Arawak Energy Limited announced that it has completed the acquisition of Saigak Investments BV, a company that has a 40% participating interest in the Saigak field in Western Kazakhstan, from Vitol BV. This transaction was originally announced in June 2007, following the signature of an initial agreement, which was subject to certain conditions, including obtaining necessary statutory and governmental approvals. The process of obtaining the required consents was finally completed at the end of May 2008, allowing the Company to complete the transaction. In consideration for the transaction, Arawak issued 8,352,587 common shares to Vitol BV on 9 June 2008. The Vitol Group of companies (“Vitol”) is Arawak’s largest shareholder and as a result of this transaction has increased its stake to 41.52%.
The Saigak field is located approximately 120 km from the Company’s existing Akzhar field in the Aktubynsk region of Western Kazakhstan and is operated by Maersk Oil Kazakhstan GmbH, which owns the remaining 60% interest. The Saigak field is currently producing around 2,000 bopd gross from four wells, one of which is currently being worked over. According to a report prepared by the Company’s independent reserve evaluators, McDaniel & Associates Consultants Ltd., remaining proved plus probable reserves attributable to Arawak’s 40% interest as of 31 December, 2007 are estimated at 2.2 million bbls. The Company has also obtained the cashflow from the effective date, 1 January 2007, to closing, totalling US$12.4 million.
Saigak, a sweet 33-37 degrees API crude, is currently produced from four wells and from multiple zones at around 2,000 metres depth. All crude is currently exported.
Saigak is produced under a production sharing contract (“PSC”), which was originally signed in 1992 and is valid until 2022. The terms of the PSC are unique, including a 12.5% royalty and 100% export rights. All other taxes and duties are included in the government profit share, currently calculated at 24%.
