LONDON: Caspian Sunrise Plc has entered into a conditional and binding term sheet with Absolute Resources LLP regarding the proposed disposal of the shallow MJF and South Yelemes Structures on the BNG contract area, which is located in the west of Kazakhstan, 40 kilometres southeast of Tengiz on the edge of the Mangistau Oblast, covering an area of 1,561 square kilometres, and the oil and gas assets and operations carried out therein.

The disposal will be effected by way of the sale to Absolute Resources of the entire issued share capital of a Group entity to be established in the Astana International Finance Centre. The sale price is $88 million.

The MJF structure is the principal shallow structure on the BNG Contract Area and has accounted for the vast majority of the Group’s oil production since it first produced oil in 2016. The South Yelemes structure was awarded its own export licence in 2021 but to date has only produced from wells drilled in the Soviet era, as improved by recent horizontal drilling.

The Group would continue to own the remainder of the BNG Contract Area including the licences for the two key deep structures Airshagyl and Yelemes Deep.

The Board believes Caspian Sunrise has a competitive advantage in the identification and acquisition of new projects in Kazakhstan, which it does not necessarily have to the same degree in the day to day operation of maturing assets. Accordingly, in the opinion of the Board, the funds released from the Disposal can be better used elsewhere to enhance longer term shareholder value.

In the year ended 31 December 2023 revenue attributable from the production of oil at the MJF and South Yelemes Structures was approximately US$21.6 million, down from approximately US$39.2 million in 2022, with gross profit in 2023 of approximately US$16.6 million, down from approximately US$32.7 million in 2022. In 2023 the profit before tax from the BNG shallow structures was approximately US$12.5 million, down from approximately US$15.0 million in 2022.