Caspian Sunrise is a Kazakhstan based oil and gas exploration and production company established in October 2006 and listed on the Alternative Investment Market of the London Stock Exchange in May 2007
Caspian Sunrise’s current principal interest is in the BNG Conract Area in the Pre Caspian basin in Western Kazakhstan. Additionally, Caspian has interest in the Munaily and Beibars Contract Areas.
This section of the website contains information on Caspian’s financial and operational performance, providing up-to-date information of value to an analyst, shareholder or potential investor.
Oil and gas exploration and production is a long-term activity requiring effective environmental stewardship. We have operated in Kazakhstan now for more than 18 years and have only been able to do so by complying with applicable environmental standards.
The Group’s overriding corporate objective is to build a successful commercial enterprise. In this the board regards an effective governance structure to be a useful tool rather than being an objective in its own right.
Governance starts with the board where we believe competence and integrity are the key attributes.
We pride ourselves on being a low cost operator, as evidenced by the board taking up to 75% pay cuts for more than four years. We have adopted this same value for money approach to governance.
In recent times and largely as the result of limited funding and the desire to deploy as much of our available cash as possible in protecting and developing our assets our adherence to the highest accepted standards of corporate governance has been patchy.
As we move into the next phase of the Group’s development with significantly more funding expected we are looking to improve our governance performance, however, the on-going reality is that:
We fully accept that good governance goes hand in hand with a successful company, but what is good governance?
We believe it essentially boils down to having a board that is competent, trustworthy and motivated to act in the interests of all shareholders.
Under the prevailing regulations we are required to document how we comply with one of the two governance regimes in operation. In common with the vast majority of AIM quoted companies the Group has elected to follow the QCA governance code and below we set out how we comply and how and why, where appropriate, we do not”.
The Group has adopted and operates a share dealing code for Directors and employees in accordance with the AIM Rules.
The Board acknowledges responsibility for maintaining appropriate internal control systems and procedures to safeguard the shareholders’ investments and the assets, employees and the business of the Group. The Board also intends to periodically review the Group’s financial controls and operating procedures.
The Board does not consider it appropriate for the current size of the Group to establish an internal audit function. However, this will be kept under review.
The Company is committed to acting ethically, fairly and with integrity in all its endeavours and compliance with legislation is monitored. The principal terms of the UK Bribery Act have been translated into Russian and circulated to our Kazakh based staff. Consideration of the Bribery Act is a standing item at board meetings.
Our culture might best be described as one where we strive for commercial success while treating others fairly and with respect. Accordingly, in dealing with each of the Groups principal stakeholders, we encourage our staff to operate in an honest and respectful manner. We also believe in getting proper value for money spent and believe this goes hand in hand with being a low-cost operator.
Kazakhstan plays an important part in the Group’s culture. It is where we operate; where almost all staff are based; it is the nationality of most staff and most of its shareholders.
The Group is committed to promoting a culture based on ethical values and behaviours across the business. Policies are in place covering key matters such as equality, protection of sensitive information, conflicts of interest, whistleblowing and health and safety as well as environmental concerns.
The board has three committees, the audit committee, the remuneration committee and the governance committee. However, as the board currently includes only one non-executive director, who is not deemed independent, the operation of the board committees has been suspended until further appointments to the board are made. In the meantime the full board will undertake the work of the committees.
The Governance Committee comprises Clive Carver, Aibek Oraziman with Clive Carver acting as chairman. The committee intends to meet at least once a year to review the Group’s governance procedures compared to accepted industry best practice.
At the appropriate time the Board plans to include a formal risk register including all the principal operational and non-operational risks to the business to be considered by the Governance Committee.
The Audit Committee, which comprises Clive Carver and Aibek Oraziman, with Clive Carver being the acting chairman, determines and examines any matters relating to the financial affairs of the Group including the terms of engagement of the Group’s auditors and, in consultation with the auditors, the scope of the audit.
The Audit Committee is responsible for monitoring the integrity of the Company’s financial statements, reviewing significant financial reporting issues, reviewing the effectiveness of the Group’s internal control and risk management systems.
The Remuneration Committee comprises Aibek Oraziman and Clive Carver and is chaired by Aibek Oraziman.
The Group’s and the Company’s policy is to provide remuneration packages that will attract, retain and motivate its executive Directors and senior management. This consists of a basic salary, ancillary benefits and other performance-related remuneration appropriate to their individual responsibilities and having regard to the remuneration levels of comparable posts.
The Remuneration Committee determines the contract term, basic salary, and other remuneration for the members of the Board and the senior management team.
The board comprise three executive directors and one non executive director
The Board consists of four directors, one of which is a non executive director. The Group holds at least four Board meetings each year, at which time financial and other reports are considered and, where appropriate, voted on.
Caspian Sunrise, in line with most AIM companies, elected to apply the rules of the Quoted Companies Alliance (QCA) Corporate Governance Code (“QCA Code”), which is based around 10 broad principles.
Caspian Sunrise’s objective is to create shareholder value from the development of oil & gas and mining projects and associated activities.
The Group has several secondary objectives, including promoting the highest level of health and safety standards, developing our staff to their highest potential and being a good corporate citizen in our chosen countries of operations.
The Group’s long-term strategy is to build an attractive portfolio of oil & gas and mining projects assets in Central Asia, in particular Kazakhstan where the board has the greatest experience. Additionally, the Group will seek to exploit associated opportunities where the board believes it can add significant value and contribute towards the success of the Group as a whole.
Our business model is to invest in and develop promising oil and gas projects.
Growth in long term value will be measured by a sustainable appreciation in the share price.
The Group’s principal asset is its interest in the BNG Contract Area, which is in the west of Kazakhstan, 40 kilometres southeast of Tengiz on the edge of the Mangistau Oblast.
The Group also has 100% interests in the 3A Best Contract and the Caspian Explorer drilling vessel.
We are also pursuing the acquisition of the Block 8 Contract Area and the West Shalva Contract Area.
The Company communicates with its shareholders via RNS announcements, its website, formal company meetings and periodic investor presentations.
The need to avoid selectively releasing price sensitive information often limits our ability to provide the answers many investors seek.
The Company’s management meets prospective institutional investors from to time to time to assess the availability of large-scale institutional funding to advance the company’s plans.
A large proportion of the Company’s shares are held by a relatively small group, namely: The Oraziman family (48%); other Kazakh shareholders (5%); Korean shareholders (10%); shareholders in the UAE (5)%; shareholders in Switzerland (5%); with the remaining (27)% being principally UK based investors.
In addition to our shareholders the Company regards its employees and their families, local and national government and its shareholders to be the core of the wider stakeholder group.
Almost all staff employed by the Group are based in Kazakhstan. The Group draws most of its field workers from the Mangistau region where alternative employment opportunities are limited. At our head office in Almaty we employ further staff, some of whom hold highly skilled positions.
As well as providing employees with appropriate remuneration and other benefits together with a safe and enjoyable working environment, the Board recognises the importance of communication with employees to motivate them and involve them fully in the business. For the most part, this communication takes place at a local level, but staff are kept informed of major developments through email updates and staff meetings.
The Group has provided significant financial support to this region for over a decade by way of social payments sometimes delivered in the form of medical or educational facilities for the local population.
Part of our work programme obligations are paid in the form of contributions to local social programmes. We are pleased to have assisted in the development of these projects and look forward to contributing to others in the coming years.
The Kazakh authorities are responsible for granting licences to explore for and produce oil. Licences are awarded subject to agreed work programmes being adhered to over the period of each licence renewal. This includes compliance with rules designed to preserve the environment.
Caspian Sunrise has an extremely high proportion of Kazakh nationals in our workforce and among our core shareholder group. The Board believes that this helps create a positive relationship with the Kazakh authorities and has assists in the Group’s day-to-day dealings with the regulators.
Many additional jobs have been funded in the Company’s suppliers, partners and professional advisers.
The Company considers feedback from its stakeholders in its decisions and actions.
Oil & gas exploration and production is a dangerous activity and as such is necessarily subject to an extreme health and safety regime. Risk assessment and evaluation is an essential part of the Company’s planning and an important aspect of the Company’s internal control system.
It is planned to introduce a formal risk register, including all the principal operational and non-operational risks to the business. Such a risk register would be reviewed and assessed at least once a year by the Audit Committee.
A summary of the principal risks facing the Group are set out in the Principal Risks section in the Financial Statements
The board comprises three executive directors and two non-executive directors.
At the executive level Kuat Oraziman, Chief Executive Officer, and Seokwoo Shin Chief Operating Officer run the Company’s operations in Kazakhstan with Clive Carver, Executive Chairman and Chief Financial Officer, taking the lead on all non-operational matters including financial matters and all aspects related to the listing of the Company’s shares on AIM, Corporate Governance compliance and Investor Relations.
Kuat Oraziman is a trained geologist and member of the academy of sciences. He has more than 27 years oil and gas experience in Kazakhstan.
Seokwoo Shin for the Korean National Oil Corporation from 1987 until 2018 with spells in Korea, the United Kingdom, Russia and most recently Kazakhstan, where he was responsible for KNOC’s Kazakh oil fields. He joined Caspian Sunrise in 2018.
Clive Carver is a fellow of the Institute of Chartered Accountants in England and Wales (FCA) and a fellow of the Association of Corporate Treasurers (FCT). While working in the UK broking industry Clive gained more than 15 years’ experience as a Qualified Executive under the AIM Rules having led the Corporate Finance departments of several of the larger and more active Nominated Adviser firms.
Aibek Oraziman is the Company’s largest shareholder holding, together with his sister, 43.97% of the Company’s shares. He has more than 12 years oil and gas experience in Kazakhstan, including 3 years in the field at Aktobe working for a local oil company.
The board believes it possesses the skills required to build a successful and durable oil and gas business focused on Kazakhstan.
The board meets a minimum of four times each year supported by periodic telephone meetings. At such meetings the board receives a report from Kuat Oraziman on all matters operational and from Clive Carver on all non-operational matters.
The board also has a list of standing items, including compliance with the UK Bribery Act, litigation and existence of open and closed periods for director dealings, which are considered at each meeting.
The number of board meetings attended each year by the directors is set out in the Directors’ report which forms part of the Annual Report and Financial Statements.
The principal reason advanced by proponents of the Code that the Chairman be non-executive is to split the roles of Chairman and Chief Executive Officer as combining them puts too much control in one pair of hands. This is not the case with our Company where the Chief Executive Officer’s family is the largest shareholder, with some 48%.
Clive Carver was appointed Non-Executive Chairman of the Company in 2006 in the lead-up to the IPO the following year. In 2012 he was appointed Executive Chairman at the same time as Kuat Oraziman moved from Non-Executive Director to Chief Executive Officer.
In the past decade, Clive Carver has served as non-executive chairman of seven AIM listed companies. In addition, his 15 years as a Qualified Executive and head of active corporate finance departments make him a very suitable candidate to be Chairman, notwithstanding his executive status.
In common with many AIM listed companies we actively encourage non-executive directors to participate in the Company’s option schemes. Proponents of the Code believe this affects the independence of the non-executive directors concerned.
We believe that independence is a matter of independence of mind, judgement and integrity. We consider our non-executives’ ability to act independently to be unaffected by the level of participation in the Company’s option scheme.
With only one non-executive director it is inevitable that the board committees will comprise executive and non-executive directors. The Company accepts this is not a long-term solution and at the appropriate time will look to appoint an additional non-executive director.
The experience of the directors and the operational board is set out in the response to principle 5 above and in the Annual Report and Financial Statements.
Operational skills are maintained through an active day to day interaction with leading international consultancies and contractors engaged to assist in the development of the Company’s assets.
Non-operational skills are maintained principally via the Company’s interaction with its professional advisers plus the experience gained from sitting on the boards of other commercial enterprises.
As the Company develops and moves from predominantly an oil exploration company to a balanced production and exploration company, the board will periodically re-assess the adequacy of the skills on both the main board and the operational board. Where gaps are found, new appointments will be made.
The Company currently does not evaluate board performance on a formal basis. However, it will in the near term seek to formalise the assessment of both executive and non-executive board members.
The Company is aware of its need to facilitate succession planning and the board evaluation process will form part of this going forward.
Our culture can best be described as one where we strive for commercial success while treating others fairly and with respect. The board firmly believes that sustained success will best be achieved by following this simple philosophy.
Accordingly, in dealing with each of the Company’s principal stakeholders, we encourage our staff to operate in an honest and respectful manner.
Operating with integrity is clearly good business and forms an important part of the annual assessment of staff and in setting their pay for future periods.
The Company believes that its governance structures and processes are consistent with its current size and complexity. The Board is aware that it must continue to review its practices as the Company evolves and grows.
The executive members of the Board have overall responsibility for managing the day-to-day operations of the Company and the Board as a whole is responsible for implementing the Company’s strategy.
The Audit Committee typically meets before each set of results (interim and final) are published and the Remuneration Committee typically meets at least once a year, when the Financial Statements for the Full year results are approved. All Committee members attend these meetings.
Our Report and Accounts contain report from the Chairman of the Remuneration. and the Audit Committee.
The appropriateness of the Company’s governance structures will be reviewed annually in light of further developments of accepted best practice and the development of the Company.
The Company reports formally to its shareholders and the market twice each year with the release of its interim and full year results.
The Annual Report and Financial Statements set out how the corporate governance of the Company has been applied in the period under review including the work undertaken by the Audit Committee and the Remuneration Committee.
The Annual Report and Financial Statements contain full details of the principal events of the relevant period together with an assessment of current trading and prospects. They are sent to shareholders and made available on the Company’s website to anyone who wishes to review them.
The Board already discloses the result of general meetings by way of RNS announcements, disclosing the voting numbers.
The Company’s website also contains all the information prescribed for an AIM Company under Rule 26.
Further details of the Company’s dialogue with its shareholders are set out under Principle 2 above
Employee stakeholders are regularly updated with the development of the Company and its performance.
We are in almost constant communication with our Governmental and regulatory stakeholders via their involvement in our day-to-day operational activities.
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