Arawak signs agreement to acquire 40% stake in Saigak field in Kazakhstan



    TSX TRADING SYMBOL: ABG

    ANGUILLA, British West Indies, June 5 /CNW/ - Arawak Energy Corporation
("Arawak" or the "Company") is pleased to announce that it has entered into an
agreement, subject to certain conditions, under which the Company expects to
acquire Saigak Investments BV ("SIBV"), a company which has a 40%
participating interest in the Saigak field in Western Kazakhstan. The
agreement was signed with Vitol BV, which owns SIBV. The Saigak field is
located approximately 120 km from the Company's existing Akzhar field in the
Aktyubinsk region of Western Kazakhstan and is operated by Maersk Oil
Kazakhstan GmbH, which owns the remaining 60% interest.
    Arawak expects to issue to Vitol BV 8,352,587 common shares in
consideration for this transaction at a price of C$2.9517 per share determined
by the 10-day volume weighted average price of Arawak shares prior to the date
of the agreement. The effective date of the transaction will be January 1,
2007 and the final number of common shares to be issued will be subject to an
adjustment based on net working capital.
    The Saigak field is currently producing around 3,500 bopd gross and has
original recoverable reserves of 14.6 million barrels according to the
operator's current development plan. On the same basis, net to Arawak the
remaining recoverable reserves are estimated at 2.4 million barrels as at
December 31, 2006. If the acquisition had been completed prior to December 31,
2006 (the effective date for the Company's last Report on Reserves Data)
Arawak's net proved plus probable reserves would have increased from 70.8 to
approximately 73.2 million boe. The cashflow resulting from the 40% interest
is estimated at approximately US$9.0 million net to Arawak in 2007, based on a
US$65 Brent price.
    Saigak, a sweet 33-37 degrees API crude is currently produced from four
wells and from multiple zones at around 2,000 metres depth. All crude oil is
currently exported.
    Saigak is produced under a production sharing contract ("PSC"),
originally signed in 1992 and which embodies terms which are more favourable
than later Kazakhstan production contracts. The contract holder has 100%
export rights and freedom from all forms of taxation apart from a 12.5%
royalty and a profit share element of 24%. The contract is valid until 2017
and includes further extension provisions.
    This producing field is relatively fully developed and so limited capital
expenditure is included in the current plans and production is expected to
decline at about 15% per year over the next 5 years without additional capital
investments. However, it is felt that there may be opportunities to add value
and additional production through later optimisations.
    Alastair McBain, Chief Executive Officer of Arawak, said: "We are very
excited to announce our first acquisition of 2007. We believe that this
strongly cash generative asset will add to the bottom line and provide funds
for our ambitious development programs in Kazakhstan and elsewhere. Also, we
are hopeful that more aggressive plans will be found to arrest or reverse the
natural decline in this field so that production will continue at Saigak for
many years to come. Although Saigak is not operated by Arawak, its proximity
to our other fields in Kazakhstan may generate opportunities for closer
co-operation".
    The acquisition is a "related party transaction" as a result of Vitol's
38.15% shareholding in Arawak (through Rosco S.A.) and is subject to approval
by an independent committee of Arawak's board of directors, statutory and
governmental approvals, including TSX approval, as well as due diligence and
execution of a definitive share purchase agreement. The acquisition is exempt
from the formal valuation and minority approval requirements of applicable
Canadian securities legislation under paragraph 2 of subsection 5.5 and
paragraph 2 of subsection 5.7 of Ontario Securities Commission Rule 61-501, as
the purchase price represents only approximately 5% of Arawak's market
capitalisation. Orion Securities Inc. have been retained to provide a fairness
opinion to the board. Upon completion of this transaction the indirect voting
share ownership of Vitol in Arawak would increase from 38.15% to approximately
41%.

    The TSX does not accept responsibility for the adequacy or accuracy of
    this release.

    Arawak's common shares are listed for trading on the TSX under the symbol
"ABG". The Company is engaged in the exploration, development and production
of oil and natural gas in Kazakhstan, Russia and Azerbaijan. The Company's
three producing fields and two exploration blocks in Kazakhstan are held
through its 100% wholly-owned subsidiary Altius Energy Corporation ("Altius").
Altius' main producing field is Akzhar, extended in 2006 from 3.8 to 71.5 sq
km, with smaller fields at Besbolek and Karataikyz. The two exploration
blocks, Alimbai and East Zharkamys III, are also situated in western
Kazakhstan. Arawak's assets in Russia are held through ZAO PechoraNefteGas
("PNG") and LLC NK Recher-Komi ("Recher-Komi") in which Arawak has a 50%
interest with the remaining interest being held by Lundin Petroleum AB. Also
in Russia, Arawak holds a 100% interest in the Kymbozhyuskaya exploration
block. In the Azerbaijan Republic, the Company's asset is its interest in the
South West Gobustan fields. Commonwealth Gobustan Limited ("CGL"), in which
Arawak has a 37.17% interest, holds an 80% interest in the EDPSA with the
remaining 20% owned by SOCAR Oil Affiliate.

    This press release includes "forward looking statements", which are based
on the opinions and estimates of management at the date the statements are
made, and are subject to a variety of risks and uncertainties and other
factors that could cause actual events or results to differ materially from
those projected in the forward looking statements. These risks and
uncertainties include, but are not limited to, risks associated with the oil
and gas industry (including operational risks in development, exploration and
production; delays or changes in plans with respect to exploration or
development projects or capital expenditures; the uncertainty of reserve
estimates; the uncertainty of estimates and projections in relation to
production, costs and expenses and health, safety and environmental risks),
the risk of commodity price and foreign exchange rate fluctuations, the
uncertainty associated with commercial negotiations and negotiating with
foreign governments and risks associated with international activity. Due to
the risks, uncertainties and assumptions inherent in forward-looking
statements, prospective investors in the Company's securities should not place
undue reliance on these forward-looking statements.





For further information:

For further information: Alastair D. McBain, President & Chief Executive
Officer, Phone: +(44) 20 7973 4285, Fax: +(44) 20 7824 8466; Charles R. A.
Carter, Chief Financial Officer, Phone:+(44) 20 7973 4285, Fax: +(44) 20 7824
8466, E-mail: info@arawakenergy.com, www.arawakenergy.com

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Arawak Energy Limited

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