EastSiberian Plc (TSXV: ESB) Announces the Lifting of the Trading Halt of ESB Shares on TSX Venture Exchange with the Completion of the NI 51-101 Reserve Report and License Title Opinions
ST. HELIER, Jersey, Feb. 11, 2013 /CNW/ - EastSiberian Plc ("EastSiberian " or the "Corporation"), an international junior oil exploration company incorporated in the Bailiwick of Jersey, is pleased to announce that the NI51-101 Reserve Report (the "Reserve Report") on the licences within the previously announced Farm-in Agreement with East Siberian Resources Ltd. ("ESR") has been completed by DeGolyer & MacNaughton and submitted to the TSX Venture Exchange (the "TSXV"). Title opinions (the "Opinions") on these licences have also been completed and submitted to the TSXV. It is anticipated that trading in the Corporation's stock will resume on or about February 12, 2013, as the TSXV has accepted the reserve report as part of the required documentation. Resumption of trading of the Company's stock does not guarantee the transaction will be completed or accepted by the TSXV.
The Farm-in Agreement between EastSiberian and ESR was announced on June 27, 2012. The Farm-in Agreement provides that the Corporation may earn up to a 51% equity stake in two wholly-owned Cyprus subsidiaries of ESR, Elranio Holdings Ltd. ("Elranio") and Lesona Holdings Ltd. ("Lesona" and Elranio and Lesona collectively, the "Holding Companies"). Elranio indirectly holds, through CJSC Pacific Oil Resources ("Pacific Oil"), a Russian entity, a 100% interest in an exploration and production license located on the eastern onshore portion of the Sakhalin Island. Lesona indirectly holds, through LLC Mezhregionalnaya Toplivnaya Kompaniya ("MTK"), a Russian entity, one oil production licence and one exploration and production licence located in Eastern Siberia. ESR is owned 100% by the Alltech Group ("Alltech" www.alltech.ru) of the Russian Federation, a private direct investment company.
The Corporation is pursuing a fund raising for approximately USD$50 million to fully fund the work program contemplated by the Farm-in Agreement (the "Work Program") and for general corporate purposes. The fund raise is being pursued by a brokered private placement of common shares of the Corporation (the "EastSiberian Shares") at a market determined price (the "Private Placement"). The original Farm-in Agreement terms requires that an initial fund raise of at least USD$15 million was raised by December 31, 2012. On January 28, 2013, the Corporation announced that it and ESR had signed an Addendum to the Farm-in Agreement extending the Initial Fund Raise deadline to March 31, 2013 under the same terms and conditions as originally agreed..
The farm-in for 51% of the Elranio shares is based upon the funding of the following potentially staged earn-in work programs to be performed in relation to the Prizalivnaya Licence held by Elranio:
a 20% shareholding in Elranio will be earned following a US$15MM
investment by the Corporation in Elranio for drilling the first
development well. This development well will be drilled to the target
reservoir zone of interest and tested, to a minimum depth of 4,000
a 20% shareholding in Elranio will be earned following an additional
US$10MM investment by the Corporation in Elranio for drilling of the
second development or delineation well. This second development or
delineation well will be drilled to the same reservoir zone of interest
and tested, to a minimum depth of 4,000 metres; and
an 11% shareholding in Elranio will be earned following an additional
US$5MM investment by the Corporation in Elranio for shooting 200 km of
2D seismic or an equivalent agreed upon 3D seismic program.
The farm-in for 51% of the Lesona shares is based upon the following potentially staged earn-in funding for work program performed in relation to the Verkhnepitskaya Licence and Borschevskaya Licences held by Lesona:
a 26% shareholding in Lesona will be earned following a US$10MM
investment by the Corporation in Lesona for drilling the first
delineation well (1P) on the Borschevskaya Licence. This well will be
drilled updip from the oil water contact in the reservoir zone of
interest and tested, to a minimum depth of 2,700 metres ;
a 25% shareholding in Lesona will be earned following an additional
US$10MM investment by the Corporation in Lesona for shooting 300 km of
2D seismic on the Borschevskaya Licence; and shooting 700 km of 2D
seismic on the Verkhnepitskaya Licence.
The earn-in period as defined in the Farm-in Agreement is three (3) years after the date that the Initial Fund Raise closes. The Initial Fund Raise proceeds will be used to drill the first development well on the Prizalivnaya Licence and for general corporate purposes.
The Reserve Report completed by DeGolyer & MacNaughton is as of August 31, 2012 and contains the evaluation of the hydrocarbon potential including two fields within two of the three licence areas defined in the Farm-in Agreement. These licences are the Prizalivnaya Licence located on Sakhalin Island and the Borschevskaya Licence located in East Siberia. DeGolyer & MacNaughton are independent of the issuer and vendor East Siberian Resources Ltd. and the reserve estimates are in accordance with NI 51-101 and the COGE Handbook reserve definitions. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 50 % probability that the quantities actually recovered will equal or exceed the sum of proven plus probable reserves and a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
The Mezhdurechenskoye field was discovered in 1990 and is located within the Prizalivnaya Licence Area on the south shoreline of Nabil Bay, close to giant offshore Lunskoye field, operated by Sakhalin II (Gazprom). It is 35km south of the town of Nogliki. Alltech acquired the licence for exploration and production within the Prizalivnaya License Area at auction in April 2008, and the license is not due to expire until 1 April 2033. Two wells, M-1S and M-3, have penetrated the P3dh oil reservoir to date and are structurally low in the closure.
Sakhalin Island is part of the north western Pacific rim, adjacent to the south eastern most coast of mainland Russia, directly north of Japan's Hokkaido Island, and between the Sea of Okhotsk and the Tatar Strait. The North Sakhalin Basin geologic province includes much of the northern half of the island plus north western and north eastern offshore areas. The 84,000km2 province area is 72% offshore and 28% onshore.
The producing hydrocarbon reservoirs are the fractured reservoirs of the Lower Miocene and Upper Oligocene Dayekhurinskaya and Lower Uyininskayaya Formations, analogous to the Okruzhnoye reservoirs elsewhere in the basin.
The North Sakhalin Basin Province has 32 onshore gas fields, 29 onshore oil fields, five offshore gas fields, and two offshore oil fields. Another two gas fields and three oil fields straddle the coastline. Offshore fields are larger both in closure areas and in petroleum volumes than fields onshore. Onshore seeps are common along the trends of the major north-south faults, and production occurs to depths exceeding 4,000m. Producible hydrocarbons or hydrocarbon shows are in more than 30 stratigraphic zones of Tertiary sandstones and fractured siliceous shales, and in pre-Tertiary serpentinites that are unconformably juxtaposed with Tertiary source rocks.
The Reserve Report concludes that the Mezhdurechenskoye field contains a mean estimate proved undeveloped reserves of 1.716 million barrels of oil, probable reserves of 47.746 million barrels of oil, and possible reserves of 68.324 million barrels of oil.
The Borschevskoye field lies within the Baykit High province, located in the southwestern part of the East Siberian craton, which also includes the Katanga structural saddle to the east. The saddle connects the Baykit and Nepa-Botuoba highs. The area of the province is approximately 220,000km2. The Baykit High is bounded by the Yenisey Ridge foldbelt to the west, the Cis-Sayan basin to the south, and the Tunguska basin to the north.
Uplift, fracturing, and weathering of Riphaen platform dolomites, followed by the unconformable deposition of sealing Vendian and Cambrian sediments, has produced major productive reservoirs in the nearby Yurubcheno-Tokhomskoye and Kuyumbinskoye fields. The overlying Vendian sediments include shales and sandstones of the Vanavarskaya formation, followed by porous dolomites, anhydrites, sandstones, and shales of the Oskobinskaya Formation (Borschevskoye reservoir). Pinchouts of sandstones and dolomite reservoirs toward the top of the Kamov Arch provide stratigraphic traps within the Vendian. Capping this sequence, Cambrian salt and carbonates provide a seal for the regional petroleum system.
For the Borschevskoye field, the Reserve Report concludes that this field contains a mean estimate probable reserves of 37.118 million barrels of oil, and possible reserves of 27.056 million barrels of oil.
Estimated Present Worth
The Reserve Report estimated the mean present worth of future net revenues at US$314.9 million at a 10% discount rate, at 100% interest to ESR. This estimate is based on Proved plus Probable reserves for both fields using forecast pricing and after income tax.
The mean present worth was calculated assuming that 100% of oil production was exported and the forecast netback price at each field was net of the export tax imposed by the Russian federation on oil exported out of the country and the Mineral Extraction Tax.
The netback price for the Mezhdurechenskoye field ranged from USD$419.09 per metric ton (MT) (USD$57.33 per barrel) to USD$359.36/MT (USD$49.29 per barrel). This price range reflects the close proximity of the field to tidewater and developed export capacity on Sakhalin Island.
The netback price for the Borschevskoye field ranged from USD$354.06/MT (USD$48.57 per barrel) to USD$296.28/MT (USD$40.64 per barrel). This price range reflects the more remote area of East Siberia and the higher transportation costs to ship the oil to export markets.
The estimated undiscounted future gross revenues from developing the mean estimated reserves (proved undeveloped plus probable) of the fields is USD$3.774 billion. The estimated undiscounted total capital expenditures to fully develop the mean estimated reserves (proved undeveloped plus probable) of both fields is USD$787.9 million. The undiscounted future net revenue from developing the mean estimated reserves (proved undeveloped plus probable) of the fields is USD$1.049 billion. The estimated values disclosed do not represent fair market value.
The Corporation has also received legal title opinions on all three licences within the Farm-in Agreement. These Opinions determined that these licences are all lawfully owned by ESR through its subsidiary corporations in Cyprus and Russia.
The Reserve Report will be available on SEDAR at www.sedar.com.
Forward looking Statements or Information
Certain statements included in this news release constitute forward-looking statements or forward-looking information under applicable securities legislation. Such forward-looking statements or information are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions. Forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements or information concerning EastSiberian in this news release may include, but are not limited to statements or information with respect to: business strategy and objectives; development, exploration, acquisition and disposition plans, and the timing and results thereof. Forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although EastSiberian believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on such statements because EastSiberian can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this news release, assumptions have been made regarding, among other things: the timely receipt of any required regulatory and shareholder approvals; the ability of EastSiberian to obtain qualified staff, equipment and services in a timely and cost efficient manner; and the ability of EastSiberian to obtain financing on acceptable terms. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used.
Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by EastSiberian and described in the forward-looking statements or information. These risks and uncertainties may cause actual results to differ materially from the forward-looking statements or information.
The forward-looking statements or information contained in this news release are made as of the date hereof and EastSiberian undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise unless required by applicable securities laws. The forward-looking statements or information contained in this news release are expressly qualified by this cautionary statement.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE EastSiberian Plc