On 20 November 2014 the Company announced it had entered into an Agreement with Levant Energy Limited whereby the Company’s acquire a major interest in Timan Oil & Gas Plc from Levant Energy in exchange for shares in Araca. The Agreement is subject to approval by shareholders at an Extraordinary General Meeting which was called for 5 December 2014.
Araca Energy ASA (formerly Aladdin Oil & Gas Company ASA)
(“Araca” or the “Company”) Oslo, 16 December 2014
Background
On 20 November 2014 the Company announced it had entered into an Agreement with Levant Energy Limited whereby the Company’s acquire a major interest in Timan Oil & Gas Plc from Levant Energy in exchange for shares in Araca. The Agreement is subject to approval by shareholders at an Extraordinary General Meeting which was called for 5 December 2014. At the Extraordinary General Meeting the resolution to approve the acquisition was not put to the meeting as revised terms had been tabled which had the support of the Company’s largest shareholder.
The revised terms value each Araca ordinary share at NOK 1.0.
At the request of the largest shareholder, the acquisition is now to be put to the Extraordinary General Meeting called for 22 December 2014
Subject to the approval of the extraordinary general meeting the Company will acquire from Levant Energy Limited (“Levant”) some 27.5% of the issued share capital of Timan Oil and Gas Plc (“Timan”) in exchange for the issue of new ordinary shares of Araca representing some 94.9% of the enlarged issued share capital of Araca. Levant is also in the process of agreeing with Timan the terms of an agreement whereby Levant will have the right to subscribe $35 million into Timan for additional new ordinary shares of Timan (the “Subscription Agreement”). Araca will also acquire these additional Timan shares from Levant in exchange for the issue of further new ordinary shares of Araca which once such shares are acquired in full would then together with Araca shares already held by Levant represent some 98.1% of the then enlarged issued share capital of Araca and in turn, Araca would own some 63.4% of the issued share capital of Timan. Alternatively, Levant will inject the $35m investment into Araca to enable Araca to make the subscription and in the event that the Subscription Agreement is not concluded, Levant will subscribe $35m directly into Araca on the same terms within 12 months.
Levant
Levant, part of the Levant Group, is a private investment company incorporated in the United Arab Emirates. Its principal activities are investments in oil and gas projects in CIS countries, Africa and emerging markets. The Levant Group has been active in the natural resources and energy sectors for more than 20 years and has been an investor and founding shareholder as well as developer of various mining and exploration and oil services companies, some of which have been listed on public stock exchanges.
Timan
Timan is a UK incorporated independent oil and gas exploration and production company with its main assets in the Timan-Pechora region of Western Russia and the Caspian basin. Timan owns and operates (through wholly or majority owned Russian subsidiaries) the following assets:
NGPT Oilfield (Onshore)
· Timan owns NGPT through its wholly owned Russian subsidiary Neftegazopromyslovye Tekhnologii Ltd. which holds the subsoil licence for exploration, survey and production of oil and gas in this NGPT Oilfield.
· Facility: There is a main oil pipeline (owned by Transneft, the largest Russian pipeline company) and a main gas pipeline crossing the oilfield and the railway station of Ukhta is 20 kilometres away from the oilfield with connection by main roads. The nearby city Ukhta provides the power and water supply as well as oil field services for development and production.
· Layer and Reservoir: Four reservoir layers (including two light oil layers and two heavy oil layers) have been identified in NGPT Oilfield. The depth of the reservoirs is shallow, mostly ranging from 60 meters to 160 meters. The layers have good reservoir physical property with an average net pay thickness of about 16 meters.
· Reserves: According to a CPR issued in June 2013 by a qualified independent petroleum consultant, NGPT Oilfield has proved (1P) reserves of 118 million barrels, proved and probable (2P) reserves of 284 million barrels.
· Current Status: The oilfield is in the preliminary stage of production. Basic infrastructure and processing facilities are in place. The oilfield is ready to go into the stage of full field development.
Izerbash Exploration Block and Sulak Exploration Block (Offshore)
· Timan has a majority interest (80%) in both the Izberbash Exploration Block and Sulak Exploration Block through a Russian subsidiary Geotermneftegaz which holds the subsoil licences for geological exploration and production of oil and gas in these two blocks.
· Location and Facilities: Both Izberbash Exploration Block and Sulak Exploration Blocks are located in the near shore shallow water area of the continental shelf of the Caspian Sea in the Republic of Dagestan, Russia. In the surrounding area of the two blocks, there are many onshore and offshore oilfields with completed infrastructure facilities for oil and gas.
· Current Status for Exploration: 2D and 3D seismic data acquisition of and study on the two exploration blocks have been carried out. It is planned to drill exploration wells and appraisal wells in the two blocks.
Way Forward
The funding to be injected into Timan post the execution of the Subscription Agreement will enable Timan to resolve historical obligations to become substantially debt free, ensure compliance with its licence requirements and initiate the Development Plan already agreed with the Russian authorities which would enhance the commercial production rate within 2015. Levant intends to deploy the latest technology and expertise available within its group through its affiliates in the oil services sector. By providing sufficient funding as may be required and with the support of an incentivised management, Levant sees this as a unique opportunity to reach significant production rates.
Ecoteq Energy ASA (Ecoteq) is an oil and gas extraction and production company (E&P) based in Oslo, Norway.
