15/02/2011
【15 February, 2011 - Hong Kong】China’s leading independent upstream oil companies operating onshore MIE Holdings Corporation (“MIE” or the “Company”, together with the subsidiaries, the “Group”; Stock Code: 1555.HK), and EMIR-OIL, LLC, a drilling exploration and oil production corporation in the Republic of Kazakhstan, entered into the Purchase Agreement on February 14, 2011 (Monday), with an aggregate consideration of US$170 million. After the Acquisition, EMIR-OIL, LLC will become a 100% wholly-owned subsidiary of the Company.
The Group’s total proved reserves, total proved + probable reserves and total proved + probable + possible reserves will increase by approximately 77% to 52.1 million barrels, 193% to 139.9 million barrels and 209% to 188.8 million barrels, respectively, after the Acquisition. Further, the Group’s average production rate per day will increase by approximately 22% after taking into account the EMIR-OIL, LLC’s production of approximately 2,170 barrels per day for the quarter ended September 30, 2010. The EMIR-OIL’s assets are located in the oil rich basin in western Kazakhstan, which will form a strong base for the Group’s international expansion strategy, in particular within and around the Central Asia region. The EMIR-OIL’s assets allow for exploration upside as several prospects have been identified based on 3D seismic data.
In addition, the reserves are considered as low-risk reserves as the reserve bearing area hasall been covered by 3D seismic data which can justify the reservoir structure of reserve calculation.There are currently 24 existing wells in the contracted area with no dry holes drilled.
Furthermore, the contracted area with its existing production with significant proved + probable reserves for further development, together with established infrastructure of gas pipeline, gas processing plant, oil processing and transportation facilities, provides a favourable basis for future development and production.
Zhang Ruilin, Chairman, Executive Director and CEO of MIE, said “Kazakhstan has the largest oil reserves in the Caspian Sea region and is the second largest oil producer within Central Asia. The potential in oil and gas industry in Kazakhstan and the good government relations between the PRC and Kazakhstan makes Kazakhstan an excellent investment location for the Group. EMIR-OIL, LLC’s assets are located in the oil rich basin in western Kazakhstan, which will form a strong base for the Group’s international expansion strategy, in particular within and around the Central Asia region. By expanding the Group’s operations into Central Asia, the Acquisition will enhance the Group’s position as an international oil and gas company.”
At present, EMIR-OIL, LLC owns a 100% undivided interest in the Existing Exploration Contract, which allows it to conduct exploration drilling and oil production in the contracted area in the Mangistau Oblast in the southwestern region of the Republic of Kazakhstan until January 2013.
The contracted area under the Existing Exploration Contract is approximately 850 square kilometers and comprises four existing oilfields (namely, the Askaz, Dolinnoe, Emir and Kariman oilfields) and six identified prospects with hydrocarbon potential, which has proved reserves, proved + probable reserves and proved + probable + possible reserves of approximately 22.7 million, 92.2 million and 127.6 million barrels of oil equivalent, respectively.
Based on the consideration of US$170 million, the EV/BOE for proved reserves and proved + probable reserves is US$7.49 and US$1.84, respectively. The reserves are considered as low-risk reserves as the reserve bearing area has all been covered by 3D seismic data which can justify the reservoir structure of reserve calculation. There are currently 24 existing wells in the contracted area with no dry holes drilled. Please see the following tables for details.
| Reserves (000 barrels of oil equivalent) | Cumulative cashflow discountedat 5%/year(US$ thousand) | Cumulative cashflow discountedat 10%/year(US$ thousand) | Cumulative cashflow discountedat 15%/year(US$ thousand) |
| Total proved | 539,482 | 422,121 | 345,934 |
| Total proved + probable | 1,462,481 | 1,002,286 | 756,272 |
| Total proved + probable + possible | 1,935,348 | 1,299,755 | 956,332 |
Furthermore, the contracted area with its existing production with significant proved + probable reserves for further development, together with established infrastructure of gas pipeline, gas processing plant, oil processing and transportation facilities, provides a favorable basis for future development and production.
Meanwhile, as the contracted area is a multizone oil reservoir which is similar to the three oilfields in the Jilin Province operated by the Group, the Group can utilize its expertise and advanced technologies in multizone oil reservoirs to increase production and profits after the Acquisition. Currently, there are many Chinese oil drilling and oilfield servicing and construction companies operating in Kazakhstan such as CNPC Great Wall Drilling Company Ltd. (中國石油長城鑽探工程分公司), CNPC Xibu Drilling Engineering Company Ltd (中國石油西部鑽探工程有限公司), Drilling Company of Zhongyuan Petroleum Exploration Bureau (中原油田鑽井四公司), BGP, INC, China National Petroleum Corporation (中國石油集團東方地球物理勘探有限責任公司), CNPC logging services and CNPC pipeline companies.
Given the Group’s relationships with many Chinese oil drilling and oilfield servicing and construction companies in the PRC, the Group plans to leverage its relationships and experience working with Chinese oilfield drilling, servicing and construction companies and work together with such service providers in Kazakhstan to in to bring down the operating costs.
EMIR-OIL, LLC’s assets are located close to a large joint venture oilfield project between CNPC/PetroChina and KazaMunaiGas (KMG), which is producing around 100,000 barrels of oil per day. The Group believes there is great potential and synergies for EMIR-OIL, LLC’s assets after the Acquisition.
About MIE Holdings Corporation
MIE is one of the leading independent upstream oil companies operating onshore in the PRC as measured by gross production under production sharing contracts. The Group operates the Daan, Moliqing and Miao 3 oilfields in the Songliao Basin, PRC’s most prolific oil-producing basin, under three separate production sharing contracts with PetroChina, the largest oil company in China. In addition, the Group pursues other development and production opportunities in China, and exploration, development and production opportunities internationally, both independently and in partnership with other major and independent oil companies.
Issued by Porda Havas International Finance Communication Group for and on behalf of MIE Holdings Corporation. For further information, please contact:
Porda Havas International Finance Communication Group
Terence Wong Tel：+852 3150 6773 E-mail：terence.wong @pordahavas.com
Henry Ho Tel：+852 3150 6712 E-mail：henry.ho@pordahavas.com
Rebecca Yu Tel：+852 3150 6767 E-mail：rebecca.yu @pordahavas.com
Fax：+852 3150 6728