SacOil, the African independent upstream oil and gas company, today announced the signing of an agreement to acquire the Cyprus-registered Exploration and Production Company, Mena International Petroleum Company Ltd (MIP).
The transaction, reportedly worth around US$14 million is effected through the issuing of SacOil shares to MIP shareholders and settling all MIP's liabilities, totalling US$4.1 million.
On completion of the transaction SacOil Holdings will have 100% ownership in MIP including its 100% operating interest in the Lagia Development Lease situated on the Sinai Peninsula in Egypt. The 32 square kilometre Lagia oil field is a development asset in test production at this stage. The field holds an independently estimated 6.174 million barrels proven plus probable reserves.
SacOil says they 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 in a statement. This initial phase is estimated to take three 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.
According to Willem de Meyer, Vice-President Commercial at SacOil, the on-shore asset is a discovered heavy oil field with five 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 years to optimise field recovery at Lagia”, says de Meyer.
Commenting on the acquisition, Dr Thabo Kgogo, SacOil CEO said: “The Lagia oil field is a very exciting addition to our portfolio and is a significant milestone in the history of the Company. The transaction endorses our short to medium-term strategy of balancing our portfolio with the focus on production and generating cash flows. Unlike most oil and gas transactions, the Lagia opportunity promises to be cash-generative within a very short time. If everything goes according to plan, the project will have a positive net cash flow by March 2015 and will result in material cash flow for the Company by the fourth quarter in 2015. This will positively impact our capacity to continue work on our other assets and to pursue more acquisitions proven to be in line with our growth strategy” says Kgogo.
The asset in the Sinai Peninsula makes Egypt the fifth operating country for SacOil - all on the African continent. Other operations are in Nigeria, DRC, Botswana and Malawi. Earlier this year, SacOil made its intention clear to expand and balance its portfolio in Africa and has, amongst others, also shown an interest in Mozambique’s thriving gas sector.
