SacOil, the African independent upstream oil and gas company, is pleased to announce that it has entered into a sale and purchase agreement dated 9 September 2014 (the “Agreement”) to acquire a Cyprus-registered exploration and production company, Mena International Petroleum Company Ltd (“MIP”), from Mena International Petroleum Holdings Company Ltd (the “Seller”), a wholly-owned subsidiary of TSX Venture listed Mena Hydrocarbons Inc.
SacOil’s current strategy is 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.
- Expansion of the portfolio to deliver production and cash flows.
MIP has a 100% interest in the development lease for the Lagia oil field, covering an area of approximately 32 square kilometres on the Sinai Peninsula in Egypt. The Lagia oil field is at a development 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 4 existing wells and the work-over of 1 well, commencing as soon as practicable after closing the Acquisition, and will be funded from existing cash resources.
Following completion of the Acquisition, which is expected on or before 31 October 2014 (the “Completion Date”), SacOil will provide further updates on its planned future development activities and investments in the Lagia oil field.
Highlights of the Acquisition include:
-The 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;
-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 represents a strategic entry to Egypt, where SacOil sees the potential to build a substantial E&P business.
SacOil will, subject to fulfillment of the conditions precedent set out below, acquire all the issued shares in MIP (the “Sale Shares”) from the Seller, with effect from 9 September 2014 (the “Effective Date”).
As consideration for the Acquisition (the “Acquisition Consideration”), the Seller will be entitled to receive US$ 10 million in SacOil shares via the issuance of 183 666 947 ordinary shares in the Company (the “Consideration Shares”), based on the 30 day volume weighted average price of the SacOil shares on the JSE for the period ended 8 September 2014.
The Consideration Shares shall be issued to Mena Hydrocarbons and shall not be traded for a period of 4 months following the Completion Date. Issuing fewer Consideration Shares should the working capital deficiency on the Completion Date be greater than US$4.1 million shall reduce the Acquisition Consideration.
In addition, SacOil will settle in cash all MIP's liabilities, to a maximum value of US$ 4.1 million (the “Cash Consideration”). The Cash Consideration includes an amount of US$1,857,319 due to the holders of various promissory notes (the “Promissory Notes”).
SacOil may from the Effective Date elect to pay MIP’s trade creditors directly, subject to a maximum of US$250,000 (the “Loan”). Should the Acquisition not be completed, the Loan will become immediately due and payable.
For more information about related Opportunities and Key Players visit Egypt Oil and Gas Projects