There’s been an awful lot written about poor old Roxi lately and most of it has been wide of the mark. The aim of Roxi Petroleum is to monetize proven undeveloped discoveries using modern technology and drilling techniques and to work with local partners who are already established in Kazakhstan and the territories in which Roxi wish to operate. Roxi is focused on developing these assets against the backdrop of an improving financial position. And I might add an increasing oil price. This is the Rationale behind the company.
The recent hiccup on NK20/Elmes although a disappointment has been over-played by investors and the CEO Wilkes commented thus:
Although the results of NK20 are less favourable than NK 22, both wells indicate encouraging potential for the newly extended area for Galaz.
We will now continue to focus on the development of NW Konys to achieve early production from the existing wells drilled in 2009, following receipt of the final permits, as well as evaluate the new production well locations as part of the next phase.
Galaz and Company LLP
Galaz has received confirmation from the Ministry of Oil and Gas that it will receive a two-year extension to the Subsoil User Contract for the NW Konys Contract Area. The addendum to the contract and work programme will be finalised with the Ministry Working Committee over the next sixty days.
This extension period will allow continued appraisal of NW Konys field during Pilot Production and the exploration of the North Konys structure in the Area Extension announced on 12 January 2011.
It is now estimated that Galaz will receive all permits and approvals to start pilot production in H2 2011. Following completion of the SSUC amendment, Galaz will apply for Pilot Production consent for the extension period. Upon receipt of all emissions and production permits, production will begin immediately from the available wells, which have individual facilities. Tendering for camp, pilot production facilities, and the first stage, development drilling campaign will commence after completion of the extension award.
It’s nailed on here that Roxi are going into production and I expect the sp to begin to rise once again into double figures. The catalysts for this will be confirmation from the city of an institutional buy in on the back of the Canamens debacle. Further proving up of the Roxi assets and first production. with permits issued in full. All of which will happen in good time.
All looked to be back on track until the strategic review from Canamens froze their stake to 28.75%. As a consequence Roxi’s stake in the BNG contract area will increase to 29.66%. Now this could turn out to be a silver lining.
The thoughts from the city are that the funding issue should be finalised in the near future. I don’t personally see any demons here. And remember oil exploration is three steps forward two steps back they have traded in excess of 13p! Currently way down and off the investor radar.
In the short term Canamens’ decision not to advance the funds for BNG will have little operational impact as most of the seismic acquisition and processing work has been completed and the publication of an audited portfolio of BNG prospectivity is expected in Q2 2011.
***Clearly the longer term development of the BNG asset will require additional funding. Roxi together with Baverstock, who between them would own some 70.25 per cent of the BNG asset will, in due course, seek to raise additional funding from industry sources.***
They will shortly no doubt be back on track and an immediate 10p target should be set on good news there’s up to 100% upside here as confidence begins to return. Investors should keep faith there’s good news in the pipe-line!