• Post quarter end Xstate received commitments to raise $1.0 million (before costs) by way of a two tranche placement to professional and sophisticated investors in Australia.
• Xstate’s Singapore lawyers attended scheduled hearings and court proceedings in Singapore to ascertain the assets of Hong Hung Thiam (“Hong” and Tanzil Hidayat ("Tanzil"), and for committal proceedings against both individuals.
• In September the Singapore High Court Judge found that Hong was liable for contempt and sentenced him to a fine of SGD15,000, and in default of payment, 10 days imprisonment.
• The Company announced revised terms in relation to the sale of its working interests in the Dempsey Project area to Raven Energy Limited (ASX:REL) who has paid Xstate a non-refundable deposit of US$88,464 and A$250,000 of Raven shares at $0.0018 per share.
• During the quarter the Operator advised that the Dempsey 1-15 well (XST 10% WI) was shut in due to water accumulated in the well bore and production was affected.
• The Operator has submitted a revised work program for the testing of the Alvares-1 gas discovery. Under the revised program, the well bore would be assessed for its suitability for directly flow testing various gas saturated reservoirs interpreted from petrophysical and mud logs and seismic in the Alvares well.
Comments
Xstate Resources Limited (ASX: XST) (“Xstate” or “the Company” is pleased to provide the following operational update in relation to its September 2018 quarter activities.
During the quarter the Company had a significant legal milestone when the Singapore High Court found Hong Hung Thiam in contempt of court. The judgment clearly demonstrates to the defendants that the Court will not tolerate non compliance with Court orders. Accordingly post quarter end Xstate has commenced contempt proceedings against Tanzil Hidayat for breaches of Court orders during the EJD process. Xstate is waiting for a hearing date to be scheduled before the Court in relation to the matter.
During the quarter the operator of the Dempsey 1-15 appraisal and exploration well advised that the Dempsey 1-15 well was shut in due to water accumulated in the well bore and production was affected. Prior to being shut in the well was flowing natural gas to sales pipelines at a combined rate of 1,300 mcf per day. The operator is planning a work over during the December quarter to re-commence production.
On October 10, 2018 the Company announced that it had received commitments to raise $1.0 million (before costs) via a private placement to new and existing domestic investors (the “Placement”.
The Placement will result in the issue of approximately 333.33 million new fully paid ordinary shares in the Company (“Shares”, at an issue price of $0.003 per share. The Company will also issue Directors and Management with a further 33.3 million shares in return for retiring debts totaling A$100,000 (subject to shareholder approval).
The funds raised will be in part used for the Company's share of operations in the Sacramento Basin, and will also accelerate drilling activities through the Alvares re-entry assessment, subject to joint venture approval. Furthermore, funds will be utilised to maintain existing leases and the connection of additional wells for production and general working capital requirements.
In addition to the Sacramento Basin activities the Company continues to pursue new production opportunities onshore California that have the potential to add significant value to the Company via production enhancement, cost control, and the drilling of new development and appraisal wells.
The focus for the Company in the next quarter is to successfully conclude its new business priorities, continue to grow gas production in the Sacramento Basin and to participate in a successful production test of the Alvares discovery well.
Legal Update on Singapore Supreme Court Enforcement Action
During the quarter, Xstate’s Singapore lawyers attended various Court hearings and instigated various further steps in the Singapore High Court to enforce the Judgment against the three defendants: Hong, Chloe Kwok and Tanzil.
In mid August 2018, Xstate’s layers attended an Examination of Judgment Debtor (EJD) Hearing in relation to Tanzil. Xstate has elected to suspend the EJD process for the time being and has commenced contempt proceedings against Tanzil.
On September 17, 2018, Xstate advised that the Singapore High Court Judge found that Hong Hung Thiam was liable for contempt and sentenced him to a fine of SGD15,000, and in default of payment, 10 days imprisonment. This is a significant step forward for Xstate’s claim against the three defendants and clearly demonstrates to all three defendants that the Court will not tolerate non compliance with Court orders and more importantly is prepared to consider a custodial sentence if warranted.
Xstate has reached a confidential agreement with Chloe and she has agreed to withdraw her challenges to the Australian and Singapore judgments. Xstate will continue its endeavours and determination to take all reasonable legal steps available to the Company to preserve its rights.
The Company will continue to keep shareholders fully informed of its progress.
New Ventures
The Board and Management has continued to actively seek to identify and evaluate further asset opportunities that meet Xstate’s investment criteria and are capable of being delivered in a timely manner.
The Board have reviewed many opportunities which have varied in size and location that fit the Company’s criteria; namely existing oil production operations and material proven reserves with associated proven undeveloped development drilling locations. Very few have met the Company’s rigorous technical and commercial requirements.
The identified projects under review are typically production opportunities onshore California that have the potential to add significant value to the company via production and reserves enhancement, cost control, and the drilling of new development and appraisal wells.
Despite not concluding a new business opportunity to date, the background work carried out and ongoing engagement with potential sellers of assets places the Company in a good position to access suitable new opportunities in the near future.
and Tanzil Hidayat ("Tanzil"), and for committal proceedings against both individuals.
(20min delay)
