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Scl - Sacoil - Sacoil Commences Trading On Alternative Investment Market

Release Date: 08/04/2011 09:04:58      Code(s): SCL
SCL - SacOil - SacOil commences trading on Alternative Investment Market        
("AIM")                                                                         
SacOil Holdings Limited                                                         
Incorporated in the Republic of South Africa                                    
(Registration number: 1993/000460/06)                                           
Share code: SCL       ISIN code: ZAE000127460                                   
("SacOil" or "the Company")                                                     
SacOil commences trading on Alternative Investment Market ("AIM")               
SacOil Holdings Limited (AIM/JSE), the independent Pan-African upstream oil     
and gas company, today announces the commencement of trading in its shares      
on AIM after an introduction by the Company`s Nominated Adviser and broker      
finnCap Limited and joint broker Renaissance Capital Limited. The Company       
remains listed on the Main Board of the JSE Limited.                            
SacOil is intent on becoming a leading independent African upstream oil and     
gas company with a balanced portfolio of Pan-African assets. SacOil and its     
subsidiaries are party to transactions pertaining to Block 3, Albertine         
Graben in the Democratic Republic of Congo ("DRC") and OPL 281 and OPL 233      
in Nigeria.                                                                     
At 7 April 2011, the Company had a current market capitalisation of             
approximately R1.4 billion (circa GBP127.0 million) on the JSE.                 
Democratic Republic of Congo                                                    
SacOil owns 50 per cent of the issued capital of Semliki Energy SPRL            
("Semliki"), a company incorporated in the DRC, which in turn holds the oil     
concession rights pertaining to Block 3, Albertine Graben in the DRC ("Block    
3").                                                                            
A Presidential Ordinance approving the Block 3 Production Sharing Agreement     
has been issued to Semliki, whereby Semliki has the right to apply (after       
fulfilling certain contractual obligations) for an exploration permit.          
On 31 March 2011, Semliki successfully concluded a farm in agreement with       
Total E&P RDC ("Total") pursuant to which Total acquired a 60 per cent          
undivided interest in, and became the operator, of Block 3.                     
Nigeria                                                                         
Subsidiaries of the Company have entered into farm-in agreements in relation    
to oil concession Blocks OPL 281 and OPL 233 in Nigeria.                        
Oil concession Block 233 is located in the shallow water area of the Niger      
Delta of discovered but undeveloped oil assets.                                 
Oil concession Block 281 is an onshore block covering some 138 kmSquared,       
and is located in the western delta region of Nigeria approximately 25 km       
due east from the Forcados terminal.                                            
Robin Vela, Chief Executive Officer of SacOil commented today:                  
"We are delighted to be bringing the SacOil story to the wider universe of      
UK and European investors who appreciate and understand the long term           
African oil and gas growth story and investment opportunities. We believe we    
have a compelling proposition to aggressively acquire new acreage, as well      
as develop and de-risk our assets through to production, thereby                
establishing the company as a balanced portfolio independent African            
upstream company".                                                              
For more information please visit www.sacoilholdings.com                        
For further information, please contact:                                        
United Kingdom Enquiries                                                        
Tavistock Communications                                                        
Jos Simson/ Ed Portman                                                          
Tel: +44 (0)20 7920 3150                                                        
South African Enquiries                                                         
The Riverbed Agency                                                             
Raphala Mogase                                                                  
Tel: +27 (0)11 783 7903                                                         
finnCap Ltd                                                                     
(Nominated Adviser)                                                             
Matthew Robinson/Ed Frisby                                                      
Tel: +44 (0) 20 7220 1658                                                       
Bryanston                                                                       
8 April 2011                                                                    
Sponsor                                                                         
BDO Corporate Finance (Pty) Ltd                                                 
Corporate Adviser                                                               
Renaissance BJM Securities                                                      
(Proprietary) Limited                                                           
About SacOil                                                                    
SacOil is intent on becoming a leading independent African upstream oil and     
gas company with a balanced portfolio of Pan-African assets. SacOil`s assets    
are in all phases of the upstream cycle - exploration, appraisal and near       
production and are currently in the DRC and Nigeria.                            
Strategy                                                                        
SacOil has progressed its stated strategic focus of targeting the               
acquisition of discovered but undeveloped, or previously producing but now      
shut in near term producing and production assets on the African continent.     
During 2011, Africa is expected to produce more oil than North America, and     
by 2020 it is expected to be the world`s third biggest oil region, hence the    
recent interest in Africa`s oil and gas acreage. Indigenisation laws in         
Africa as well as certain oil majors retreating from discovered but             
undeveloped marginal oilfields in Africa, provide opportunities to emerging,    
junior exploration and production companies such as SacOil.                     
The Company`s vision is to successfully build SacOil into a pan-African         
independent upstream oil and gas company. The Company has an ambitious and      
aggressive acquisition-led growth strategy and the Directors believe it is      
well positioned to exploit its foothold in Africa.                              
Block 3, DRC                                                                    
Block 3 is situated in the Albertine Graben, DRC and comprises an area of       
3,177 kmSquared, which is mostly lowland (Semliki river plain) and is           
flanked by rift margins. Block 3 is on trend with Lake Albert discoveries in    
Uganda. The largest discovery in the Escarpment/Near-shore Play is              
Kingfisher (200MMbbl) and the largest discovery in the Victoria Nile Delta      
Play is Giraffe-Buffalo (300MMbbl). Block 3 is expected to contain both         
plays. Over 800 million barrels of recoverable oil have been discovered in      
the Albertine Graben, and the total resource base is estimated at two           
billion barrels. To date, the majority of the exploration has been within       
the borders of Uganda, but the DRC concessions are considered to be highly      
prospective, with Block 3 being close to recent significant discoveries.        
Block 3 is almost a virgin exploration territory, where no seismic or other     
relevant data exists as yet, which could be used to define the prospects and    
leads. However, part of the block is covered with aero-magnetic and gravity     
data, and the block is also in close proximity to several discoveries and       
can be said to contain a prospective play. The total resource base is           
estimated at two billion barrels. To date, the majority of the exploration      
has been within the borders of Uganda, but the DRC concessions are              
considered to be highly prospective, with Block 3 being close to recent         
significant discoveries.                                                        
Total farm-in                                                                   
On 31 March 2011, Semliki successfully completed the satisfaction of the        
conditions precedent as contained in a farm in agreement entered into with      
Total E&P RDC ("Total"), in terms of which Semliki will transfer to Total, a    
60 per cent interest in the rights and obligations of Semliki (the "Block 3     
Rights") under the Production Sharing Contract pertaining to Block 3,           
Albertine Graben in the DRC. The last condition precedent, being the            
approval of SacOil shareholders in general meeting, has been satisfied.         
The Board believes that in order to effectively explore and evaluate the oil    
deposits of Block 3, it was necessary to form a relationship with a major       
international oil company which has the necessary financial capacity,           
technical skills and operating expertise to operate the asset. Following        
careful consideration of a number of potential participants, SacOil entered     
into detailed discussions with Total during 2010. These discussions have        
resulted in the conclusion of the Agreement.                                    
As a consequence of the agreement with Semliki, SacOil received gross cash      
proceeds in an amount of US$7.5 million, which will permit cash flow to be      
released which can be utilised to fund the Company`s Nigerian activities.       
SacOil furthermore received cash proceeds in an amount of US$1.4 million        
(net of costs in relation to Block 3) in full and final settlement of a loan    
advanced to Divine Inspiration Group (Pty) Ltd (the other 50 per cent holder    
of Semliki) in respect of, inter alia, the Block 3 Rights. In addition,         
SacOil may receive further contingent cash considerations in an amount of       
US$54.0 million, in two stages up to first oil.                                 
Total shall also carry Semliki and the DRC Government`s share of the Block 3    
exploration costs from the date of completion until the date on which a         
final investment decision is made to develop Block 3, including, but not        
limited to, the approval of the field`s development plan and the conversion     
of the exploration license to a production license.                             
Following the completion of the Total agreement, SacOil will be                 
significantly de-risked in terms of exploration, development and other          
costs. Total, in its capacity as operator, will use its reasonable              
endeavours to ensure that one exploration well is drilled in Block 3 before     
31 December 2012.                                                               
An exploration campaign is being planned for this block and will aim to         
establish the presence of all the elements of the petroleum system in Block     
3, define prospects and leads and eventually re-grade the resources.            
Energy Equity Resources Ltd ("EER") JV, Nigeria                                 
In the important Nigerian oil and gas market, SacOil has formed a joint         
venture with the established oil and gas company, EER, to acquire and/or        
develop oil and gas assets in Nigeria as announced by the Company on 12         
October 2010. This joint venture facilitates the acquisition by the Company     
of interests in oil and gas assets in Nigeria, including those relinquished     
and disposed of by international oil companies in compliance with Nigeria`s     
indigenisation legislation.                                                     
OPL 233, Nigeria                                                                
Oil concession Block 233 in Nigeria is located in the shallow water area of     
the Niger Delta of discovered but undeveloped oil assets. Oil concession        
Block 233 is a 126 kmSquared block with a water depth of less than 30 ft and    
is located immediately off the coast of the central delta region of Nigeria,    
some 120 km due south-southeast from the Forcados terminal. The block is        
adjacent to giant Apoi field (>600MMbo). The AGR-TRACS (an oil and gas          
industry recognised independent expert) petrophysical interpretation of the     
Olobia-I well-logs indicates 103 ft of net oil and 54 ft of gas and             
condensate across five reservoir zones in the well. Most of the block is        
completely unevaluated by seismic surveys being the primary case for the        
upside potential in oil concession Block 233.                                   
Under the farm-in arrangements, SacOil obtains a 20 per cent participating      
interest and a 25 per cent economic interest in the contractor share for        
production volumes up to 100 mmbbls, reducing to 20 per cent once production    
exceeds this level. During the first exploration stage, SacOil will carry a     
substantial part of the exploration and appraisal expenditure, which            
requires a minimum work programme comprising one well and 100kmSquared ocean    
bottom cable seismic data. The work programme for the second exploration        
phase has not yet been defined as it is contingent on the results of the        
Phase I programme but is currently planned to be complete by 31 December        
2013.                                                                           
As a result, TRACS has reported that the 2C best estimate unrisked              
contingent resources on OPL233 are estimated at 19.0 MMbbls, and the            
corresponding net 2C best estimate unrisked contingent resources                
attributable to SacOil once the farm-in (described further below) is            
completed is estimated at 3.8 MMbbls. The net 2C best estimated risked          
contingent resources attributable to SacOil is estimated at 1.5MMbbls.          
SacOil`s partner, EER intends to acquire a 3D OBC seismic survey across the     
oil concession Block 233 as part of the initial work programme on the Block,    
which comprises one well plus the 3D seismic programme. The estimated cost      
for the seismic acquisition and processing is US$10 million and it is           
anticipated that the program will commence towards the middle of 2011 with      
the first fast track volume for mapping purposes available in the late third    
quarter or early fourth quarter of 2011. The aim is to use this data to         
mature exploration prospects and define the location of the proposed Olobia     
appraisal well planned in the late fourth quarter of 2011 on this data.         
Future wells will be contingent on the results of the 3D seismic evaluation.    
OPL 281, Nigeria                                                                
Oil concession Block 281 is an onshore block covering some 138 kmSquared,       
and is located in the western delta region of Nigeria approximately 25 km       
due east from the Forcados terminal. Two discovery wells were drilled,          
namely Obote-I in 1970 which encountered hydrocarbons at four levels between    
8,720 ft and 12,350 ft, while Ekoro-I drilled in 1967 discovered eight          
hydrocarbon sands between 8,260 ft and 10,761 ft. It has discovered but         
undeveloped oil assets with an estimated recoverable contingent resource for    
the block of 100 mmboe (P50 as reported by TRACS, an oil and gas industry       
recognised independent expert) and a peak potential production rate of up to    
30,000 bopd.                                                                    
Following two exploration stages to 1 January 2013, SacOil is planning to       
obtain a 20 per cent participating interest and a 30 per cent economic          
interest in the contractor share for production volumes up to 50 mmbbls,        
reducing to 20 per cent once production exceeds this level. During the          
exploration stages SacOil will carry a substantial part of the exploration      
and appraisal expenditure, which requires a minimum work programme of           
US$30mln/phase, to include two wells and some 3D seismic acquisition and/or     
seismic reprocessing.                                                           
The OPL 281 development concept assumed by SacOil`s prospective partner EER     
envisages natural aquifer drive. The base case assumes a total of seven         
producers, with the 2012 appraisal well assumed to be recompleted as a          
future producer, plus six new producers drilled in 2013 - 2015.                 
The partners are in discussion with the Nigerian Department of Petroleum        
Resources ("DPR") for a likely minimum work programme commitment as follows:    
Phase 1:                                                                        
3D Seismic Data - Reprocessing of existing data over the block (128             
kmSquared)                                                                      
No of Wells: 1                                                                  
Financial Commitment: US$30 million                                             
Phase 2:                                                                        
3D Seismic Data - Acquisition over remaining part of the block without 3D       
coverage (to provide full coverage over southern 10 sq km area so far not       
covered by OPL281 seismic survey)                                               
No of Wells: 1                                                                  
Financial Commitment: US$30 million                                             
The partners plan to conduct an extended well test ("EWT") as part of the       
appraisal well program in phase 1. The EWT shall be conducted using a low       
cost workover barge and a well test package at an estimated daily cost of       
US$60,000 (total cost US$2.7 mln). The DPR typically allows up to six weeks     
of production during the EWT. The first phase of work, including the EWT is     
expected to be complete by the end of 2012.                                     
Date: 08/04/2011 09:04:57 Supplied by www.sharenet.co.za                     
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