Tito Mboweni: SA's New Oil Baron Builds Up Traction In SacOil

9 January 2017 | SA Views | Jeremy Woods: Out of the Woods
 


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The previous Governor of the Reserve Bank, Tito Mboweni, is once again lining up another deal which will position SacOil, listed on the JSE and AIM, as a major player in the oil and gas sector on the African continent. 

SacOil, the South African-based independent African oil and gas company, is in advanced negotiations "on an exclusive basis" to acquire a Southern African focused petroleum product related wholesaler, says a SENS announcement. 

OPEC’s recent decision to end the almost three-year global oil glut has seen a remarkable increase in SacOil’s share price from 19c to 26c.

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The board of SacOil believes "the proposed acquisition is fully in keeping with the company’s stated strategy of focusing on cash generating opportunities that expand SacOil’s offering across the oil and gas value chain."

If concluded, the advanced deal would significantly increase SacOil’s turnover, and provide the company with a foothold in the downstream oil and gas market which compliments its existing upstream assets such as the producing Lagia field in Egypt.

Some more good news for SacOil, and other oil producers, is the decision taken by the Organisation of Petroleum Exporting Countries (OPEC) to reduce the oversupply of oil by 1.2 million barrels a day from the start of January 2017. 

According to oil analysts, the effects of the production cut should become apparent towards the middle of 2017, when demand will start to outstrip supply, leading to improved crude oil prices for investors.

OPEC hopes the deal will help the oil market to recover from its longest downturn in a generation. This has hit the share prices of oil companies and sent big producing countries spiralling into recession.

SacOil, a company that has no long-term debt, as well as a highly experienced management team, is well positioned to capitalise on their recent strategic moves in the oil market. 

In the last two years, SacOil shares have hit a high of 67c. And the way the company is starting to flex its muscles, it would not be surprising to see SacOil shares heading back in the same direction.


Jeremy Woods

Jeremy Woods trained for three years as a journalist on the Herts Advertiser, St Albans, in the U.K. Once qualified, he left England to work as a crime reporter on the Vancouver Sun in Canada. After three years, he worked for the Los Angeles Times as a trainee financial journalist, spending most of his time reading company accounts and finding publishable stories in them. He moved to South Africa and for the last five years in journalism worked for the Sunday Times, Business Times, as Investment Editor. He has also published a financial thriller called "Special Payments", which was a best-seller on publication, and optioned three times for a film.


Disclaimer:
The information contained in this article is for informational purposes only and must not be regarded as a prospectus for any security, financial product or transaction. It is neither to be construed as financial advice nor to be regarded as a definitive analysis of any financial issue. Investors should consider this research/article as only a single factor in making their investment decision. We recommend you consult a financial planner/advisor to take into account your particular investment objectives, financial situation and individual needs. The views and opinions (where expressed) in this article are those of the author and do not necessarily reflect the official policy or position of Sharenet.

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