LONDON: Caspian Sunrise PLC is set to selling its MJF and South Yelemes structures within the BNG Contract Area to Absolute Resources LLP for $83 million.
The exclusivity agreement, valid until 8 August 2024, could lead to a conditional sale and purchase agreement subject to regulatory and shareholder approval.
The proposed sale would not include the deep structures at BNG, which the Board deems more valuable. This strategic move aligns with Caspian Sunrise’s focus on leveraging its competitive edge in project acquisition over the operation of maturing assets.
The MJF structure, a significant contributor to the Group’s development funds since 2016, and the South Yelemes structure, operational since the Soviet era, collectively represent the majority of BNG’s shallow structure output.
The deal terms suggest Absolute Resources will establish a new entity to hold the shallow structure licenses, with the sale price adjusted for approximately $15-17 million in Historic Costs. Upon completion, Absolute Resources will assume operational control.
This disposal is part of Caspian Sunrise’s broader strategy to reallocate resources and enhance shareholder value, especially as new production from Block 8 and West Shalva is anticipated later this year. The Board believes the funds from this sale could be more effectively used in other ventures within Kazakhstan.
Clive Carver, Chairman Caspian Sunrise said, “There is a price at which even the best performing asset is better sold.
With production expected from both Block 8 and West Shalva later this year, we believe now is a good time to consider disposing of the maturing shallow structures at the BNG Contract Area.
The Group’s skills are the identification and acquisition of undervalued assets and knowing when to let them go, rather than necessarily being conventional operators of maturing fields.
While the MJF structure has plenty of oil still to be produced it has reached a stage of maturity where maintaining production levels may well take an increasing amount of time, effort and funding.
In summary, while we remain proud owners of the BNG shallow structures, we recognise that the funds released from the sale of the MJF and South Yelemes structures may be better used in other projects to increase shareholder value.”
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