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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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