KUALA LUMPUR (April 24): After three months of talks, Sumatec Resources Bhd said today that it has struck a contract deal with Chinese contractor Talap Munai Service LLP to jointly develop and finance up to US$20 million in the development of Rakushechnoye oil and gas (O&G) field in Kazakhstan.

The Rakushechnoye field is a large field with reserves, both in oil/condensate and gas, totalling around 139.4 million barrels of oil equivalent (MMboe) of proven and probable reserves.

In a filing with Bursa Malaysia, Sumatec said the contractor financing the proposal is not exclusive and that the company may consider or accept other similar offers from other parties.

To initiate the development, Talap Munai is proposing to carry out works with an initial seed investment of about US$20 million, involving, among others, well workovers, drilling of new wells, upgrading of surface, production and storage facilities, as well as the installation of gas injection facilities for pressure maintenance and offtake.

The scope of work proposed by Talap Munai is anticipated to increase production by an additional 3,500 boe per day in January 2019, and thereafter targeted to increase to an additional 7,200 boe per day by August 2019.

"This contractor financing proposal is in addition to the production plan currently being pursued by Sumatec on its own. Both Talap Munai and Sumatec agree that this contractor financing will be repaid by way of cash or in kind, that is oil/condensate barrels or shares of Sumatec or shares of CaspiOilGas LLP — the partner of Sumatec in Kazakhstan," Sumatec said.

This offer is beneficial until such time that the company can complete its own funding exercise, the filing read.

In a separate filing, Sumatec said it has entered into a memorandum of agreement with Liaohe Oilfield of CNPC, which is a subsidiary of China National Petroleum Corp, for the latter to provide subsurface, drilling and production engineering works for the exploration and development of the Rakushechnoye O&G gas field.

"Prior to this, as a show of commitment on the project, CNPC-Liaohe has completed around 5,000 man-hours of reviewing and studying the data of the Rakushechnoye field and carrying out studies on several wells," Sumatec added.

At 3.47pm, Sumatec shares were unchanged at 6.5 sen, with 40.23 million shares traded, for a market value of RM276.43 million.