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Acquisition of Major Interest in Timan Oil & Gas Plc & Directorate Change

Source: www.gulfoilandgas.com 11/20/2014, Location: Asia

Acquisition of major interest in Timan Oil and Gas Plc Aladdin has signed a Sale and Purchase Agreement with Levant Energy Limited ("Levant") which owns some 27.5% of the issued share capital of Timan Oil and Gas Plc ("Timan") which Aladdin will acquire in exchange for the issue of new ordinary shares of Aladdin representing some 90.7% of the enlarged issued share capital of Aladdin.

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"). Aladdin will also acquire these additional Timan shares from Levant in exchange for the issue of further new ordinary shares of Aladdin which once such shares are acquired in full would then together with Aladdin shares already held by Levant represent some 96.5% of the then enlarged issued share capital of Aladdin and in turn, Aladdin would own some 63.4% of the issued share capital of Timan. Alternatively, Levant will inject the $35m investment into Aladdin to enable Aladdin to make the subscription and in the event that the Subscription Agreement is not concluded, Levant will subscribe $35m directly into Aladdin on the same terms within 12 months.

The acquisition is conditional, inter alia, on approval by Aladdin shareholders at an extraordinary general meeting to be held on 3 December 2014.

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.

- Location: 20 kilometers to the west of Ukhta, the Republic of Komi, Russia.

- Area: 215 square kilometers.

- Licence Term: 25 years from March 1999 to April 2024.

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 kilometers 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 the 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.

- Area: 670 square kilometres for Izberbash Exploration Block and 610 square kilometres for Sulak Exploration Block.

- Licence Term: From October 1998 to July 2023

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 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.

Conclusion

The directors believe that this acquisition offers to Aladdin the opportunity to participate in a proven oil and gas asset with sufficient funding to reach production in a reasonable timescale.

Directorate change

The existing Board Aladdin members will resign at the EGM called for 3 December 2014. A nomination committee of shareholders will propose a new board of directors for election at the EGM.



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