S/African Firm May Exit Nigeria Over Falling Crude Prices

S/African Firm May Exit Nigeria Over Falling Crude Prices

A South African oil and gas explorer, SacOil, is contemplating withdrawing further investments in Nigeria due to the sliding oil prices.

The company is likely going to cancel an agreement to complete an appraisal on a prospective oil asset in Nigeria and leave the country.

In a cautionary statement released to its shareholders, the company advised them to continue to exercise caution when dealing in their shares until a further announcement is made in this regard.

“With reference to the cautionary announcement published on December 18, 2014, on the Stock Exchange News Service of the Johannesburg Stock Exchnage (JSE) and on the regulatory News Service of the London Stock Exchange, SacOil shareholders were advised that the company is still in the process of considering its portfolio rationalisation, which, if successfully concluded, may have a material effect on the price of SacOil ordinary shares. In particular, SacOil is considering the cancellation of an agreement to participate in an appraisal asset in Nigeria.

“As yet, no transaction has been formalised and there can be no guarantee as to the terms and conditions attached to any cancellation of this asset,” the statement explained.

SacOil was listed in October 1994 on the venture capital sector of the JSE under the name SA Mineral Resources Corporation Limited. SacOil completed an AIM listing in early 2011 to access European capital markets. In October 2010, SacOil, through its wholly-owned subsidiary SacOil 281 Nigeria Limited (SacOil 281), concluded a farm-in agreement with the EER 281 Nigeria Limited (EER 281) and Transnational Corporation of Nigeria Plc (Transcorp).

In terms of the farm-in agreement, SacOil 281 will acquire from, and be assigned a 20 per cent interest in the OPL 281 concession by Transcorp. The assignment to SacOil 281 of the participating interest in OPL 281 requires the prior approval from the federal government.

A pre-requisite to seeking such approval has been for Transcorp to have entered into a production sharing contract (PSC) for OPL 281 with the Nigerian National Petroleum Corporation (NNPC).

Transcorp has informed SacOil that the NNPC has signed the PSC for OPL 281.

NNPC’s signing of the PSC for OPL 281 now clears the way for Transcorp and SacOil 281 to prepare and to lodge an application to seek the approval from the Government of Nigeria for Transcorp to assign a 20 per cent participating interest to SacOil 281.

With the signing of the PSC, Transcorp, as operator of OPL281, will now proceed to execute the PSC commitments and work programme to appraise the contingent resources estimated at approximately 100 million barrels of oil equivalent.