LON:SAC | SacOil - Aiming To Become A Major Player In Africa

5th Dec '11 by Antone

2 comments 6760 reads

SacOil Holdings - African oil play with the promise of early production - Reiterate recommendation of Speculative Buy at 4.125p with a 27p target price.

Dual-listed SacOil is an independent African upstream oil and gas business. The company offers investors the promise of early production and cash flow as well as the chance to add substantial value by moving opportunities up the value chain. The recently announced interim results served to remind the market of the African oil play’s impressive portfolio. The focus of attention over the past six months has been on the blue sky opportunity in Block III in the highly prospective Albertine Basin the Democratic Republic of Congo (DRC) which has been neatly de-risked following a farm-in by Total. At the same time the team has also has been fast tracking progressing the OPL 233 and OPL 281 concession blocks in Nigeria towards early production and revenues. In October, the company announced a $25 million Standby Equity Distribution Agreement with Yorkville which followed a R75 million (£5.9 million) funding at R0.67 (5.28p) by Timtex Investments which should help provide the funds to accelerate these projects.

Interim results for the six months to 31st August 2011 showed that revenues from the Greenhills manganese operation increased by 17% to R19.3 million. Pre-tax profit came out at R19.15 million compared to a loss of R6.95 million at the halfway stage last year due to principally to receipts and fair value adjustments. In this period, SacOil through its 50%-owned DRC vehicle Semliki Energy SPRL (other 50% holder is DIG Oil Proprietary Limited) successfully concluded the farm-out and transfer of 60% stake in Block III to Total. In this move, SacOil gained cash of $7.5 million, a future contingent cash bonus of $54.0 million payable in two tranches, full carry on exploration costs of at least $35 million until the final investment decision and also the settlement of a $1.4 million loan provided to DIG. Importantly, SacOil has maintained representation on the management committee of Block III in which it now has a 12.5% effective stake that is fully funded.

Block III in the DRC occupies a large acreage in the Albertine Graben which forms part of the Eastern African Rift System where modern era exploration began only in 1999. Since then around 800MMbbls of recoverable oil resources have been discovered, which includes Tullow’s Kingfisher (200MMbbl)…

Unlock with Email

Unlock with Google

Already have an account?
Login here

Antone

7th Dec '11

To add to my previous post i have found two additional recent reports that are well worth a read .

http://www.edisoninvestmentresearch.co.uk/researchreports/sacoil241111update.pdf

http://www.proactiveinvestors.co.uk/companies/news/36197/sacoil-to-add-value-through-exploration-and-appraisal-says-shore-capital--36197.html

9th Dec '11

Half Yearly 2011 Financial Results -14 November 2011

AIM and JSE listed - SacOil Holdings Limited, the African independent upstream oil and gas company, is pleased to announce its half yearly financial results for the six months ended 31 August 2011.

HIGHLIGHTS:

Operational / Management / Corporate

The recognition of the R238.1 (GBP20.6) million is in accordance with International Accounting Standard 37: Contingent Assets and Contingent Liabilities and is based on additional information available, at the time of this release, to the management of SacOil in relation to the probability of future economic benefits that could flow to SacOil as a result of the Disposal. The Group Interim Results for the six months ended 31 August 2011 will be released on or about Monday, 14 November 2011. The information contained in this announcement has not been reviewed or reported on by the Group`s auditors.

*Successful farmout of a 60% interest in Block III to Total E&P RDC ("Total") ("Block III Disposal") for: US$7.5m (£ 4.6m) cash payment received net to SacOil

*US$54m (£ 33.02m) contingent bonus paymentnet to SacOil

*Full carry on exploration costs of at least US$35m (£ 21.4m) to final investment decision

*Strengthened main board, with the appointments of John Bentley and James William (Bill) Guest as Independent Non-Executive Directors.

*Strengthened management team with the appointment of Bradley Cerff as Vice-President.

*Successful admission to AIM

Financial:

**US$7.5m (£ 4.6m) cash received and further potential proceeds of US$54m (£33.02m) in relation to the Block III Disposal (net to SacOil)

**US$10.6m cash (£ 6.5m) raised through equity

**Headline earnings up 657%

**Tangible Net Asset Value up 379%

**Greenhills plant net profit up 11%

Commenting, Robin Vela, CEO, said:

"The focus over the last six months has been on managing the Company's exposure to the high impact exploration assets in Block III in the highly prospective Albertine Basin, whilst retaining significant potential upside for shareholders. Our attention has also been on procuring funding in order to de-risk and fast track the work program obligations of our asset portfolio and progressing towards early production and revenues from our oil concession blocks, OPL 233 and OPL 281, in Nigeria. We successfully did this through the farm-out to Total and the recently announced Standby Equity Distribution Agreement. Combined, this puts us in a good position to fast track and develop our asset position and opportunities and we look forward to the next six months of the financial year with added confidence."

SacOil - aiming to become a major player in Africa

Unlock the rest of this article with a 14 day trial

About the Author

Antone

2 comments

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...