By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-African independent upstream oil and gas company, SacOil Holdings Ltd on Wednesday announced it has acquired a 100 percent stake in Cyprus-registered exploration and production company, Mena International Petroleum Company Ltd (MIP), from Mena International Petroleum Holdings Company Ltd.
SacOil the South African based upstream oil and gas firm entered into a sale and purchase agreement dated September 09, 2014 to acquire MIP from MIP Holdings a wholly-owned subsidiary of TSX Venture listed Mena Hydrocarbons Inc.
The deal worth about $14 million was consummated through the issuing of SacOil shares to MIP shareholders and settling all MIP’s liabilities, totaling $4.1 million.
On completion of the deal, apart from the 100 percent ownership in MIP, SacOil will also own MIP’s 100 percent operating interest in the Lagia Development Lease situated on the Sinai Peninsula in Egypt covering an area of approximately 32 square kilometers.
The 32 square kilometre Lagia oil field is at a developmental stage with heavy oil (16-18° API) in shallow reservoirs and light oil potential in deeper reservoirs.
‘’The assets include existing production facilities and oil storage for 3 000 barrels of oil. The field is currently in test production and SacOil intends to implement a phased development programme to bring the field into full production. Phase 1 will include the hydraulic stimulation of four (4) existing wells and the work-over of one (1) well, commencing as soon as practicable after closing the acquisition, and will be funded from existing cash resources,’’ the company said.
According to the SacOil, the rationale behind the acquisition is as a result of its current strategy to grow and balance its existing portfolio on the African continent through the addition of reserves and production to its asset base. ‘’The two-pronged approach of this strategy includes: the monetization of the existing assets and expansion of the portfolio to deliver production and cash flows,’’ the upstream oil and gas firm said.
The company says highlights of the acquisition include that Lagia oil field represents the acquisition by SacOil of a de-risked onshore development asset in Egypt with short timelines to production and cash flows.
Another highlight is the proven plus probable reserves net to MIP of 6.174 million barrels (audited by Degolyer and MacNaughton as at the year ended 31 December 2013) and the acquisition representing a strategic entry to Egypt, where SacOil sees the potential to build a substantial E&P business.
The African independent upstream oil and gas firm said it will make a significant investment in the field to bring it into full production by mid-2015. ‘’Phase one of the development plan will include the “hydraulic stimulation of four existing wells and the work-over of one well commencing as soon as practicable”, the company said.
It further affirmed that the initial phase is estimated to take three (3) months and is scheduled to commence in October 2014, depending on the availability of the appropriate equipment. The company is targeting a production rate of more than 1000 barrels per day from the Lagia oil field by late 2015.
Thabo Kgogo, CEO at SacOil while commenting on the transaction said the signing of a definitive agreement to acquire Mena International Petroleum Company Ltd is another significant milestone in the history of the company, and endorses its short to medium term strategy of balancing its existing exploration and appraisal portfolio with lower risk production and development assets.
‘’We welcome our new shareholders and this opportunity to expand into a new geographical location, which continues our strategy of building a substantial pan African company,” Kgogo said.
He noted that the acquisition represents the first booked reserves for the company and through its anticipated development programme, it will be targeting a daily production rate from the Lagia oil field of more than 1,000 barrels of oil per day by Q4 2015.
On his part, Willem de Meyer, vice-president commercial at SacOil said the on-shore asset is a discovered heavy oil field with five (5) wells completed and existing infrastructure, including storage facilities for up to 3000 barrels. “This is certainly an asset with significant upside potential and we will most likely drill a number of production wells over the next five (5) years to optimize field recovery at Lagia,” de Meyer said.
Sacoil says the acquisition is expected to end on or before October 31, 2014 and it would provide further updates on its planned future development activities and investments in the Lagia oil field.
