Caspian Sunrise declares its first ever dividend

Caspian Sunrise declared its maiden dividend, as well as the creation of a new oil trading division, in an update on Friday.

The AIM-traded firm said it had been a “long-held objective” to commence regular dividend payments, with the first dividend to total $1.13m (£1m).

It said it would be paid as 0.044p per share, with an ex-dividend date of 17 November, a record date of 18 November, and a payment date of 16 December.

“The size of the first dividend is indicative of the levels to be expected in the future,” the board said in its statement.

“The board intends that the future dividends will be paid on a monthly basis, based on the higher of £1m per month or a pay-out ratio of broadly 35% to 40% of free cash flows.”

Caspian Sunrise also announced that it had formed a wholly-owned oil trading subsidiary to take advantage of changes in regulations from 1 January.

It said the changes would, for the first time, allow it to sell its own production direct to international and domestic buyers.

“This is expected to increase the net price received by between $5 and $10 per barrel.”

Looking at its current operations, at the BNG Deep Wells, Caspian Sunrise said it remained “encouraged” by strong oil shows from deep well 802.

It said that following an “extensive” cementing exercise, it was now preparing to drill a side-track from a depth of 2,416 metres to a depth of 3,900 metres to target the first interval of interest from which the oil encountered to date had flowed.

If successful, and based on current timings, the company said it expected to test the well before the end of the year.

“Once the rig in use at deep well 802 becomes available, it will be used at Deep Well A5 to seek to remove the remaining stuck pipe and then to drill a side-track from a depth of 3,970 metres, targeting the oil-bearing interval at a depth of 4,335 metres, which previously produced at the rate in excess of 1,000 barrels of oil per day.

“Work is also planned to resume drilling at deep well A7 from a depth of 2,175 metres as rigs and crews become available.

“Work using horizontal drilling which has proved successful at several of the MJF shallow wells is planned for the new year at existing deep wells A6 and 801, at a depth of approximately 4,400 metres.”

The company added that at deep well A8, the intention was that the well would be plugged and abandoned.

At its shallow wells, Caspian Sunrise said work to bring wells 141 and 142 back into production was expected to resume in the first quarter of 2023, while a new shallow well, 155, was expected to spud before the end of the year with a planned total depth of 2,500 metres, again using a horizontal drilling approach.

Work was also planned in the first half of 2023 to drill the first shallow well at the South Yelemes structure, since it was awarded a full production licence.

Looking at production, the company said it was continuing at the rate of around 2,400 barrels of oil per day.

“As wells 141 and 142 come back into production the near-term production expectations are that production volumes return to levels seen earlier in the year,” the board explained.

“The $25 to $30 per barrel discount for oil sent through Russian pipelines together with taxes still set at the full Brent price makes selling oil to the international market less attractive than selling domestically and to direct to local refineries, where the net price achieved is approximately $35 per barrel.

“Consequently, all output is currently being sold domestically.”

At 1326 GMT, shares in Caspian Sunrise were up 45.4% at 3.64p.

Reporting by Josh White for Sharecast.com.