Sumatec

It believes there were “potentially more oil and gas reserves in the field than those already certified”.

It has undertaken initial extraction of crude oil reserves at its Rakushenchnoye oil and gas field in Kazakhstan since Jan 25 2014.

It is carrying out an internal review of the oil and gas reserves in the Rakushechnoye oil field in Kazakhstan. Oil output is estimated at 150 barrels per day at the field known as the Shelly oil field. Oil production at the second well will follow about two week’s time as planned. Sumatec will provide further details as soon as it is available.

However, the company said this would only be confirmed by a new reserves certification to be conducted by an independent competent body and expected to be completed in the later half of 2014.

Sumatec was clarifying a news report that it is believed to have found a larger pool of oil and gas at its oil field in Kazakhstan.

It also corrected the news report that the discovery of additional oil and gas resources may warrant a change in its forecast net profit of RM86mil for the 2013 financial year and RM69mil for 2014.

Sumatec said while it expected the enlarged certified reserves would contribute significantly to the company’s long term earnings, but with immaterial impact to the earnings for 2014.

The company therefore does not intend to revise the forecast earnings for 2013 and 2014.

Sumatec also clarified the report that it would have to reimburse Markmore Energy the cost of exploring and developing the oil field amounting to US$135mil (RM450mil), and spend another US$60mil on infrastructure to speed up production.

The company pointed out that under the joint investment agreement signed in March 2012, Sumatec paid US$95mil to Markmore Energy for the rights to share the oil profit with Markmore, and another US$40mil as performance guarantee.

The performance guarantee is to be recovered by Sumatec from future royalty payments to Markmore. Sumatec expects to spend about US$60mil for capital expenditure over the next 12 to 24 months from Jan 2014, which is fully recoverable from CaspiOilGas LLP, the concession owner.