Roxi Petroleum secures US$20 million investment as second deep well makes good progress

By Amy McLellan

Roxi Petroleum has secured more investment, with a subsidiary of Chinese industrial group Bright Oceans Corp subscribing to more than 75 million shares priced at 18 pence per share, a premium of 16 per cent. This US$20 million subscription, which will give the Chinese company BOCO more than 7.8 per cent of the enlarged share capital, is another sign of growing confidence in AIM-quoted Roxi as it pursues the deep prospects on its flagship BNG licence in Kazakhstan.

Roxi has a 58.41 per cent stake in the BNG licence in the west of Kazakhstan, where the company is drilling ahead with Deep Well 801. This US$11 million well spudded in December and is drilling towards a target of 4,950 metres to test the Lower Carboniferous. The well has now passed through the salt layer without incident and has reached a depth of 4,095 metres in the Lower Permian. Importantly, this well has avoided the long running technical issues that troubled its first deep well.

That well, Deep Well A5, some 8 km away from Deep Well 801, remains stuck, with the company now seeking to bring in specialist equipment to clear the blockage in the deep well. The A5 well is also targeting the Lower Carboniferous.

Chairman Clive Carver said the company was delighted with this significant investment. “In the current market security of funding is more important than ever,” said Carver. “Those with access to funding are able to develop their assets more cheaply than in recent years. Those without access to funding are stuck.”

He continued: “The funds from the BOCO subscription together the with the proceeds from the forthcoming completion of the sale of Galaz will provide an additional US$50 million and allow the pace of development at BNG to be accelerated at a time when the cost of drilling is falling.”

Carver was referring to news in February that Roxi had sold its stake in the Galaz Contract Area for up to US$100 million. The AIM-quoted company has received the all important consent of the Kazakh authorities to complete the sale. Once the purchaser has been cleared by the Kazakh monopolies authority, the completion of the sale of Galaz is set to proceed as planned and on time.

Under the terms of the most recent transaction, Hong Kong-based BOCO will be able to appoint a non-executive director to the Board of Roxi.