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SOL/SOLBE1 - Sasol Limited - Sasol announces a CAD$1 050 Million (ZAR7 413

Release Date: 08/03/2011 12:24:01      Code(s): SOL SOLBE1
SOL/SOLBE1 - Sasol Limited - Sasol announces a CAD$1 050 Million  (ZAR7 413     
million) acquisition of a 50% interest in Cypress A - its second in the Montney 
Basin in Canada                                                                 
Sasol Limited                                                                   
(Incorporated in the Republic of South Africa)                                  
(Registration number 1979/003231/06)                                            
Sasol Ordinary Share codes:   JSE : SOL  NYSE : SSL                             
Sasol Ordinary ISIN codes:    ZAE000006896   US8038663006                       
Sasol BEE Ordinary Share code:     JSE : SOLBE1                                 
Sasol BEE Ordinary ISIN code:      ZAE000151817                                 
("Sasol" or "the Company")                                                      
ITS SECOND IN THE MONTNEY BASIN IN CANADA                                       
Transaction highlights                                                          
*    in strategic partnership with Talisman, Sasol entered the North American   
shale gas market in December 2010 through the acquisition of a 50% interest 
    in the Farrell Creek assets, which transaction closed on 1 March 2011;      
*    Sasol`s second shale gas acquisition comprises a 50% interest in Talisman`s
    Cypress A acreage for a purchase consideration of CAD$1 050 million (ZAR7   
413 million);                                                               
*    the 57 000 acres of land covered by Cypress A represents an estimated      
    contingent resource of 11,2 trillion cubic feet ("tcf");                    
*    upon closing of Cypress A, Sasol will hold an estimated aggregate 10,4 tcf 
of contingent resources in the Montney Basin; and                           
*    this transaction underpins the focussed growth within Sasol`s upstream     
    portfolio and accelerates the potential gas-to-liquids ("GTL") growth in    
    North America.                                                              
1. Introduction                                                                 
Sasol agreed on 7 March 2011 to acquire a 50% interest in the high quality      
Cypress A assets from Talisman for a total purchase consideration of CAD$1 050  
million (ZAR7 413 million at the closing CAD/ZAR exchange rate of 7,06) ("the   
2. Rationale for the Transaction                                                
As described in the 20 December 2010 Farrell Creek announcement, shale gas has  
become an economically attractive alternative to conventional natural gas. The  
resultant impact on the North American gas market provides Sasol with an        
opportunity to accelerate growth within its upstream resource base by way of the
acquisition of high quality natural gas assets, and also grow its international 
GTL portfolio. The Company believes that there has been a structural shift in   
the dynamics between the natural gas price and oil price, making GTL an even    
stronger value proposition.                                                     
The Cypress A asset has the following attributes: (i) well developed thickness  
of the productive shale formations, (ii) large contiguous acreage position,     
(iii) close proximity (25 miles) to the recently acquired Farrell Creek assets, 
allowing optimisation and synergies and (iv) access to existing and planned     
pipeline infrastructure.                                                        
The above attributes make the asset attractive both on a stand-alone basis as   
well as in combination with the Farrell Creek assets.                           
As disclosed earlier, it is Sasol and Talisman`s intention to pursue the        
establishment of a GTL plant in western Canada. At present the parties are      
jointly conducting a feasibility study for this purpose. The combination of the 
Cypress A acquisition with the Farrell Creek acquisition will thus allow        
scalability of such a GTL plant.                                                
3. Details of the Transaction                                                   
3.1 Seller                                                                      
Talisman, listed on the Toronto and New York stock exchanges, is a global,      
diversified, upstream oil and gas company with its headquarters in Canada. The  
company is an established player in the North American unconventional gas       
resource industry with strong operator skills and is committed to operating in a
safe, environmentally responsible manner and to maintaining good working        
relationships with local communities near the areas of its operations.          
Talisman is a major producer of gas in the Marcellus shale and also holds       
leading positions in the Montney, Utica, and Eagle Ford shales.                 
3.2 Transaction description                                                     
Talisman has agreed to sell a 50% interest in Cypress A to Sasol.  An           
appropriate transaction structure is still being investigated. Consistent with  
the Farrell Creek acquisition, Talisman will continue to operate Cypress A and  
any future associated gas gathering systems and processing facilities.          
3.3 Description of assets                                                       
The Montney Basin is located in Canada`s western Alberta and north-eastern      
British Columbia.  Its primary shale productive formations are of mid-Triassic  
age and found at depths of around 8 000 feet.  The average shale thickness in   
the Cypress A acreage is 1 600 feet.  The 57 000 acres of Cypress A is estimated
to contain a contingent resource of 11,2 tcf, within a range of 5 tcf to 20 tcf.
The timing of the full scale development of Cypress A is subject to additional  
studies, which will take overall technical maturity, pipeline evacuation        
capacity and marketing options into consideration. This will allow the partners 
to optimise capital expenditure and maximise return for the integrated joint    
venture. At present the Cypress A asset is producing at a rate of 18 million    
standard cubic feet ("mmscf") per day into existing pipeline infrastructure.    
Hence, only a small percentage of the contingent resources of Cypress A is      
envisaged to be included as reserves in Sasol`s annual report on Form 20-F as   
filed with the US Securities and Exchange Commission at the end of its current  
financial reporting year.                                                       
3.4 Purchase consideration                                                      
Payment of the purchase consideration of CAD$1 050 million will be structured   
similar to the Farrell Creek acquisition with an upfront cash payment of 25%    
(CAD$263 million) and the remaining 75% (CAD$787 million) being paid in the form
of a capital carry of Talisman`s 50% share of future capital commitments of the 
integrated venture development area until such time that the purchase           
consideration has been paid in full.                                            
Following the settlement of the Cypress A carry arrangement, each partner will  
fund its 50% share of the future development of the acreage.                    
The aggregate purchase consideration will be funded from surplus cash available 
within the Sasol group.                                                         
3.5 Suspensive conditions                                                       
The Transaction is subject to the conclusion of the definitive agreements and   
regulatory approvals, including South African Exchange Control approval.        
It is envisaged that closing will take place in the third quarter of the 2011   
calendar year.                                                                  
4 Pro forma financial effects                                                   
The unaudited and unreviewed pro forma consolidated financial effects of the    
combined Farrell Creek and Cypress A transactions (the "Combined Transaction")  
on Sasol`s  consolidated interim results for the six months ended and financial 
position as at 31 December 2010, calculated in terms of the provisions of the   
JSE Limited Listings Requirements, before and after the Combined Transaction,   
are provided below.                                                             
The Combined Transaction is aggregated for purposes of the unaudited and        
unreviewed pro forma consolidated financial effects because of their conjoined  
influence and as they were entered into within a period of twelve months of each
other with the same counter party.                                              
The unaudited and unreviewed pro forma consolidated financial effects of the    
Combined Transaction are the responsibility of the directors of Sasol.  The     
unaudited and unreviewed consolidated financial effects have been presented for 
illustrative purposes only, and, because of their nature, may not fairly present
Sasol`s financial position, changes in equity, results of operations nor cash   
flows after the implementation of the Combined Transaction.                     
The unaudited and unreviewed pro forma consolidated financial effects have been 
prepared on the basis that the Combined Transaction had been fully implemented  
on 1 July 2010 for Income Statement purposes and as at 31 December 2010 for     
purposes of the Statement of Financial Position. It does not purport to be      
indicative of what the consolidated financial results would have been had the   
Combined Transaction been implemented on a different date.                      
The unaudited and unreviewed pro forma consolidated financial effects of the    
Combined Transaction are presented in a manner consistent with Sasol`s          
accounting policies applied in preparation of the reviewed interim financial    
results for the six months ended 31 December 2010.                              
The unaudited and unreviewed pro forma consolidated financial effects, before   
and after the Combined Transaction, are set out in the table below:             
                                Before(1)     After       Percentage            
                                                          change (%)            
Attributable        ZAR Cents    1 268         1 232       (2,9)                
earnings per                                                                    
Headline earnings   ZAR Cents    1 297         1 261       (2,8)                
per share(2)                                                                    
Net asset value per ZAR Cents    16 038        16 012      (0,2)                
Net tangible asset  ZAR Cents    15 737        15 711      (0,2)                
value per share(3)                                                              
Weighted average    Million      599,6         599,6       0,0                  
number of shares in                                                             
The unaudited and unreviewed pro forma consolidated financial effects of the    
Combined Transaction are based on the assumptions set out in the notes below.   
Notes and assumptions:                                                          
1    extracted from the Sasol interim financial results for the six months ended
31 December 2010 as published on 7 March 2011;                              
2    the unaudited and unreviewed pro forma consolidated financial information  
    after the Combined Transaction is based on the following assumptions:       
    a    the Combined Transaction was implemented with effect from 1 July 2010  
for the calculation of the Income Statement effects;                   
    b    include the proportionate share (50%) of income and expenditure        
         relating to the Combined Transaction for the six months ended 31       
         December 2010, net of taxes;                                           
c    include the estimated transaction costs of a non-recurring nature, net 
         of taxes;                                                              
    d    the reduction in interest income, net of taxes, as a result of cash    
         being utilised to fund the Combined Transaction, calculated at the     
average of the relevant prevailing money market deposit interest rates 
         applicable to Sasol over the six month period ended 31 December 2010;  
3    the Combined Transaction has a marginal impact on Sasol`s net asset value  
per share and net tangible asset value per share. The amount of the         
    combined acquisition cost accounted for is equivalent to the cash payments  
    that would be due on closing of the Combined Transaction. The tax           
    allowances and accounting principles applied are also dependent on final    
structuring of the Combined Transaction.                                    
The unaudited and unreviewed pro forma consolidated financial effects have not  
been reviewed nor reported on by Sasol`s external auditors.                     
8 March 2011                                                                    
Exclusive Financial advisor                                                     
Morgan Stanley & Co                                                             
Legal advisor                                                                   
Fraser, Milner & Casgrain                                                       
Deutsche Securities (SA) (Pty) Limited                                          
Forward-looking statement - Disclaimer:                                         
The estimates of contingent resources contained in this announcement are based  
on definitions provided by the Society of Petroleum Engineers.  Contingent      
resources do not constitute, and should not be confused with, reserves.         
Contingent resources are defined as those quantities of petroleum estimated, as 
of a given date, to be potentially recoverable from a known accumulation by     
application of development projects, but which are not currently considered to  
be commercially recoverable due to one or more contingencies.  There is         
therefore uncertainty as to the portion of the volumes identified as contingent 
resources that will be commercially producible.                                 
Sasol may, in this announcement, make certain statements that are not historical
facts and relate to analyses and other information which are based on forecasts 
of future results and estimates of amounts not yet determinable. These          
statements may also relate to our future prospects, developments and business   
strategies. Examples of such forward-looking statements include, but are not    
limited to, statements regarding exchange rate fluctuations, volume growth,     
increases in market share, total shareholder return, resource volumes and values
and cost reductions. Words such as "believe", "anticipate", "expect", "intend", 
"seek", "will", "plan", "could", "may", "endeavour" and "project" and similar   
expressions are intended to identify such forward-looking statements, but are   
not the exclusive means of identifying such statements.                         
By their very nature, forward-looking statements involve inherent risks and     
uncertainties, both general and specific, and there are risks that the          
predictions, forecasts, projections and other forward-looking statements will   
not be achieved. If one or more of these risks materialise, or should underlying
assumptions prove incorrect, our actual results may differ materially from those
anticipated. You should understand that a number of important factors could     
cause actual results to differ materially from the plans, objectives,           
expectations, estimates and intentions expressed in such forward-looking        
statements. Some of these factors are discussed more fully in our most recent   
annual report under the Securities Exchange Act of 1934 on Form 20-F filed on 28
September 2010 and in other filings with the United States Securities and       
Exchange Commission. The list of factors discussed therein is not exhaustive;   
when relying on forward-looking statements to make investment decisions, you    
should carefully consider both these factors and other uncertainties and events.
Forward-looking statements apply only as of the date on which they are made, and
we do not undertake any obligation to update or revise any of them, whether as a
result of new information, future events or otherwise.                          
Morgan Stanley & Co and its affiliates(including Morgan Stanley South Africa    
(Pty) Limited) are acting as independent financial advisor to Sasol Limited and 
no one else in connection with the Transaction and will not be responsible to   
anyone other than Sasol Limited for providing the protections afforded to the   
clients of Morgan Stanley & Co nor for providing advice in relation to the      
Transaction, the contents of this announcement or any other matter referred to  
Date: 08/03/2011 12:24:00 Supplied by www.sharenet.co.za                     
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