes shallow wells to be able to resume production once that structure is granted export production status.

Also, after many weeks of logistical delays getting the specialist acid for the proposed deep well treatments through closed international borders it has now arrived in Kazakhstan, ready for delivery to BNG immediately before its planned use.  We therefore plan to start acidization work at each of the four deep wells in August 2020.

Success with any of the four deep wells is expected to materially increase the aggregate production from the BNG Contract Area, and although it would be sold at domestic prices it should allow a greater proportion of our MJF production to be sold by reference to international prices, materially improving our monthly revenues.

While our plans both operational and financial depend on events and world prices we believe the worst of the impact of the Covid-19 virus to be behind us and look forward to continuing to work to increase production, and in particular that element of production eligible to be sold by reference to international prices.

Funding Details

The Company entered into a placing agreement (“Placing Agreement”) with WH Ireland pursuant to which terms WH Ireland agreed to arrange the Placing. The Company has given certain customary warranties and indemnities under the Placing Agreement in favour of WH Ireland. Completion of the Placing is subject to the satisfaction of the conditions contained in the Placing Agreement including, but not limited to, Admission.

Your attention is drawn to the detailed terms and conditions of the Placing set out in the Appendix to this Announcement (which forms part of this Announcement).

The Appendix to this Announcement contains the detailed terms and conditions of the Placing and the basis on which investors agreed to participate in the Placing. The Placing has not been underwritten by WH Ireland. Placees are deemed to have read and understood this Announcement in its entirety, including the Appendix, and to have made their offer on the terms and subject to the conditions contained herein and to have given the representations, warranties, undertakings and acknowledgements contained in the Appendix to this Announcement.

The Placing Shares will be issued, credited as fully paid, and will rank pari passu with the existing Ordinary Shares in issue in the capital of the Company, including the right to receive all dividends and other distributions (if any) declared, made or paid on or in respect of such shares after the date of their issue.

Admission and Settlement

Application will be made for the admission to trading on the AIM market (“AIM”) of London Stock Exchange plc (“LSE”) (“Admission”). Admission is expected to occur on or around 12 August 2020. Following Admission, the Company will have 1,927,963,084 Ordinary Shares in issue. There are no shares held in treasury. The total voting rights in the Company is therefore 1,927,963,084 and Shareholders may use this figure as the denominator by which they are required to notify their interest in, or change to their interest in, the Company under the Disclosure Guidance and Transparency Rules.